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Sun Communities 10-K 2010
sui10k_123109.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009
Commission file number 1-12616

SUN COMMUNITIES, INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
 
38-2730780
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
     
27777 Franklin Rd.
   
Suite 200
   
Southfield, Michigan
 
48034
(Address of Principal Executive Offices)
 
(Zip Code)

(248) 208-2500
 (Registrant’s telephone number, including area code)

Common Stock, Par Value $0.01 per Share
New York Stock Exchange
Securities Registered Pursuant to Section 12(b) of the Act
Name of each exchange on which registered

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [   ]  No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes[   ]  No [X]

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [   ]  No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

Large accelerated filer [   ]
Accelerated filer [ X]
Non-accelerated filer [   ]
Smaller reporting company [   ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes[   ]  No [X]

As of June 30, 2009, the aggregate market value of the Registrant’s stock held by non-affiliates was approximately $229,522,000 (computed by reference to the closing sales price of the Registrant’s common stock as of June 30, 2009). For this computation, the Registrant has excluded the market value of all shares of common stock reported as beneficially owned by executive officers and directors of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.

Number of shares of Common Stock, $0.01 par value per share, outstanding as of March 1, 2010: 18,830,191



 
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Table of Contents
 
 
Item
 
Description
 
Page
         
Part I.
       
   
3
   
7
   
15
   
15
   
20
         
Part II.
       
   
21
   
24
   
25
   
42
   
42
   
42
   
43
   
43
         
Part III.
       
   
44
   
51
   
62
   
64
   
66
         
Part IV.
       
   
67


 
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PART I

ITEM 1.      BUSINESS

GENERAL

Sun Communities, Inc., a Maryland corporation, together with the Sun Communities Operating Limited Partnership, a Michigan limited partnership (the “Operating Partnership”) and other consolidated subsidiaries (the “Subsidiaries”) are referred to herein as the “Company”, “us”, “we”, and “our”. We are a self-administered and self-managed real estate investment trust (“REIT”).

We are a fully integrated real estate company which, together with our affiliates and predecessors, has been in the business of acquiring, operating, and expanding manufactured housing communities since 1975.  We lease individual parcels of land (“sites”) with utility access for placement of manufactured homes and recreational vehicles to our customers. We are also engaged through a taxable subsidiary, Sun Home Services, Inc., a Michigan corporation (“SHS”), in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities.  The operations of SHS support and enhance our occupancy levels, property performance, and cash flows.

We own, operate, and develop manufactured housing communities concentrated in the midwestern, southern, and southeastern United States. As of December 31, 2009, we owned and operated a portfolio of 136 properties located in 18 states (the “Properties”, or “Property”), including 124 manufactured housing communities, 4 recreational vehicle communities, and 8 properties containing both manufactured housing and recreational vehicle sites. As of December 31, 2009, the Properties contained an aggregate of 47,572 developed sites comprised of 42,294 developed manufactured home sites, 3,176 permanent recreational vehicle sites, 2,102 seasonal recreational vehicle sites, and approximately 6,000 additional manufactured home sites suitable for development.

Our executive and principal property management office is located at 27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephone number is (248) 208-2500. We have regional property management offices located in Austin, Texas; Dayton, Ohio; Grand Rapids, Michigan; Elkhart, Indiana; and Orlando, Florida, and we employed an aggregate of 664 full and part time people as of December 31, 2009.

Our website address is www.suncommunities.com and we make available, free of charge, on or through our website all of our periodic reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the Securities and Exchange Commission.

RECENT DEVELOPMENTS

Shelf Registration

Our shelf registration for up to $300.0 million of common stock, preferred stock and debt securities expired December 31, 2008.  In April 2009, we filed a new shelf registration statement on Form S-3 with the SEC to replace the previous shelf registration for a proposed offering of up to $300.0 million of our common stock, preferred stock and debt securities. The SEC declared the new shelf registration effective in May 2009.

Derivative Instruments and Hedging Activities

We entered into three new derivative contracts during 2009 consisting of two interest rate swap agreements with a total notional amount of $45.0 million and an interest rate cap agreement with a notional amount of $152.4 million.  We utilize these derivative instruments to manage exposure to interest rate movements thereby minimizing the effect of interest rate changes and the effect it  could have on future cash flows.   These derivative instruments effectively convert a portion of our variable rate debt to fixed rate debt and cap the maximum interest rate on certain variable rate borrowings. We do not enter into derivative instruments for speculative purposes.  Additional information is included in Note 15 of the Notes to Consolidated Financial Statements included herein.

Debt

Upon the maturity of our $40.0 million floor plan facility in March 2009, we entered into a new $10.0 million manufactured home floor plan facility. The floor plan facility initially had a committed term of one year.  In February 2010, the floor plan facility was renewed indefinitely until our lender provides us 12 month notice of their intent to terminate the agreement.  The interest rate is 100 basis points over the greater of Prime or 6.0 percent (effective rate 7.0 percent as of December 31, 2009).  Prime means for any month, the prevailing “prime rate” as quoted in the Wall Street Journal on last day of such calendar month.

 
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We completed a financing of $18.5 million with Bank of America in June 2009. The loan has a three year term. The loan is secured by three properties. The interest rate is 400 basis points over LIBOR, with a minimum rate of 5.0 percent (effective rate 5.0 percent as of December 31, 2009). Proceeds of $11.2 million were used to repay mortgage notes that matured in June 2009. The remaining proceeds were used to pay down our unsecured line of credit.

We have completed various transactions involving our installment notes secured by manufactured homes.  We have received $31.3 million of cash proceeds in exchange for relinquishing our right, title and interest in the installment notes during 2009.  These transactions were recorded as a transfer of financial assets, and the cash proceeds related to these transactions were recorded as a secured borrowing.  Additional information is included in Note 4 of the Notes to Consolidated Financial Statements included herein.

Divestiture of Cable Television Service Business

In the fourth quarter of fiscal 2008, we announced our intention to exit the cable television service business. We completed the sale of the business during the third quarter ended September 30, 2009.  Cash proceeds from this sale were $0.3 million, resulting in a net gain on sale of $0.1 million. Additional information is included in Note 2 of the Notes to Consolidated Financial Statements included herein.

Georgia Flood Damage

On September 21, 2009, a flood caused substantial damage to our property, Countryside Village of Atlanta, located in Lawrenceville, Georgia.  We have comprehensive insurance coverage for both property damage and business interruption, subject to deductibles and certain limitations.  We believe the cost of the damage sustained from the flooding will be in excess of our insurance deductible.  We recorded a charge of $0.8 million during the third quarter ended September 30, 2009 associated with the flooding.  This charge represents our deductible, net of expected insurance recoveries for the replacement of assets that exceed the net book value of assets damaged in the flood.

Equity Offerings

We entered into a sales agreement to issue and sell up to 1,600,000 shares of common stock from time to time pursuant to our effective shelf registration statement on Form S-3.  Sales under the agreement commenced during the third quarter of 2009 and we have issued 100,000 shares of common stock through this program as of December 31, 2009. The shares of common stock were sold at the prevailing market price of our common stock at the time of each sale with a weighted average sale price of $19.98.  We received net proceeds of approximately $1.9 million during the year ended December 31, 2009 from the sales of these shares of common stock.  The proceeds were used to pay down our unsecured line of credit.

Equity Incentive Plan

At the Annual Meeting of Stockholders held on July 29, 2009, the stockholders approved the Sun Communities, Inc. Equity Incentive Plan (“2009 Equity Plan”).  The 2009 Equity Plan had been adopted by the Board and was effective upon approval by our stockholders. The 2009 Equity Plan replaced the Sun Communities, Inc. Stock Option Plan adopted in 1993, amended and restated in 1996 and 2000. The 2009 Equity Plan terminates automatically July 29, 2019.  The maximum number of shares of common stock that may be issued under the 2009 Equity Plan is 950,000 shares.

STRUCTURE OF THE COMPANY

The Operating Partnership is structured as an umbrella partnership REIT, or UPREIT.  We contributed our net assets to the Operating Partnership in exchange for the sole general partner interest in the Operating Partnership and the majority of all the Operating Partnership’s initial capital.  We substantially conduct our operations through the Operating Partnership.  The Operating Partnership owns, either directly or indirectly through Subsidiaries, all of our assets. This UPREIT structure enables us to comply with certain complex requirements under the Federal tax rules and regulations applicable to REITs, and to acquire manufactured housing communities in transactions that defer some or all of the sellers’ tax consequences.  The financial results of the Operating Partnership and the Subsidiaries are consolidated in our Consolidated Financial Statements.  The financial results include certain activities that do not necessarily qualify as REIT activities under the Internal Revenue Code of 1986, as amended (the “Code”).  We have formed taxable REIT subsidiaries, as defined in the Code, to engage in such activities. We use taxable REIT subsidiaries to offer certain services to our residents and engage in activities that would not otherwise be permitted under the REIT rules if provided directly by us or by the Operating Partnership.  The taxable REIT subsidiaries include our home sales business, SHS, which provides manufactured home sales, leasing and other services to current and prospective tenants of the Properties.

 
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We do not own all the interests in the Operating Partnership.  The interests in the Operating Partnership held by limited partners other than Sun Communities, Inc. are referred to as “OP Units”.  The holders of Common OP Units receive distributions in an amount equal to the dividends paid to holders of our common stock.  As of December 31, 2009, the Operating Partnership had a total of approximately 21.0 million units outstanding.  We held approximately 18.8 million units, or 89.8% of the units (not including preferred limited partnership units) in the Operating Partnership.

THE MANUFACTURED HOUSING COMMUNITY> 

A manufactured housing community is a residential subdivision designed and improved with sites for the placement of manufactured homes and related improvements and amenities. Manufactured homes are detached, single-family homes which are produced off-site by manufacturers and installed on sites within the community. Manufactured homes are available in a wide array of designs, providing owners with a level of customization generally unavailable in other forms of multi-family housing.

Modern manufactured housing communities, such as the Properties, contain improvements similar to other garden-style residential developments, including centralized entrances, paved streets, curbs and gutters, and parkways. In addition, these communities also often provide a number of amenities, such as a clubhouse, a swimming pool, shuffleboard courts, tennis courts, and laundry facilities.

The owner of each home on our Properties leases the site on which the home is located. We own the underlying land, utility connections, streets, lighting, driveways, common area amenities and other capital improvements and are responsible for enforcement of community guidelines and maintenance. Some of the Properties provide water and sewer service through public or private utilities, while others provide these services to residents from on-site facilities. Each owner within our Properties is responsible for the maintenance of the home and leased site. As a result, capital expenditure needs tend to be less significant relative to multi-family rental apartment complexes.

PROPERTY MANAGEMENT

Our property management strategy emphasizes intensive, hands-on management by dedicated, on-site district and community managers. We believe that this on-site focus enables us to continually monitor and address tenant concerns, the performance of competitive properties and local market conditions.  As of December 31, 2009, we employed 664 full and part time employees, of which 548 were located on-site as property managers, support staff, or maintenance personnel.

Our community managers were overseen by John B. McLaren, Chief Operating Officer, who has 14 years of manufactured housing and related financing experience, 3 Senior Vice Presidents of Operations and 12 Regional Vice Presidents. In addition, the Regional Vice Presidents are responsible for semi-annual market surveys of competitive communities, interaction with local manufactured home dealers and regular property inspections.

Each district or community manager performs regular inspections in order to continually monitor the Property’s physical condition and provides managers with the opportunity to understand and effectively address tenant concerns. In addition to a district or community manager, each district or property has an on-site maintenance personnel and management support staff. We hold mandatory training sessions for all new property management personnel to ensure that management policies and procedures are executed effectively and professionally.  All of our property management personnel participate in on-going training to ensure that changes to management policies and procedures are implemented consistently.  We offer over 30 courses for our team members which has led to increased knowledge and accountability of the daily operations and policies and procedures.

HOME SALES AND LEASING

SHS is engaged in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities. Since tenants often purchase a home already on-site within a community, such services enhance occupancy and property performance. Additionally, because many of the homes on the Properties are sold through SHS, better control of home quality in our communities can be maintained than if sales services were conducted solely through third-party brokers. SHS also leases homes to prospective tenants. At December 31, 2009, SHS had 5,747 occupied leased homes in its portfolio. Homes for this rental program are purchased at discounted rates from finance companies that hold repossessed homes within our communities. New homes are purchased as necessary to supplement these repossessed home purchases. Leases associated with the rental program are, in general, one year leases. This program requires intensive management of costs associated with repair and refurbishment of these homes as the tenants vacate and the homes are re-leased, similar to apartment rentals. We have added repair and service supervisors in areas with high concentrations of rental homes to aggressively pursue cost containment programs. The program is a strategic response to capture the value inherent in the purchase of substantially discounted repossessed homes in our communities. We receive approximately 19,000 applications each year to live in our Properties, providing a significant “resident boarding” system allowing us to market purchasing a home to the best applicants and to rent to the remainder of approved applicants. Through the rental program we are able to demonstrate our product and lifestyle to the renters, while monitoring their payment history and converting qualified renters to owners.

 
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REGULATIONS AND INSURANCE

General

Manufactured housing community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses and other common areas. We believe that each Property has the necessary operating permits and approvals.

Insurance

Our management believes that the Properties are covered by adequate fire, flood (where appropriate), property and business interruption insurance provided by reputable companies with commercially reasonable deductibles and limits. We maintain a blanket policy that covers all of our Properties. We have obtained title insurance insuring fee title to the Properties in an aggregate amount which we believe to be adequate.  Claims made to our insurance carriers that are determined to be recoverable are classified in other receivables as incurred.

SITE LEASES OR USAGE RIGHTS

The typical lease we enter into with a tenant for the rental of a manufactured home site is month-to-month or year-to-year, renewable upon the consent of both parties, or, in some instances, as provided by statute. In some cases (mainly in Florida), leases are for one-year terms, with up to ten renewal options exercisable by the tenant, with rent adjusted for increases in the consumer price index. Generally, market rate adjustments are made on an annual basis.  These leases are cancelable for non-payment of rent, violation of community rules and regulations or other specified defaults. During the past five years, on average 3.0 percent of the homes in our communities have been removed by their owners and 6.6 percent of the homes have been sold by their owners to a new owner who then assumes rental obligations as a community resident. The cost to move a home is approximately $4,000 to $10,000. The above experience can be summarized as follows: the average resident remains in our communities for approximately fifteen years, while the average home, which gives rise to the rental stream, remains in our communities for approximately thirty three years.

At Properties zoned for recreational vehicle (“RV”) use, our customers have short-term (“seasonal”) usage rights or long-term (“permanent”) usage rights.  The seasonal RV customers typically prepay for their stay or leave deposits to reserve a site for the following year.  Many of these RV customers do not live full time on the Property.

FORWARD-LOOKING STATEMENTS

This Form 10-K contains various “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to prospective events or developments are deemed to be forward-looking statements. Words such as “believes,” “forecasts,” “anticipates,” “intends,” “plans,” “expects,” “may”, “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward looking statements. Such risks and uncertainties include the national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled “Risk Factors” contained in this Form 10-K and our filings with the Securities and Exchange Commission. The forward-looking statements contained in this Form 10-K speak only as of the date hereof and we expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in our expectations of future events.

 
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ITEM 1A.  RISK FACTORS

Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to time in our other filings with the Securities and Exchange Commission.

REAL ESTATE RISKS

General economic conditions and the concentration of our properties in Michigan, Florida, Indiana, and Texas may affect our ability to generate sufficient revenue.

The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. We derived significant amounts of rental income for the twelve months ended December 31, 2009 from properties located in Michigan, Florida, Indiana, and Texas. As of December 31, 2009, 47 of our 136 Properties representing approximately 30% of developed sites, are located in Michigan; 19 Properties representing approximately 21% of developed sites, are located in Florida; 18 Properties representing approximately 14% of developed sites, are located in Indiana; and 17 Properties representing approximately 11% of developed sites are located in Texas. As a result of the geographic concentration of our Properties in Michigan, Florida, Indiana, and Texas, we are exposed to the risks of downturns in the local economy or other local real estate market conditions which could adversely affect occupancy rates, rental rates, and property values of properties in these markets.

The following factors, among others, may adversely affect the revenues generated by our communities:

·  
the national and local economic climate which may be adversely impacted by, among other factors, plant closings, and industry slowdowns;

·  
local real estate market conditions such as the oversupply of manufactured housing sites or a reduction in demand for manufactured housing sites in an area;

·  
the number of repossessed homes in a particular market;

·  
the lack of an established dealer network;

·  
the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;

·  
the perceptions by prospective tenants of the safety, convenience and attractiveness of our Properties and the neighborhoods where they are located;

·  
zoning or other regulatory restrictions;

·  
competition from other available manufactured housing communities and alternative forms of housing (such as apartment buildings and site-built single-family homes);

·  
our ability to provide adequate management, maintenance and insurance;

·  
increased operating costs, including insurance premiums, real estate taxes, and utilities; and

·  
the enactment of rent control laws or laws taxing the owners of manufactured homes.

 
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REAL ESTATE RISKS, CONTINUED

Our income would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each Property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the Property. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

Competition affects occupancy levels and rents which could adversely affect our revenues.

All of our Properties are located in developed areas that include other manufactured housing community properties. The number of competitive manufactured housing community properties in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our Properties or at any newly acquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers and directors. In addition, other forms of multi-family residential properties, such as private and federally funded or assisted multi-family housing projects and single-family housing, provide housing alternatives to potential tenants of manufactured housing communities.

Our ability to sell or lease manufactured homes may be affected by various factors, which may in turn adversely affect our profitability.

SHS operates in the manufactured home market offering manufactured home sales and leasing services to tenants and prospective tenants of our communities.  The market for the sale and lease of manufactured homes may be adversely affected by the following factors:

·  
downturns in economic conditions which adversely impact the housing market;

·  
an oversupply of, or a reduced demand for, manufactured homes;

·  
the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and

·  
an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales.

Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease in profitability.

Increases in taxes and regulatory compliance costs may reduce our revenue.

Costs resulting from changes in real estate laws, income taxes, service or other taxes, generally are not passed through to tenants under leases and may adversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which would adversely affect our business and results of operations.

 
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REAL ESTATE RISKS, CONTINUED

We may not be able to integrate or finance our development activities.

From time to time, we engage in the construction and development of new communities, and may continue to engage in the development and construction business in the future. Our development and construction business may be exposed to the following risks which are in addition to those risks associated with the ownership and operation of established manufactured housing communities:

·  
we may not be able to obtain financing with favorable terms for community development which may make us unable to proceed with the development;

·  
we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the community entirely if we are unable to obtain such permits or authorizations;

·  
we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities;

·  
we may be unable to complete construction and lease-up of a community on schedule resulting in increased debt service expense and construction costs;

·  
we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability;

·  
we may be unable to secure long-term financing on completion of development resulting in increased debt service and lower profitability; and

·  
occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and economic conditions, which may result in the community not being profitable.

If any of the above occurred, our business and results of operations could be adversely affected.

We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.

We acquire and intend to continue to acquire manufactured housing communities on a select basis. Our acquisition activities and their success are subject to the following risks:

·  
we may be unable to acquire a desired property because of competition from other well capitalized real estate investors, including both publicly traded real estate investment trusts and institutional investment funds;

·  
even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied;

·  
even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;

·  
we may be unable to finance acquisitions on favorable terms;

·  
acquired properties may fail to perform as expected;

·  
acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures; and

·  
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.

If any of the above occurred, our business and results of operations could be adversely affected.

 
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REAL ESTATE RISKS, CONTINUED

In addition, we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were to be asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.

Rent control legislation may harm our ability to increase rents.

State and local rent control laws in certain jurisdictions may limit our ability to increase rents and to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain Properties are located, and we may purchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted.

We may be subject to environmental liability.

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under or in such property. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent such property, to borrow using such property as collateral or to develop such property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.

All of the Properties have been subject to a Phase I or similar environmental audit (which involves general inspections without soil sampling or ground water analysis) completed by independent environmental consultants. These environmental audits have not revealed any significant environmental liability that would have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more Properties.

Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow.

We maintain comprehensive liability, fire, flood (where appropriate), extended coverage, and rental loss insurance on the Properties with policy specifications, limits, and deductibles which are customarily carried for similar properties. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots, or acts of war. In the event an uninsured loss occurs, we could lose both our investment in and anticipated profits and cash flow from the affected property. Any loss could adversely affect our ability to repay our debt.

 
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FINANCING AND INVESTMENT RISKS


We have a significant amount of debt. As of December 31, 2009, we had approximately $1.2 billion of total debt outstanding, consisting of approximately $1.1 billion in debt that is collateralized by mortgage liens on 106 of the Properties (the “Mortgage Debt”) and secured by collateralized receivables, $5.3 million is collateralized by liens on manufactured homes, and $138.0 million in unsecured debt. If we fail to meet our obligations under the Mortgage Debt, the lender would be entitled to foreclose on all or some of the Properties securing such debt which could have a material adverse effect on us and our ability to make expected distributions, and could threaten our continued viability.

We are subject to the risks normally associated with debt financing, including the following risks:

·  
our cash flow may be insufficient to meet required payments of principal and interest, or  require us to dedicate a substantial portion of our cash flow to pay our debt and the interest associated with our debt rather than to other areas of our business;

·  
our existing indebtedness may limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt;

·  
it may be more difficult for us to obtain additional financing in the future for our operations, working capital requirements, capital expenditures, debt service or other general requirements;

·  
we may be more vulnerable in the event of adverse economic and industry conditions or a downturn in our business;

·  
we may be placed at a competitive disadvantage compared to our competitors that have less debt; and

·  
we may not be able to refinance at all or on favorable terms, as our debt matures.

If any of the above risks occurred, our financial condition and results of operations could be materially adversely affected.

We may be able to incur substantially more debt, which would increase the risks associated with our substantial leverage.

Despite our current indebtedness levels, we may still be able to incur substantially more debt in the future. If new debt is added to our current debt levels, an even greater portion of our cash flow will be needed to satisfy our debt service obligations. As a result, the related risks that we now face could intensify and increase the risk of a default on our indebtedness.

Our equity investment in Origen Financial, Inc. may subject us to certain risks.

In October 2003, we purchased 5,000,000 shares of common stock of Origen Financial, Inc. (“Origen”). We own approximately 19% of Origen as of December 31, 2009, and we account for our investment using the equity method of accounting.  The carrying value of our investment in Origen was $1.6 million as of December 31, 2009.

In December 2008, Origen voluntarily delisted its common stock from the NASDAQ Global Market and deregistered its common stock under the Securities and Exchange Act of 1934. Currently, Origen is actively managing its residual interests in securitized loans, whole loans, and bond holdings which provide continuing cash flows for the organization.

We recorded equity losses from our investment in Origen of $1.7 million, $16.5 million, and $8.0 million for the years ended December 31, 2009, 2008, and 2007, respectively.  These equity losses included other than temporary charges of $9.6 million and $1.9 million for the years ended December 31, 2008 and 2007, respectively.

If Origen’s business and financial condition do not perform as expected, our investment in Origen may result in additional equity losses and additional other than temporary impairment charges, and our financial condition and results of operations could be materially adversely affected.


 
11

 

FINANCING AND INVESTMENT RISKS, CONTINUED

The financial condition and solvency of our borrowers may adversely affect our installment and other loans.

As of December 31, 2009, we had outstanding approximately $64.8 million, net of reserves, in installment loans to owners of manufactured homes. These installment loans are collateralized by the manufactured homes. We may invest in additional mortgages and installment loans in the future. By virtue of our investment in the mortgages and the loans, we are subject to the following risks of such investment:

·  
the borrowers may not be able to make debt service payments or pay principal when due;

·  
the value of property securing the mortgages and installment notes receivable may be less than the amounts owed; and

·  
interest rates payable on the mortgages and installment notes receivable may be lower than our cost of funds.

If any of the above occurred, our business and results of operations could be adversely affected.

TAX RISKS

We may suffer adverse tax consequences and be unable to attract capital if we fail to qualify as a REIT.

We believe that since our taxable year ended December 31, 1994, we have been organized and operated, and intend to continue to operate, so as to qualify for taxation as a REIT under the Code. Although we believe that we have been and will continue to be organized and have operated and will continue to operate so as to qualify for taxation as a REIT, we cannot be assured that we have been or will continue to be organized or operated in a manner to so qualify or remain so qualified. Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which require us to continually to monitor our tax status.

If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. This treatment would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability to us for the years involved. In addition, distributions to stockholders would no longer be required to be made. Even if we qualify for and maintain our REIT status, we will be subject to certain federal, state and local taxes on our property and certain of our operations.

 
12

 

TAX RISKS, CONTINUED

We intend for the Operating Partnership to qualify as a partnership, but we cannot guarantee that it will qualify.

We believe that the Operating Partnership has been organized as a partnership and will qualify for treatment as such under the Code. However, if the Operating Partnership is deemed to be a “publicly traded partnership,” it will be treated as a corporation instead of a partnership for federal income tax purposes unless at least 90% of its income is qualifying income as defined in the Code. The income requirements applicable to REITs and the definition of “qualifying income” for purposes of this 90% test are similar in most respects. Qualifying income for the 90% test generally includes passive income, such as specified types of real property rents, dividends and interest. We believe that the Operating Partnership would meet this 90% test, but we cannot guarantee that it would. If the Operating Partnership were to be taxed as a corporation, it would incur substantial tax liabilities, we would fail to qualify as a REIT for federal income tax purposes, and our ability to raise additional capital could be significantly impaired.

Our ability to accumulate cash may be restricted due to certain REIT distribution requirements.

In order to qualify as a REIT, we must distribute to our stockholders at least 90% of our REIT taxable income (calculated without any deduction for dividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100% of our REIT taxable income, including capital gains. As a result of the distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, these distributions could significantly reduce the cash available to us in subsequent periods to fund our operations and future growth.
BUSINESS RISKS

Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests.

Ownership of Origen. In the 2003 recapitalization of Origen Financial, Inc., (“Origen”), we purchased 5,000,000 shares of Origen common stock for $50.0 million and Shiffman Origen LLC (which is owned by the Milton M. Shiffman Spouse’s Marital Trust, Gary A. Shiffman (our Chief Executive Officer), and members of Mr. Shiffman’s family) purchased 1,025,000 shares of Origen common stock for approximately $10.3 million. Gary A. Shiffman is a member of the board of directors of Origen and Arthur A. Weiss, a director of the Company, is a trustee of the Milton M. Shiffman Spouse’s Marital Trust.  Accordingly, in all transactions involving Origen, Mr. Shiffman and/or Mr. Weiss may have a conflict of interest with respect to their respective obligations as an officer and/or director of the Company.

Legal Counsel During 2009, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation (“JRH&W”) acted as our general counsel and represented us in various matters. Arthur A. Weiss, one of our directors, is the Chairman of the Board of Directors and a shareholder of such firm. We incurred legal fees and expenses of approximately $1.1 million in the year ended December 31, 2009 and approximately $1.0 million in the years ended December 31, 2008 and 2007.

Lease of Executive Offices.  Gary A. Shiffman, together with certain family members, indirectly owns a 21 percent equity interest in American Center LLC, the entity from which we lease office space for our principal executive offices. Arthur A. Weiss owns a 0.75 percent indirect interest in American Center LLC. This lease was for an initial term of five years, beginning May 1, 2003, with the right to extend the lease for an additional five year term. In December 2007, we exercised our option to extend our lease for our executive offices. The extension was for a period of five years commencing on May 1, 2008. In August 2008, we modified our lease agreement to  lease approximately 5,300 additional square feet, for a total of approximately 36,700 rentable square feet, and extend the term of the lease until August 31, 2015, with an option to renew for an additional five years. The annual base rent under the current lease is $18.81 per square foot (gross) and will remain this amount through August 31, 2015.  Mr. Shiffman and Mr. Weiss may have a conflict of interest with respect to their obligations as our officer and/or director and their ownership interest in American Center LLC.

Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of 24 properties (four of which have been sold) from partnerships previously affiliated with him (the “Sun Partnerships”). Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those of us and our public stockholders on the sale of any of the Sun Partnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties.

 
13

 


BUSINESS RISKS, CONTINUED

We rely on key management.

We are dependent on the efforts of our executive officers, particularly Gary A. Shiffman, John B. McLaren, Karen J. Dearing and Jonathan M. Colman (together, the “Senior Officers”). The loss of services of one or more of our executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtaining any “key-man” life insurance on the Senior Officers.

Certain provisions in our governing documents may make it difficult for a third-party to acquire us.

9.8% Ownership Limit. In order to qualify and maintain our qualification as a REIT, not more than 50% of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8% of our outstanding shares of common stock by any single stockholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REIT under the Code. Such restrictions in our charter do not apply to Gary A. Shiffman, the Milton M. Shiffman Spouse’s Marital Trust and the Estate of Robert B. Bayer.

The 9.8% ownership limit, as well as our ability to issue additional shares of common stock or shares of other stock (which may have rights and preferences over the common stock), may discourage a change of control of the Company and may also: (1) deter tender offers for the common stock, which offers may be advantageous to stockholders; and (2) limit the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8% of our outstanding shares or otherwise effect a change of control of the Company.

Staggered Board. Our Board of Directors has been divided into three classes of directors. The term of one class will expire each year. Directors for each class will be chosen for a three-year term upon the expiration of such class’s term, and the directors in the other two classes will continue in office. The staggered terms for directors may affect the stockholders’ ability to change control of the Company even if a change in control were in the stockholders’ interest.

Preferred Stock. Our charter authorizes the Board of Directors to issue up to 10,000,000 shares of preferred stock and to establish the preferences and rights (including the right to vote and the right to convert into shares of common stock) of any shares issued. The power to issue preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the stockholders’ interest.

Rights Plan. We adopted a stockholders’ rights plan in 2008 that provides our stockholders (other than a stockholder attempting to acquire a 15% or greater interest in us) with the right to purchase our stock at a discount in the event any person attempts to acquire a 15% or greater interest in us. Because this plan could make it more expensive for a person to acquire a controlling interest in us, it could have the effect of delaying or preventing a change in control even if a change in control were in the stockholders’ interest.

Changes in our investment and financing policies may be made without stockholder approval.

Our investment and financing policies, and our policies with respect to certain other activities, including our growth, debt, capitalization, distributions, REIT status, and operating policies, are determined by our Board of Directors. Although the Board of Directors has no present intention to do so, these policies may be amended or revised from time to time at the discretion of the Board of Directors without notice to or a vote of our stockholders. Accordingly, stockholders may not have control over changes in our policies and changes in our policies may not fully serve the interests of all stockholders.

Substantial sales of our common stock could cause our stock price to fall.

Sales of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for shares. As of December 31, 2009, up to approximately 2.7 million shares of our common stock may be issued in the future to the limited partners of the Operating Partnership in exchange for their common limited partnership interests (“Common OP Units”) and preferred limited partnership interests (“Preferred OP Units”). These Preferred OP Units are convertible into common shares at a price of $68 per share. The limited partners may sell such shares pursuant to registration rights or an available exemption from registration. As of December 31, 2009, options to purchase 151,961 shares of our common stock were outstanding under our 1993 Employee Stock Option Plan, our 1993 Non-Employee Director Stock Option Plan, our 2004 Non-Employee Director Option Plan and our Long-Term Incentive Plan.  In addition, we have the authority to issue restricted stock awards or options to purchase up to an additional 870,000 shares of our common stock pursuant to our 2009 Equity Incentive Plan.  No prediction can be made regarding the effect that future sales of shares of our common stock or our other securities will have on the market price of shares.

 
14

 


BUSINESS RISKS, CONTINUED

An increase in interest rates may have an adverse effect on the price of our common stock.

One of the factors that may influence the price of our common stock in the public market will be the annual distributions to stockholders relative to the prevailing market price of the common stock. An increase in market interest rates may tend to make the common stock less attractive relative to other investments, which could adversely affect the market price of our common stock.

The current volatility in economic conditions and the financial markets may adversely affect our industry, business and financial performance.

The capital and credit markets have experienced unusual volatility and disruption during the last two years.  The economic uncertainty has resulted in substantial fluctuations of the market prices for publicly traded securities and also resulted in decreased availability of financing for many businesses. Although steps have been taken by several U.S. government agencies to stabilize the economy, it is not certain at this time what impact, if any, that these financial market events or these government agency actions might have on us and our business and cannot be estimated at this time. The other risk factors presented in this Form 10-K discuss some of the principal risks inherent in our business, including liquidity risks, operational risks, and credit risks, among others. The turbulence in financial markets has accentuated each of these risks and magnified their potential effect on us. At the same time, there appears to be a general weakening of the U.S. economy and the economies of many other countries. If these economic developments continue to worsen, there could be an adverse impact on our access to capital, stock price and our operating results.

ITEM 1B.   UNRESOLVED STAFF COMMENTS
 
 
None.

ITEM 2.      PROPERTIES

As of December 31, 2009, the Properties consisted of 124 manufactured housing communities, 4 recreational vehicle communities, and 8 properties containing both manufactured housing and recreational vehicle sites located in 18 states. As of December 31, 2009, the Properties contained an aggregate of 47,572 developed sites comprised of 42,294 developed manufactured home sites, 3,176 permanent recreational vehicle sites, 2,102 seasonal recreational vehicle sites, and approximately 6,000 additional manufactured home sites suitable for development.  Most of the Properties include amenities oriented toward family and retirement living. Of the 136 Properties, 65 have more than 300 developed manufactured home sites; with the largest having 999 developed manufactured home sites.

As of December 31, 2009, the Properties had an occupancy rate of 83.4 percent excluding seasonal recreational vehicle sites. Since January 1, 2009, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of approximately 2.8 percent and an average annual turnover of residents (where the resident-owned home is sold and remains within the community, typically without interruption of rental income) of approximately 4.9 percent. The average renewal rate for residents in our Rental Program was 58.3 percent for the year ended December 31, 2009.

We believe that our Properties’ high amenity levels contribute to low turnover and generally high occupancy rates. All of the Properties provide residents with attractive amenities with most offering a clubhouse, a swimming pool, and laundry facilities. Many Properties offer additional amenities such as sauna/whirlpool spas, tennis, shuffleboard and basketball courts and/or exercise rooms.

We have concentrated our communities within certain geographic areas in order to achieve economies of scale in management and operation. The Properties are principally concentrated in the midwestern, southern, and southeastern United States. We believe that geographic diversification helps to insulate the portfolio from regional economic influences.

 
15

 

The following tables set forth certain information relating to the properties owned as of December 31, 2009.  The occupancy percentage includes manufactured home sites (“MH Sites”) and permanent recreational vehicle sites (“RV Sites”), and excludes seasonal RV sites.

Property
 
City
 
State
 
MH and
Permanent RV
Sites as of
12/31/09
 
Seasonal RV
Sites as of
12/31/09
 
Occupancy
as of
12/31/09
 
Occupancy
as of
12/31/08
 
Occupancy
as of
12/31/07
MIDWEST
                                 
Michigan
                                 
Academy/West Pointe (1)
 
Canton
 
MI
 
441
 
-
 
88%
   
88%
   
91%
 
Allendale Meadows Mobile Village
 
Allendale
 
MI
 
352
 
-
 
74%
   
73%
   
78%
 
Alpine Meadows Mobile Village
 
Grand Rapids
 
MI
 
403
 
-
 
82%
   
84%
   
85%
 
Bedford Hills Mobile Village
 
Battle Creek
 
MI
 
339
 
-
 
76%
   
74%
   
78%
 
Brentwood Mobile Village
 
Kentwood
 
MI
 
195
 
-
 
94%
   
92%
   
92%
 
Byron Center Mobile Village
 
Byron Center
 
MI
 
143
 
-
 
92%
   
93%
   
88%
 
Candlewick Court
 
Owosso
 
MI
 
211
 
-
 
76%
   
84%
   
85%
 
College Park Estates
 
Canton
 
MI
 
230
 
-
 
68%
   
73%
   
73%
 
Continental Estates
 
Davison
 
MI
 
385
 
-
 
37%
   
37%
   
43%
 
Continental North
 
Davison
 
MI
 
474
 
-
 
53%
   
54%
   
54%
 
Country Acres Mobile Village
 
Cadillac
 
MI
 
182
 
-
 
85%
   
86%
   
90%
 
Country Meadows Mobile Village
 
Flat Rock
 
MI
 
577
 
-
 
90%
   
91%
   
89%
 
Countryside Village
 
Perry
 
MI
 
359
 
-
 
70%
   
71%
   
80%
 
Creekwood Meadows
 
Burton
 
MI
 
336
 
-
 
59%
   
61%
   
64%
 
Cutler Estates Mobile Village
 
Grand Rapids
 
MI
 
259
 
-
 
90%
   
84%
   
84%
 
Davison East
 
Davison
 
MI
 
190
 
-
 
45%
   
45%
   
52%
 
Falcon Pointe (2)
 
East Lansing
 
MI
 
142
 
-
 
17%
(2)
 
18%
(2)
 
18%
(2)
Fisherman’s Cove
 
Flint
 
MI
 
162
 
-
 
85%
   
80%
   
83%
 
Grand Mobile Estates
 
Grand Rapids
 
MI
 
230
 
-
 
72%
   
75%
   
77%
 
Hamlin (3)
 
Webberville
 
MI
 
209
 
-
 
72%
(3)
 
74%
(3)
 
75%
(3)
Holly Village/Hawaiian Gardens (1)
 
Holly
 
MI
 
425
 
-
 
97%
   
97%
   
97%
 
Hunters Glen (2)
 
Wayland
 
MI
 
280
 
-
 
53%
(2)
 
48%
(2)
 
46%
(2)
Kensington Meadows
 
Lansing
 
MI
 
290
 
-
 
81%
   
81%
   
80%
 
Kings Court Mobile Village
 
Traverse City
 
MI
 
639
 
-
 
98%
   
98%
   
97%
 
Knollwood Estates
 
Allendale
 
MI
 
161
 
-
 
79%
   
87%
   
88%
 
Lafayette Place
 
Metro Detroit
 
MI
 
254
 
-
 
65%
   
64%
   
68%
 
Lakeview
 
Ypsilanti
 
MI
 
392
 
-
 
91%
   
89%
   
91%
 
Lincoln Estates
 
Holland
 
MI
 
191
 
-
 
88%
   
94%
   
94%
 
Meadow Lake Estates
 
White Lake
 
MI
 
425
 
-
 
81%
   
81%
   
87%
 
Meadowbrook Estates
 
Monroe
 
MI
 
453
 
-
 
92%
   
94%
   
94%
 
Presidential Estates Mobile Village
 
Hudsonville
 
MI
 
364
 
-
 
84%
   
80%
   
83%
 
Richmond Place
 
Metro Detroit
 
MI
 
117
 
-
 
82%
   
77%
   
84%
 
River Haven Village
 
Grand Haven
 
MI
 
721
 
-
 
58%
   
59%
   
63%
 
Scio Farms Estates
 
Ann Arbor
 
MI
 
913
 
-
 
95%
   
96%
   
93%
 
Sheffield Estates
 
Auburn Hills
 
MI
 
228
 
-
 
99%
   
99%
   
99%
 
Sherman Oaks
 
Jackson
 
MI
 
366
 
-
 
72%
   
74%
   
77%
 
St. Clair Place
 
Metro Detroit
 
MI
 
100
 
-
 
77%
   
76%
   
80%
 
Sunset Ridge (2)
 
Portland Township
 
MI
 
190
 
-
 
92%
(2)
 
93%
(2)
 
87%
(2)
Timberline Estates
 
Grand Rapids
 
MI
 
296
 
-
 
79%
   
79%
   
80%
 
Town & Country Mobile Village
 
Traverse City
 
MI
 
192
 
-
 
98%
   
100%
   
99%
 
Village Trails (3)
 
Howard City
 
MI
 
100
 
-
 
82%
(3)
 
79%
(3)
 
76%
(3)
White Lake Mobile Home Village
 
White Lake
 
MI
 
315
 
-
 
98%
   
97%
   
95%
 
White Oak Estates
 
Mt. Morris
 
MI
 
480
 
-
 
70%
   
71%
   
74%
 
Windham Hills Estates (3)
 
Jackson
 
MI
 
402
 
-
 
62%
(3)
 
66%
(3)
 
69%
(3)
Woodhaven Place
 
Metro Detroit
 
MI
 
220
 
-
 
97%
   
95%
   
95%
 
Michigan Total
         
14,333
 
-
 
78%
   
79%
   
80%
 


 
16

 


Property
 
City
 
State
 
MH and
Permanent RV
Sites as of
12/31/09
 
Seasonal RV
Sites as of
12/31/09
 
Occupancy
as of
12/31/09
 
Occupancy
as of
12/31/08
 
Occupancy
as of
12/31/07
MIDWEST
                                 
Indiana
                                 
Brookside Mobile Home Village
 
Goshen
 
IN
 
570
 
-
 
61%
   
59%
   
66%
 
Carrington Pointe (3)
 
Ft. Wayne
 
IN
 
320
 
-
 
78%
(3)
 
76%
(3)
 
72%
(3)
Clear Water Mobile Village
 
South Bend
 
IN
 
227
 
-
 
74%
   
72%
   
72%
 
Cobus Green Mobile Home Park
 
Elkhart
 
IN
 
386
 
-
 
60%
   
62%
   
66%
 
Deerfield Run (3)
 
Anderson
 
IN
 
175
 
-
 
68%
(3)
 
65%
(3)
 
67%
(3)
Four Seasons
 
Elkhart
 
IN
 
218
 
-
 
79%
   
83%
   
92%
 
Holiday Mobile Home Village
 
Elkhart
 
IN
 
326
 
-
 
71%
   
79%
   
85%
 
Liberty Farms
 
Valparaiso
 
IN
 
220
 
-
 
99%
   
98%
   
100%
 
Maplewood
 
Lawrence
 
IN
 
207
 
-
 
74%
   
78%
   
81%
 
Meadows
 
Nappanee
 
IN
 
330
 
-
 
51%
   
50%
   
52%
 
Pebble Creek (2) (4)
 
Greenwood
 
IN
 
257
 
-
 
88%
(2)
 
88%
(2)
 
85%
(2)
Pine Hills
 
Middlebury
 
IN
 
129
 
-
 
88%
   
78%
   
87%
 
Roxbury Park
 
Goshen
 
IN
 
398
 
-
 
85%
   
86%
   
87%
 
Timberbrook
 
Bristol
 
IN
 
567
 
-
 
56%
   
53%
   
58%
 
Valley Brook
 
Indianapolis
 
IN
 
798
 
-
 
54%
   
54%
   
59%
 
West Glen Village
 
Indianapolis
 
IN
 
552
 
-
 
70%
   
74%
   
78%
 
Woodlake Estates
 
Ft. Wayne
 
IN
 
338
 
-
 
47%
   
45%
   
48%
 
Woods Edge Mobile Village (3)
 
West Lafayette
 
IN
 
598
 
-
 
54%
(3)
 
54%
(3)
 
53%
(3)
Indiana Total
         
6,616
 
-
 
66%
   
66%
   
69%
 
                                   
Ohio
                                 
Apple Creek Manufactured Home Community and Self Storage
 
Amelia
 
OH
 
176
 
-
 
92%
   
86%
   
84%
 
Byrne Hill Village
 
Toledo
 
OH
 
236
 
-
 
86%
   
86%
   
90%
 
Catalina
 
Middletown
 
OH
 
462
 
-
 
61%
   
63%
   
65%
 
East Fork (2) (4)
 
Batavia
 
OH
 
215
 
-
 
93%
(2)
 
89%
(2)
 
89%
(2)
Oakwood Village
 
Miamisburg
 
OH
 
511
 
-
 
84%
   
84%
   
83%
 
Orchard Lake
 
Milford
 
OH
 
147
 
-
 
95%
   
97%
   
99%
 
Westbrook Senior Village
 
Toledo
 
OH
 
112
 
-
 
99%
   
100%
   
99%
 
Westbrook Village
 
Toledo
 
OH
 
344
 
-
 
95%
   
97%
   
96%
 
Willowbrook Place
 
Toledo
 
OH
 
266
 
-
 
94%
   
94%
   
95%
 
Woodside Terrace
 
Holland
 
OH
 
439
 
-
 
84%
   
82%
   
84%
 
Worthington Arms
 
Lewis Center
 
OH
 
224
 
-
 
97%
   
95%
   
96%
 
Ohio Total
         
3,132
 
-
 
86%
   
85%
   
86%
 
                                   
SOUTH
                                 
Texas
                                 
Boulder Ridge (2)
 
Pflugerville
 
TX
 
527
 
-
 
73%
(2)
 
69%
(2)
 
65%
(2)
Branch Creek Estates
 
Austin
 
TX
 
392
 
-
 
99%
   
100%
   
98%
 
Casa del Valle
 
Alamo
 
TX
 
204
 
195
 
100%
(5)
 
99%
(5)
 
100%
(5)
Chisholm Point Estates
 
Pflugerville
 
TX
 
416
 
-
 
95%
   
95%
   
89%
 
Comal Farms (2) (4)
 
New Braunfels
 
TX
 
351
 
-
 
80%
(2)
 
73%
(2)
 
67%
(2)
Kenwood RV and Mobile Home Plaza
 
LaFeria
 
TX
 
91
 
189
 
99%
(5)
 
100%
(5)
 
100%
(5)
Oak Crest (2)
 
Austin
 
TX
 
335
 
-
 
74%
(2)
 
70%
(2)
 
61%
(2)
Pecan Branch (2)
 
Georgetown
 
TX
 
69
 
-
 
93%
(2)
 
84%
(2)
 
72%
(2)
Pine Trace (2)
 
Houston
 
TX
 
406
 
-
 
81%
(2)
 
71%
(2)
 
68%
(2)
River Ranch (2) (4)
 
Austin
 
TX
 
121
 
-
 
99%
(2)
 
96%
(2)
 
88%
(2)
River Ridge (2)
 
Austin
 
TX
 
337
 
-
 
96%
(2)
 
94%
(2)
 
82%
(2)
Saddle Brook (2)
 
Austin
 
TX
 
255
 
-
 
75%
(2)
 
63%
(2)
 
61%
(2)
Snow to Sun
 
Weslaco
 
TX
 
292
 
187
 
100%
(5)
 
100%
(5)
 
100%
(5)
Stonebridge (2) (4)
 
San Antonio
 
TX
 
338
 
-
 
96%
(2)
 
88%
(2)
 
84%
(2)
Summit Ridge (2) (4)
 
Converse
 
TX
 
250
 
-
 
100%
(2)
 
95%
(2)
 
87%
(2)
Sunset Ridge (2) (4)
 
Kyle
 
TX
 
170
 
-
 
96%
(2)
 
98%
(2)
 
92%
(2)
Woodlake Trails (2) (4)
 
San Antonio
 
TX
 
134
 
-
 
96%
(2)
 
96%
(2)
 
94%
(2)
Texas Total
         
4,688
 
571
 
89%
   
85%
   
80%
 

 
17

 


Property
 
City
 
State
 
MH and
Permanent RV
Sites as of
12/31/09
 
Seasonal RV
Sites as of
12/31/09
 
Occupancy
as of
12/31/09
 
Occupancy
as of
12/31/08
 
Occupancy
as of
12/31/07
SOUTHEAST
                                 
Florida
                                 
Arbor Terrace RV Park
 
Bradenton
 
FL
 
194
 
201
 
98%
(5)
 
97%
(5)
 
100%
(5)
Ariana Village Mobile Home Park
 
Lakeland
 
FL
 
208
 
-
 
91%
   
92%
   
91%
 
Buttonwood Bay
 
Sebring
 
FL
 
789
 
151
 
100%
(5)
 
100%
(5)
 
100%
(5)
Gold Coaster
 
Homestead
 
FL
 
428
 
117
 
99%
(5)
 
99%
(5)
 
99%
(5)
Groves RV Resort
 
Ft. Myers
 
FL
 
148
 
136
 
99%
(5)
 
98%
(5)
 
97%
(5)
Holly Forest Estates
 
Holly Hill
 
FL
 
402
 
-
 
100%
   
100%
   
100%
 
Indian Creek Park
 
Ft. Myers Beach
 
FL
 
1,342
 
115
 
99%
(5)
 
99%
(5)
 
99%
(5)
Island Lakes
 
Merritt Island
 
FL
 
301
 
-
 
100%
   
100%
   
100%
 
Kings Lake
 
Debary
 
FL
 
245
 
-
 
100%
   
99%
   
100%
 
Lake Juliana Landings
 
Auburndale
 
FL
 
274
 
-
 
98%
   
98%
   
96%
 
Lake San Marino RV Park
 
Naples
 
FL
 
205
 
204
 
100%
(5)
 
100%
(5)
 
100%
(5)
Meadowbrook Village
 
Tampa
 
FL
 
257
 
-
 
99%
   
100%
   
99%
 
Orange Tree Village
 
Orange City
 
FL
 
246
 
-
 
99%
   
100%
   
100%
 
Royal Country
 
Miami
 
FL
 
864
 
-
 
100%
   
100%
   
100%
 
Saddle Oak Club
 
Ocala
 
FL
 
376
 
-
 
100%
   
100%
   
100%
 
Siesta Bay RV Park
 
Ft. Myers Beach
 
FL
 
737
 
60
 
100%
(5)
 
100%
(5)
 
99%
(5)
Silver Star Mobile Village
 
Orlando
 
FL
 
406
 
-
 
99%
   
99%
   
99%
 
Tampa East
 
Tampa
 
FL
 
193
 
507
 
99%
(5)
 
99%
(5)
 
100%
(5)
Water Oak Country Club Estates
 
Lady Lake
 
FL
 
999
 
-
 
99%
   
99%
   
100%
 
Florida Total
         
8,614
 
1,491
 
99%
   
99%
   
99%
 


 
18

 


Property
 
City
 
State
 
MH and
Permanent RV
Sites as of
12/31/09
 
Seasonal RV
Sites as of
12/31/09
 
Occupancy
as of
12/31/09
 
Occupancy
as of
12/31/08
 
Occupancy
as of
12/31/07
OTHER
                                 
Autumn Ridge
 
Ankeny
 
IA
 
413
 
-
 
99%
   
99%
   
99%
 
Bell Crossing (3)
 
Clarksville
 
TN
 
239
 
-
 
64%
(3)
 
60%
(3)
 
52%
(3)
Candlelight Village
 
Chicago Heights
 
IL
 
309
 
-
 
88%
   
92%
   
91%
 
Cave Creek (2)
 
Evans
 
CO
 
289
 
-
 
74%
(2)
 
69%
(2)
 
67%
(2)
Countryside Atlanta (6)
 
Lawrenceville
 
GA
 
271
 
-
 
99%
(6)
 
99%
   
97%
 
Countryside Gwinnett
 
Buford
 
GA
 
331
 
-
 
91%
   
96%
   
93%
 
Countryside Lake Lanier
 
Buford
 
GA
 
548
 
-
 
82%
   
83%
   
83%
 
Creekside (2) (4)
 
Reidsville
 
NC
 
45
 
-
 
64%
(2)
 
67%
(2)
 
63%
(2)
Desert View Village (2)
 
West Wendover
 
NV
 
93
 
-
 
49%
(2)
 
48%
(2)
 
49%
(2)
Eagle Crest (2)
 
Firestone
 
CO
 
317
 
-
 
97%
(2)
 
86%
(2)
 
80%
(2)
Edwardsville
 
Edwardsville
 
KS
 
634
 
-
 
66%
   
68%
   
68%
 
Forest Meadows
 
Philomath
 
OR
 
75
 
-
 
100%
   
99%
   
99%
 
Glen Laurel (2) (4)
 
Concord
 
NC
 
260
 
-
 
57%
(2)
 
47%
(2)
 
44%
(2)
High Pointe
 
Frederica
 
DE
 
411
 
-
 
92%
   
93%
   
97%