SUN COMMUNITIES INC

PART I - FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

(In millions, except for per share amounts)

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except for per share amounts) (Unaudited)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Sun Communities, Inc., and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership (the "Operating Partnership"), Sun Home Services, Inc. ("SHS"), Safe Harbor Marinas, LLC ("Safe Harbor") and the entities through which we operate our business in the United Kingdom (collectively, "Park Holidays") are referred to herein as the "Company," "SUI," "us," "we," or "our."

We follow accounting standards set by the Financial Accounting Standards Board ("FASB"). FASB establishes accounting principles generally accepted in the United States of America ("GAAP"), which we follow to ensure that we consistently report our financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification ("ASC"). These unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information and in accordance with GAAP. We present interim disclosures and certain information and footnote disclosures as required by SEC rules and regulations. Accordingly, the unaudited Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited Consolidated Financial Statements reflect, in the opinion of management, all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of the interim financial statements. All significant intercompany transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation. There was no impact to prior period net income for any of the reclassifications.

The results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 28, 2024 (our "2023 Annual Report"). These statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our 2023 Annual Report.

Significant Accounting Policies: Investment Property

Investment property is recorded at cost, less accumulated depreciation.

Impairment of long-lived assets - we review the carrying value of long-lived assets to be held for use for impairment quarterly or whenever events or changes in circumstances indicate a possible impairment. Future events could occur which would cause us to conclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to change the estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements. Our primary indicator for potential impairment is based on NOI trends period over period. Circumstances that may prompt a test of recoverability may include a significant decrease in the anticipated market price, an adverse change to the extent or manner in which an asset may be used or in its physical condition or other events that may significantly change the value of the long-lived asset. An impairment loss is recognized when a long-lived asset's carrying value is not recoverable and exceeds estimated fair value.

We estimate the fair value of our long-lived assets based on discounted future cash flows and any potential disposition proceeds for a given asset. Forecasting cash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development and operating expenses during the holding period, as well as capitalization rates. Management uses its best judgment when developing these estimates and assumptions.

Reportable Segments

During the three months ended March 31, 2024, we expanded our organizational structure from three segments, which consisted of (i) manufactured home ("MH") communities, (ii) recreational vehicle ("RV") communities, and (iii) Marinas, to afour-segment structure that now includes (iv) communities in the United Kingdom ("UK"). The new structure reflects how the chief operating decision maker manages the business, makes operating decisions, allocates resources and evaluates operating performance. Beginning with the three months ended March 31, 2024, we are reporting our financial results consistent with our newly realigned operating segments and have recast prior period amounts to conform to the way we internally manage our business and monitor segment performance. Certain reclassifications have been made to the prior period financial statements and related notes in order to conform to the current period presentation. There was no impact to prior period net income, stockholders' equity or cash flows for any of the reclassifications.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restatement of Previously Issued Financial Statements

As disclosed in our 2023 Annual Report, we restated the unaudited financial information as of and for the three months ended March 31, 2023, the three and six months ended June 30, 2023, and the three and nine months ended September 30, 2023 (collectively, the "2023 Interim Financial Statements"). Accordingly, certain prior period balances within our consolidated financial statements and the accompanying footnotes have been restated, where applicable.

In 2022, we acquired a portfolio of holiday park properties located in the United Kingdom, which we refer to as our Park Holidays business, classified within our UK reporting segment. As disclosed in our Current Report on Form 8-K filed with the SEC on February 20, 2024, during the course of management's 2023 year-end procedures, we reviewed the controls relating to the valuation of the Park Holidays business and the associated goodwill at March 31, 2023, June 30, 2023 and September 30, 2023. In connection with that review, we concluded that there were triggering events relevant to the valuation of the Park Holidays business, including reduced financial projections and increases in interest rates, that should have been taken into account when preparing the 2023 Interim Financial Statements. Management undertook a full review of the valuations and determined that at each of March 31, 2023, June 30, 2023 and September 30, 2023, we should have recognized non-cash impairments to goodwill for the Park Holidays business.

For the three months ended March 31, 2023, non-cash goodwill impairment increased Net loss on our Consolidated Statements of Operations by $15.4 million.

2. Revenue

Our revenue consists of real property revenue at our MH, RV, Marina and UK properties, revenue from home sales, revenue from service, retail, dining and entertainment, interest income, and brokerage commissions and other revenue.

The following table disaggregates our revenue by major source and segment (in millions):

(1)Recast to reflect segment changes.

The majority of our revenue is derived from site and home leases, and wet slip and dry storage space leases that are accounted for pursuant to ASC 842, "Leases." We account for all revenue from contracts with customers following ASC 606, "Revenue from Contracts with Customers," except for those that are within the scope of other topics in the FASB ASC. For additional information, refer to Note 1, "Significant Accounting Policies" in our 2023 Annual Report.

3. Real Estate Acquisitions and Dispositions

2024 Acquisitions

We did not acquire any operating properties during the three months ended March 31, 2024. During the same period, we entered into a ground lease to supportone marina with eight wet slips and dry storage spaces.

2024 Development and Expansion Activities

During the three months ended March 31, 2024, we acquiredtwo land parcels located in the United States ("U.S.") for an aggregate purchase price of $12.9 million. In conjunction with one of the land parcel acquisitions, we issued 4,452 common OP units valued at $0.6 million.

During the three months ended March 31, 2024, we acquiredtwo buildings related to our marinas located in the U.S. for an aggregate purchase price of $13.7 million.

2024 Dispositions

In February 2024, we soldtwo MH communities located in Arizona and Florida with 533 developed sites for total cash consideration of $51.7 million. The gain from the sale of the properties was $6.2 million and was recorded in Gain / (loss) on dispositions of properties on our Consolidated Statements of Operations.

2023 Acquisitions

For the year ended December 31, 2023, we acquired the following properties:

(1)Property names are subject to changes subsequent to acquisition.

The following table summarizes the amounts of assets acquired, net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in 2023 (in millions):

(1)Refer to Note 10, "Equity and Temporary Equity," for additional detail.

(2)Property names are subject to changes subsequent to acquisition.

(3)In conjunction with the acquisition, the Operating Partnership issued 31,289 common OP units valued at $4.4 million.

(4)In conjunction with the acquisition, the Operating Partnership issued one million Series K preferred OP units valued at $100.6 million.

During the year ended December 31, 2023, we incurred and capitalized $3.1 million of transaction costs, which have been allocated among the various fixed asset categories for purchases that meet the asset acquisition criteria. During the year ended December 31, 2023, we recognized $3.0 million of business combination expenses in connection with transactions completed during 2022.

2023 Development and Expansion Activities

During the year ended December 31, 2023, we acquired four land parcels located in the U.S. andone land parcel in the United Kingdom for an aggregate purchase price of $35.8 million.

2023 Dispositions

In December 2023, as part of a transaction with our joint venture partners in Sun NG RV Resorts, Sun NG Whitewater RV Resorts LLC, Sun NG Beaver Brook LLC andfour standalone affiliates (collectively, "Sun NG"), we disposed of our majority equity interest owned inthree consolidated joint venture RV properties with 955 developed sites.

In August 2023, we soldone MH community located in Maine with 155 developed sites at its net carrying value for cash consideration of $6.8 million. The property was previously classified as held for sale during the three months ended June 30, 2023, with its net carrying value of $13.1 million written down by $6.3 million within Asset impairments on our Consolidated Statements of Operations, to a fair value less cost to sell of $6.8 million.

In February 2023, we soldtwo parcels of land in the United Kingdom for total consideration of $111.5 million. The consideration consisted of $108.8 million in the form of an operator note receivable that was added to an existing facility with a weighted average interest rate of 11.9% per annum, due May 31, 2023 and subsequently extended to July 31, 2023 as part of the operator's total facility. On the date of sale, the carrying value of the note receivable approximated its fair value due to its short term nature. The dispositions resulted in a loss on sale totaling $2.2 million during the year ended December 31, 2023, net of the release of foreign currency translation losses from Accumulated other comprehensive income ("AOCI") of $11.9 million. The total loss on sale was recorded in Gain / (loss) on dispositions of properties on the Consolidated Statements of Operations. As of December 31, 2023, we have reacquired thesetwo parcels of land at fair value as part of the settlement of the related note receivable, withno remeasurement gain or loss recognized. Refer to Note 4, "Notes and Other Receivables," for additional information on the settlement of the notes receivable.

Real Estate Held For Sale - Changes to a Plan of Sale

We periodically classify real estate as "held for sale" after an active program to sell an asset has commenced and when the sale is probable. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded.

In February 2023, the criteria was met to classify Sandy Bay, an operating MH community in the United Kingdom, with 730 developed sites, as held for sale. Previously, this property had been under contract. At December 31, 2023, the sale contract was no longer in effect, and due to an unexpected change in circumstance related to the counterparty, we reclassified the property as held for use. In accordance with ASC Topic 360, "Property, Plant, and Equipment," we recorded the property at the lower of the carrying amount before the asset was held for sale, adjusted for depreciation and amortization expense that would have been recognized had the asset been continually classified as held for use, and the fair value at the time of the reclassification. During the three months ended December 31, 2023, we recorded depreciation and amortization expense of $1.3 million in conjunction with the reclassification of the property. The following assets and liabilities, which were previously classified as held for sale within Other assets and Other liabilities, respectively, were reclassified as of December 31, 2023: Investment in property, net of $259.0 million, Inventory of manufactured homes of $4.6 million, Other intangible assets of $1.3 million and Other liabilities, net of $55.8 million.

Refer to Note 20, "Subsequent Events," for information regarding acquisitions completed after March 31, 2024.

4. Notes and Other Receivables

The following table sets forth certain information regarding notes and other receivables (in millions):

Installment Notes Receivable on Manufactured Homes

Installment notes receivable are measured at fair value, using indicative pricing models from third party valuation specialists, in accordance with ASC Topic 820, "Fair Value Measurements and Disclosures." During the three months ended December 31, 2023, we transferred a group of installment notes receivable to an unrelated party. Refer to Note 5, "Collateralized Receivables and Transfers of Financial Assets," for additional details. The balances of installment notes receivable of $38.3 million (gross installment notes receivable of $39.1 million less fair value adjustment of $0.8 million) and $19.6 million (gross installment notes receivable of $20.4 million less fair value adjustment of $0.8 million) as of March 31, 2024 and December 31, 2023, respectively, are secured by manufactured homes. The notes represent financing to purchasers of manufactured homes located in our communities and require monthly principal and interest payments. The notes had a net weighted average interest rate (net of servicing costs) and maturity of 6.6% and 18.2 years as of March 31, 2024, and 6.9% and 17.2 years as of December 31, 2023, respectively. Refer to Note 16, "Fair Value Measurements," for additional details.

Notes Receivable from Real Estate Developers and Operators

Notes receivable from real estate developers and operators are measured at fair value, using indicative pricing models from third party valuation specialists, in accordance with ASC Topic 820, "Fair Value Measurements and Disclosures." Refer to Note 16, "Fair Value Measurements," for additional information.

Note Receivable from a Real Estate Operator

The note receivable from a real estate operator was comprised of a fully drawn loan provided to Royale Holdings Group HoldCo Limited, a real estate development owner and operator in the United Kingdom, and certain other parties, to fund investing and financing activities (the "Note"). The Note was collateralized by a first-priority security interest inthree real estate assets andthree MH manufacturers in the United Kingdom. As of March 31, 2024, there wasno remaining balance due on the note receivable.

After the maturity date of July 31, 2023, the Note became past due. On September 29, 2023, we appointed receivers over the real estate assets. The receivers marketed the real estate assets for sale during the fourth quarter of 2023. Upon completion of the marketing process, on December 28, 2023, we appointed administrators over the real estate assets and acquired such assets through a credit bid. During the fourth quarter, we engaged third party valuation specialists to appraise the real estate assets in accordance with ASC 820. The appraisals were completed using the discounted cash flow method (income approach), with the significant assumptions being development density, estimated absorption rate, home sale price and discount rate. The real estate assets appraised at fair value totaling $263.8 million. The Note balance was reduced by this amount, with an offsetting adjustment to Investment property, net on our Consolidated Balance Sheets as of December 31, 2023.

As of December 31, 2023, the balance remaining on the Note, which was in nonaccrual status, collateralized by a first-priority security interest inthree MH manufacturers in the United Kingdom, was adjusted to fair value totaling $10.8 million (gross notes receivable of $114.3 million, inclusive of accrued interest of $10.4 million, less a fair value adjustment of $103.5 million). The note had a weighted average interest rate of 12.5% as of December 31, 2023.

During the three months ended March 31, 2024, we completed a receivership process related to thethree MH manufacturers in the United Kingdom. The receivers sold such assets for a total consideration of $10.7 million, resulting in cash proceeds to the Company of $7.0 million, net of non-cash consideration and fees. The sale of these assets resulted in an incremental fair value remeasurement adjustment of $0.8 million that was recorded in Loss on remeasurement of notes receivable on the Consolidated Statements of Operations.

Notes Receivable from Real Estate Developers

Other acquisition and construction loans provided to real estate developers total $127.7 million with a net weighted average interest rate and maturity of 9.3% and 2.6 years as of March 31, 2024, and total $123.7 million with a net weighted average interest rate and maturity of 9.2% and 2.6 years as of December 31, 2023. As of March 31, 2024, the additional acquisition and construction loans provided to real estate developers have $38.3 million of undrawn funds. There wereno adjustments to the fair value of notes receivable from real estate developers during the three months ended March 31, 2024 and the year ended December 31, 2023.

Other Receivables, net

Other receivables, net were comprised of amounts due from the following categories (in millions):

(1)Net of allowance of $5.0 million and $4.8 million as of March 31, 2024 and December 31, 2023, respectively.

(2)Net of allowance of $3.1 million and $2.9 million as of March 31, 2024 and December 31, 2023, respectively.

5. Collateralized Receivables and Transfers of Financial Assets

During the three months ended December 31, 2023, we completed a transfer of our installment notes receivable to an unrelated entity and received net cash proceeds of $53.4 million, along with an agreed upon future cash payment of $1.1 million from the third-party servicer, in exchange for relinquishing our right, title and interest in the receivables. We used the proceeds to pay down borrowings outstanding under our senior credit facility. We have no further obligations or rights with respect to the control, management, administration, servicing or collection of the installment notes receivables. However, we are subject to certain recourse provisions requiring us to purchase the underlying manufactured homes collateralizing such notes at a price calculated based on the agreed upon terms, in the event of a note default and subsequent repossession of the home by the unrelated entity. The recourse provisions are considered to be a form of continuing involvement which precluded establishing legal isolation, and therefore these transferred loans do not meet the requirements for sale accounting under ASC 860, "Transfers and Servicing."

The transaction has been accounted for in accordance with ASC 860-30, with the transferred assets classified as Collateralized receivables, net and the cash proceeds received from this transaction classified as Secured borrowings on collateralized receivables within the Consolidated Balance Sheets. We have elected to apply the fair value option to the collateralized receivables and related secured borrowings under ASC 820, "Fair Value Measurements and Disclosures." The balance of collateralized receivables was $56.5 million (gross collateralized receivable of $57.8 million less fair value adjustments of $1.3 million) and $56.2 million (gross collateralized receivable of $59.1 million less fair value adjustments of $2.9 million) as of March 31, 2024 and December 31, 2023, respectively. The balance of secured borrowings on collateralized receivables was $56.1 million (gross secured borrowings of $52.6 million plus fair value adjustments of $3.5 million) and $55.8 million (gross secured borrowings of $53.9 million plus fair value adjustments of $1.9 million) as of March 31, 2024, and December 31, 2023, respectively. The notes represent financing to purchasers of manufactured homes located in our communities and require monthly principal and interest payments. The notes had a net weighted average interest rate and maturity of 8.6% and 13.9 years as of March 31, 2024 and 8.6% and 14.2 years as of December 31, 2023. Refer to Note 16, "Fair Value Measurements," for additional details.

The collateralized receivables earn interest income and the secured borrowings accrue interest expense at the same amount. The amount of interest income and interest expense recognized during the three months ended March 31, 2024 was $1.2 million.

6. Goodwill and Other Intangible Assets

Our intangible assets include goodwill, in-place leases, non-competition agreements, trademarks and trade names, customer relationships, franchise agreements and other intangible assets. These intangible assets are recorded in Goodwill and Other intangible assets, net on the Consolidated Balance Sheets.

Goodwill

The measurement periods for the valuation of assets acquired and liabilities assumed in a business combination end as soon as information on the facts and circumstances that existed as of the acquisition dates becomes available on the earlier of (i) the dates of acquisition, or (ii) 12 months after the acquisition dates. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. Changes in the carrying amount of goodwill during the three months ended March 31, 2024 by reportable segment were as follows (in millions):

(1) Recast to reflect segment changes.

(2)During the three months ended March 31, 2024, we performed a qualitative assessment of our goodwill balance in accordance with ASC 350-20, "Goodwill and Other." We concluded that the fair value of each respective reporting segment was more-likely-than-not greater than its carrying value. Accordingly, there were no goodwill impairment charges recorded during the three months ended March 31, 2024. For the year ended December 31, 2023, we recorded aggregate non-cash impairment charges of $369.9 million within Goodwill impairment on the Consolidated Statements of Operations. The decline in fair value of the UK reporting segment was primarily driven by a higher weighted average cost of capital due to changes in the macroeconomic environment, as well as inflationary pressures in the UK causing a decline in financial projections.

We evaluate goodwill for impairment on an annual basis and at an interim date, if indicators of potential impairment exist. During the three months ended March 31, 2024, we voluntarily changed our annual impairment assessment date from April 1 to October 31 for the UK reporting segment. As the last quantitative impairment test was performed as of December 31, 2023, there will not be more than 12 months that have elapsed between goodwill impairment tests of the UK reporting segment.

The change in measurement date represents a change in method of applying an accounting principle. This change is preferable because it better aligns our goodwill impairment testing procedures with our annual planning process, our fiscal year-end, and with the annual testing for our Marina segment. We continue to monitor each reporting segment for triggering events for purposes of goodwill impairment testing.

The change in accounting principle did not result in any, nor do we expect the change in accounting principle to result in any delay, acceleration or avoidance of an impairment charge.

Other Intangible Assets, net

The gross carrying amounts and accumulated amortization of our intangible assets were as follows (in millions):

Amortization expenses related to our Other intangible assets were as follows (in millions):

We anticipate amortization expense for Other intangible assets to be as follows for the next five years (in millions):

7. Investments in Nonconsolidated Affiliates

Investments in joint ventures that are not consolidated, nor recorded at cost, are accounted for using the equity method of accounting as prescribed in ASC Topic 323, "Investments - Equity Method and Joint Ventures." Investments in nonconsolidated affiliates are recorded within Other assets, net on the Consolidated Balance Sheets. Equity income and loss are recorded in Income / (loss) from nonconsolidated affiliates on the Consolidated Statements of Operations.

Sungenia Joint Venture ("Sungenia JV")

At March 31, 2024 and December 31, 2023, we had a 50.0% ownership interest in Sungenia JV, a joint venture formed between us and Ingenia Communities Group (ASX:INA) ("Ingenia") in November 2018, to establish and grow a manufactured housing community development program in Australia.

GTSC LLC("GTSC")

At March 31, 2024 and December 31, 2023, we had a 40.0% ownership interest in GTSC, which engages in acquiring, holding and selling loans secured, directly or indirectly, by manufactured homes located in our communities.

SV Lift, LLC ("SV Lift")

At March 31, 2024 and December 31, 2023, we had a 50.0% ownership interest in SV Lift, which owns, operates and leases an aircraft.

The investment balance in each nonconsolidated affiliate was as follows (in millions):

The income / (loss) from each nonconsolidated affiliate is as follows (in millions):

(1) Represents an RV reservation software technology company, operating under the Campspot brand, which we acquired in January 2019 and disposed of our ownership interest in December 2023.

The change in the Sungenia JV investment balance is as follows (in millions):

The change in the GTSC investment balance is as follows (in millions):

8. Consolidated Variable Interest Entities

The Operating Partnership

We consolidate the Operating Partnership under the guidance set forth in ASC 810, "Consolidation." We evaluated whether the Operating Partnership met the criteria for classification as a variable interest entity ("VIE") or, alternatively, as a voting interest entity and concluded that the Operating Partnership met the criteria of a VIE. Our significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. We are the sole general partner and generally have the power to manage and have complete control over the Operating Partnership and the obligation to absorb its losses or the right to receive its benefits.

Other Consolidated VIEs

We consolidate Sun NG Cisco Grove RV LLC, Sun NG Coyote Ranch RV LLC, Sun NG Kittatinny RV LLC, Sun NG River Beach LLC, Sun NG Beaver Brook LLC, FPG Sun Menifee 80 LLC, Solar Energy Project LLC, Solar Energy Project CA II LLC, Solar Energy Project III LLC and FPG Sun Moreno Valley 66 LLC under the guidance set forth in ASC 810, "Consolidation." We concluded that each entity is a VIE where we are the primary beneficiary, as we have the power to direct the significant activities of and absorb the significant losses and receive the significant benefits from each entity. Refer to Note 10, "Equity and Temporary Equity," for additional information on consolidated VIEs.

Sun NG Cisco Grove RV LLC, Sun NG Coyote Ranch RV LLC, Sun NG Kittatinny RV LLC and Sun NG River Beach RV LLCwere formed in December 2023 to engage in the sourcing, due diligence, acquisition, management, construction, leasing and disposition of certain RV parks and resorts. The table below shows their respective ownership percentages, representing the common equity interests:

Sun NG Beaver Brook RV LLC was formed during the three months ended September 30, 2022. The purpose of the company is to engage in the sourcing, due diligence, acquisition, management, construction, leasing and disposition of a recreational vehicle park and resort. The Company's ownership percentages were split between Sun NG LLC and NG Beaver Brook, LLC in the ratio of 70% and 30%, representing common equity interests. In December 2023, the terms were amended which resulted in the Company ownership percentages split between Sun NG LLC and NG Beaver Brook, LLC changing to a ratio of 98.4% and 1.6%, respectively, representing the common equity interests.

The following table summarizes the assets and liabilities of our consolidated VIEs after eliminations, with the exception of the Operating Partnership, included in our Consolidated Balance Sheets (in millions):

Total assets related to the consolidated VIEs, with the exception of the Operating Partnership, comprised 0.8% of our consolidated total assets at March 31, 2024 and December 31, 2023. Total liabilities comprised 0.3% of our consolidated total liabilities at March 31, 2024 and December 31, 2023. Equity Interests and Noncontrolling interests related to the consolidated VIEs, on an absolute basis, comprised less than 1.0% of our consolidated total equity at March 31, 2024 and December 31, 2023.

9. Debt and Line of Credit

The following table sets forth certain information regarding debt, including premiums, discounts and deferred financing costs (in millions, except for statistical information):

(1) Balances at March 31, 2024 and December 31, 2023 include zero net debt premium, as of each such date, and $16.2 million and $16.9 million of deferred financing costs, respectively. Weighted average interest rates include the impact of hedge activity.

(2) Balances at March 31, 2024 and December 31, 2023 include fair value adjustments of $3.5 million and $1.9 million, respectively.

(3) Balances at March 31, 2024 and December 31, 2023 include $6.9 million and $6.5 million of net debt discount, respectively, and $19.4 million and $16.0 million of deferred financing costs, respectively. Weighted average interest rates include the impact of hedge activity.

(4) Balances at March 31, 2024 and December 31, 2023 include zero and $1.6 million of deferred financing costs, respectively. Weighted average interest rates include the impact of hedge activity.

Mortgage term loans

During the three months ended March 31, 2024 and the year ended December 31, 2023, no mortgage term loans were repaid.

During the three months ended March 31, 2024 we did not enter into any mortgage term loans. During the year ended December 31, 2023, we entered into the following mortgage term loans during the quarters presented below (in millions, except for statistical information):

(1)Includestwo newly encumbered properties.

(2)Includes five existing encumbered properties.

(3)Includes 22 existing encumbered properties.

The mortgage term loans, which total $3.5 billion as of March 31, 2024, are secured by 156 properties comprised of 62,848 sites representing approximately $2.7 billion of net book value.

Secured Borrowings on Collateralized Receivables

Refer to Note 5, "Collateralized Receivables and Transfers of Financial Assets," for information on Secured Borrowings on Collateralized Receivables.

Unsecured Debt

Senior Unsecured Notes

The following table sets forth certain information regarding our outstanding senior unsecured notes (in millions, except for statistical information). All senior unsecured notes include interest payments on a semi-annual basis in arrears, and are recorded within the Unsecured debt line item on the Consolidated Balance Sheets.

(1)In January 2024, the Operating Partnership issued $500.0 million of senior unsecured notes with an interest rate of 5.5% and afive-year term, due January 15, 2029 (the "2029 Notes"). Interest on the 2029 Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2024. The net proceeds from the offering were $495.4 million, after deducting underwriters' discounts and estimated offering expenses. We used the majority of the net proceeds to repay borrowings outstanding under our Senior Credit Facility.

Line of Credit

The Operating Partnership (as borrower), SUI (as guarantor), and certain lenders are parties to a credit agreement which governs our senior credit facility (the "Senior Credit Facility").

Prior to March 2024, the aggregate amount of our Senior Credit Facility was $4.2 billion with the ability to upsize the total borrowings by an additional $800.0 million, subject to certain conditions. The aggregate amount under the Senior Credit Facility consisted of the following: (a) a revolving loan in an amount up to $3.05 billion and (b) a term loan facility of $1.15 billion, with the ability to draw funds from the combined facilities in U.S. dollars, Pound sterling, Euros, Canadian dollars and Australian dollars, subject to certain limitations. The maturity date of the revolving term loan facility is April 7, 2026. At our option that maturity date may be extendedtwo additionalsix-month periods. The maturity date of the term loan facility was April 7, 2025.

In March 2024, we terminated the term loan facility and settled the associated $1.1 billion of borrowings outstanding under the term loan by increasing our borrowings under the revolving loan of the Senior Credit Facility. Subsequent to the termination of the term loan, our aggregate borrowing capacity under the Senior Credit Facility was reduced to the original capacity under the revolving loan of $3.05 billion. During the three months ended March 31, 2024, we recognized a Loss on extinguishment of debt in our Consolidated Statements of Operations of $0.6 million related to the termination of the term loan facility.

The Senior Credit Facility bears interest at a floating rate based on the Adjusted Term Secured Overnight Financing Rate ("SOFR"), the Adjusted Eurocurrency Rate, the Australian Bank Bill Swap Bid Rate ("BBSY"), the Daily Sterling Overnight Index Average ("SONIA") Rate or the Canadian Dollar Offered Rate, as applicable, plus a margin, in all cases, which can range from 0.725% to 1.6%, subject to certain adjustments. As of March 31, 2024, the margins based on our credit ratings were 0.85% on the revolving loan facility.

At the lenders' option, the Senior Credit Facility will become immediately due and payable upon an event of default under the Credit Facility Agreement. We had $1.7 billion and $944.1 million of borrowings outstanding under the revolving loan as of March 31, 2024 and December 31, 2023, respectively. We also hadzero and $1.1 billion of borrowings outstanding under the term loan on the Senior Credit Facility as of March 31, 2024 and December 31, 2023, respectively. These balances are recorded in Unsecured debt on the Consolidated Balance Sheets.

The Senior Credit Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our borrowings outstanding under the Senior Credit Facility, but does reduce the borrowing amount available. We had $11.2 million and $26.2 million of outstanding letters of credit at March 31, 2024 and December 31, 2023, respectively.

Unsecured Term Loan

In October 2019, we assumed a $58.0 million secured term loan facility related to an acquisition. The term loan initially had afour-year term ending October 29, 2023, and bore interest at a floating rate based on the Eurodollar rate or Prime rate plus a margin ranging from 1.2% to 2.05%. Effective July 1, 2021, we amended the agreement to release the associated collateral, extend the term loan facility maturity date to October 29, 2025 and adjust the interest rate margin to a range from 0.8% to 1.6%. In August 2022, we amended the secured term loan facility to transition from the Eurodollar rate to SOFR. As of March 31, 2024, the margin based on our credit rating was 0.95%. The outstanding balance was $3.9 million and $7.8 million at March 31, 2024 and December 31, 2023, respectively. These balances are recorded in Unsecured debt on the Consolidated Balance Sheets.

Covenants

The mortgage term loans, senior unsecured notes and Senior Credit Facility are subject to various financial and other covenants. The most restrictive covenants are pursuant to (a) the terms of the Senior Credit Facility, which contains a maximum leverage ratio, minimum fixed charge coverage ratio and maximum secured leverage ratio, and (b) the terms of the senior unsecured notes, which contain a total debt to total assets ratio, secured debt to total assets ratio, consolidated income available for debt service to debt service ratio and unencumbered total asset value to unsecured debt ratio. At March 31, 2024, we were in compliance with all financial covenants.

In addition, certain of our subsidiary borrowers own properties that secure loans. These subsidiaries are consolidated within our accompanying Consolidated Financial Statements, however, each of these subsidiaries' assets and credit are not available to satisfy our debts and other obligations, and any of our other subsidiaries or any other person or entity.

Interest Capitalized

We capitalize interest during the construction and development of our communities. Capitalized interest costs associated with construction and development activities during the three months ended March 31, 2024 and 2023 were as follows (in millions):

10. Equity and Temporary Equity

Temporary Equity

Redeemable Preferred OP Units

Temporary equity includes preferred securities that are redeemable for cash at the holder's option or upon the occurrence of an event that is not solely within our control based on a fixed or determinable price. These securities are not mandatorily redeemable for cash nor do they contain a fixed maturity date. The following table sets forth the various series of redeemable preferred OP units that were outstanding as of March 31, 2024 and December 31, 2023 and the related terms, and summarizes the balance included within Temporary Equity on our Consolidated Balance Sheets (in millions, except for statistical information):

(1) Exchange rates are subject to adjustment upon stock splits, recapitalizations and similar events. The exchange rates of certain series of OP units are approximated to four decimal places.

(2)Distributions are payable on the issue price of each OP unit, which is $100.00 per unit for all these preferred OP units.

(3)The redemption price for each preferred OP unit redeemed will be equal to its issue price plus all accrued but unpaid distributions.

Redeemable Equity Interests

The following table summarizes the redeemable equity interests included in Temporary Equity on our Consolidated Balance Sheets (in millions):

(1)Refer to Note 8, "Consolidated Variable Interest Entities," for more information on the consolidated VIEs.

Permanent Equity

Universal Shelf Registration Statement

In March 2024, we filed a new universal shelf registration statement on Form S-3 with the SEC. The shelf registration statement was deemed automatically effective and provides for the registration of unspecified amounts of equity and debt securities. The authorized number of shares of our capital stock is 380,000,000 shares, of which 360,000,000 shares are common stock and 20,000,000 shares are preferred stock. As of March 31, 2024, we had 124,641,861 shares of common stock issued and outstanding andno shares of preferred stock were issued and outstanding.

At the Market Offering Sales Agreement

We have entered into an At the Market Offering Sales Agreement with certain sales agents and forward sellers pursuant to which we may sell, from time to time, up to an aggregate gross sales price of $1.25 billion of our common stock (the "ATM"), through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly to the sales agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed amount not to exceed 2.0% of the gross price per share for any shares sold under the ATM. Through March 31, 2024, we had entered into forward sales agreements under the ATM for an aggregate gross sales price of $160.6 million.

Issuances of Common OP Units in Connection with the Acquisition of Certain Properties

Accumulated Other Comprehensive Income

AOCI attributable to SUI common shareholders is separately presented on our Consolidated Balance Sheets as a component of total SUI shareholders' equity. Other Comprehensive Income ("OCI") attributable to noncontrolling interests is allocated to, and included within, Noncontrolling interests on our Consolidated Balance Sheets. Refer to the Statements of Comprehensive Loss for complete details related to OCI activity in the reporting period.

AOCI attributable to SUI common shareholders consisted of the following, net of tax (in millions):

Noncontrolling Interests - Common and Preferred OP Units

The following table summarizes the common and preferred OP units included within Noncontrolling interests on our Consolidated Balance Sheets (in millions, except for shares and statistical information):

(1) Exchange rates are subject to adjustment upon stock splits, recapitalizations and similar events. The exchange rates of certain series of OP units are approximated to four decimal places.

(2)Distributions are payable on the issue price of each OP unit which is $100.00 per unit for all these preferred OP units.

Conversions

Conversions to Common Stock and Common OP Units - Subject to certain limitations, holders can convert certain series of OP units to shares of our common stock and to common OP units at any time. Below is the activity of conversions during the three months ended March 31, 2024 and 2023:

(1)Calculation may yield minor differences due to rounding incorporated in the above numbers.

Distributions

Distributions declared for the three months ended March 31, 2024 were as follows:

11. Share-Based Compensation

As of March 31, 2024, we hadtwo share-based compensation plans: the Sun Communities, Inc. 2015 Equity Incentive Plan (as amended, the "2015 Equity Incentive Plan") and the First Amended and Restated 2004 Non-Employee Director Option Plan (as amended, the "2004 Non-Employee Director Option Plan"). We believe granting equity awards will provide certain executives, key employees and directors additional incentives to promote our financial success and promote employee and director retention by providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future. Time based awards for directors generally vest over three years. Time based awards for key employees and executives generally vest over five years. Market condition awards for executives generally vest after three years.

During the three months ended March 31, 2024 and 2023, shares were granted as follows:

(1)Represents the weighted average fair value per share of the closing price of our common stock on the dates the shares were awarded.

(2)Represents the weighted average fair value per share of the Monte Carlo simulation fair value price of our market condition awards on the dates the shares were awarded.

(3)Share-based compensation for restricted stock awards with market conditions is measured based on shares expected to vest using a Monte Carlo simulation to determine fair value.

(4)Includes 6,000 shares that were deferred under the 2021 Non-Employee Directors Deferred Compensation Plan and are issuable on future dates.

(5)Includes 2,000 shares that were deferred under the 2021 Non-Employee Directors Deferred Compensation Plan and are issuable on future dates.

The vesting requirements for 166,304 and 203,898 restricted shares granted to our executives, directors and employees were satisfied during the three months ended March 31, 2024 and 2023, respectively.

We capitalize a portion of share-based compensation costs for employees who work directly on construction and development of our communities. We recognized the following share-based compensation costs (in millions):

(1) Recorded within General and administrative expense on the Consolidated Income Statements.

(2) Capitalized to Land improvements and buildings on the Consolidated Balance Sheets.

12. Segment Reporting

ASC Topic 280, "Segment Reporting," establishes standards for the way that business enterprises report information about operating segments in its financial statements. As described in Note 1, "Basis of Presentation," effective January 1, 2024, we expanded our organizational structure from three segments, which consisted of (i) manufactured home ("MH") communities, (ii) recreational vehicle ("RV") communities, and (iii) Marinas to add a fourth segment that includes communities in the United Kingdom ("UK"). The new structure reflects how the chief operating decision maker manages the business, makes operating decisions, allocates resources and evaluates operating performance. Beginning with the three months ended March 31, 2024, we are reporting our financial results consistent with our newly realigned operating segments and have recast prior period amounts to conform to the way we internally manage our business and monitor segment performance. Certain reclassifications have been made to the prior period financial statements and related notes in order to conform to the current period presentation. There was no impact to prior period net income, stockholders' equity or cash flows for any of the reclassifications.

Ourfour reportable segments are: (i) MH, (ii) RV, (iii) Marina and (iv) UK.

The MH segment owns, operates, develops, or has an interest in, a portfolio of MH communities in the U.S., and is in the business of acquiring, operating and developing ground-up MH communities to provide affordable housing solutions to residents. The MH segment in the U.S. also provides manufactured home sales and leasing services to tenants and prospective tenants of our communities.

The RV segment owns, operates, develops, or has an interest in, a portfolio of RV communities and is in the business of acquiring, operating and developing ground-up RV communities in the U.S. and Canada. It also provides leasing services for vacation rentals within the RV communities.

The Marina segment owns, operates and develops marinas, and is in the business of acquiring and operating marinas in the U.S., with the majority of such marinas concentrated in coastal regions, and others located in various inland regions.

The UK segment owns, operates, develops, or has an interest in, a portfolio of communities, referred to as holiday parks, and is in the business of acquiring, operating and developing communities in the United Kingdom. It also provides home sales and associated site license activities to owners and tenants within the communities.

A presentation of segment financial information is summarized as follows (in millions):

(1) Recast to reflect segment changes.

13. Income Taxes

We have elected to be taxed as a real estate investment trust ("REIT") pursuant to Section 856(c) of the Internal Revenue Code of 1986, as amended ("Code"). In order for us to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources. In addition, a REIT must distribute annually at least 90% of its REIT taxable income (calculated without any deduction for dividends paid and excluding capital gains) to its shareholders and meet other tests.

Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are 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 requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that we continued to qualify as a REIT during the three months ended March 31, 2024.

As a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on the ordinary taxable income we distribute to our shareholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate rates. Even if we qualify as a REIT, we may be subject to certain state and local income taxes, as well as U.S. federal income and excise taxes on our undistributed income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. We are also subject to local income taxes in Canada, Puerto Rico and the United Kingdom due to certain properties located in those jurisdictions. We do not provide for withholding taxes on our undistributed earnings from our Canadian subsidiaries as they are reinvested and will continue to be reinvested indefinitely outside of the U.S. As currently structured, we are not subject to United Kingdom withholding taxes on distributions from our United Kingdom properties.

Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. Our temporary differences primarily relate to net operating loss carryforwards, depreciation, interest and basis differences between tax and GAAP. Our deferred tax assets that have a full valuation allowance relate to our taxable REIT subsidiaries. As of March 31, 2024, we had $309.1 million of net deferred tax liabilities, comprised of deferred tax assets, net of valuation allowance of $61.9 million, and deferred tax liabilities of $371.0 million. The deferred tax liability balance is comprised primarily of basis differences in our foreign investment in properties in the United Kingdom and Canada. As of December 31, 2023, we had $277.1 million of net deferred tax liabilities, comprised of deferred tax assets, net of valuation allowance of $58.1 million, and deferred tax liabilities of $335.2 million. The net deferred tax assets and deferred tax liabilities are recorded within Other assets and Other liabilities, respectively, on our Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

We hadno unrecognized tax benefits as of March 31, 2024 and 2023. We do not expect significant changes in tax positions that would result in unrecognized tax benefits within one year of March 31, 2024.

For thethree months ended March 31, 2024, we recorded current tax expense for federal, state, Canadian, Puerto Rican, and United Kingdom income taxes totaling $2.1 million. For the three months ended March 31, 2023, we recorded current tax expense for federal, state, Canadian, Puerto Rican, and United Kingdom income taxes and Australian withholding taxes totaling $3.9 million.

For the three months ended March 31, 2024 and 2023, we recorded a deferred tax benefit of $5.7 million and $4.6 million, respectively.

14. Loss Per Share

Loss per share ("EPS") is computed by dividing net loss by the weighted average number of common shares outstanding during the period on a basic and diluted basis. We calculate diluted EPS using the more dilutive of the treasury stock method and the two-class method for stock option and restricted common shares, the treasury stock method for forward equity sales and the if converted method for convertible units.

From time to time, we enter into forward equity sales agreements, which are discussed in Note 10, "Equity and Temporary Equity." We considered the potential dilution resulting from the forward equity sales agreements on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered unless there is a physical settlement. Common shares issued upon the physical settlement of the forward equity sales agreements, weighted for the period these common shares are outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares outstanding - diluted in accordance with the treasury stock method.

Our potentially dilutive securities include our potential common shares related to our forward equity offerings, our unvested restricted common shares, and our Operating Partnership outstanding common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units, Series D preferred OP units, Series E preferred OP units, Series F preferred OP units, Series G preferred OP units, Series H preferred OP units, Series J preferred OP units, Series K preferred OP units, and Series L preferred OP units, which, if converted or exercised, may impact dilution.

Diluted EPS considers the impact of potentially dilutive securities except when the potential common shares have an anti-dilutive effect. Our unvested restricted stock common shares contain rights to receive non-forfeitable distributions and participate equally with common stock with respect to distributions issued or declared, and thus, are participating securities, requiring the two-class method of computing EPS. In calculating the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average number of shares outstanding during the period. The two-class method determines EPS by (1) dividing the sum of distributed earnings allocated to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of shares of common stock outstanding for the period; and (2) dividing the sum of distributed earnings allocated to participating securities and undistributed earnings allocated to participating securities by the weighted average number of shares of participating securities for the period. The remaining potential dilutive common shares do not contain rights to distributions and are included in the computation of diluted EPS.

Computations of basic and diluted EPS were as follows (in millions, except for per share data):

(1) For the three months ended March 31, 2024 and March 31, 2023, diluted loss per share was calculated using the treasury stock method for restricted common shares as the application of this method resulted in a more diluted loss per share during those periods.

We have excluded certain convertible securities from the computation of diluted EPS because the inclusion of those securities would have been anti-dilutive for the periods presented. The following table presents the outstanding securities that were excluded from the computations of diluted EPS as of March 31, 2024 and 2023 (in thousands):

N/A = Not applicable.

(1) All of our outstanding Aspen preferred OP units converted during the year ended December 31, 2023.

15. Derivative Financial Instruments

Our objective and strategy in using interest rate derivatives is to manage exposure to interest rate movements, thereby minimizing the effect of interest rate changes and the effect they could have on future cash outflows (forecasted interest payments), on a forecasted issuance of long-term debt, or on outstanding floating rate debt. We typically enter into treasury rate locks, interest rate swaps, and forward swaps to accomplish this objective. We do not enter into derivative instruments for speculative purposes. We recognize derivative instruments at fair value on a recurring basis on the Consolidated Balance Sheets and classify the derivatives within Level 2 of the fair value hierarchy. We adjust our Consolidated Balance Sheets on a quarterly basis to reflect the current fair market value of the derivative instruments.

As of March 31, 2024 and December 31, 2023, we held 7 and 13 derivative contracts, which have each been designated as cash flow hedges under ASC Topic 815, "Derivatives and Hedging." The risks being hedged are the interest rate risk related to outstanding floating rate debt and forecasted debt issuance transactions, and the benchmark interest rates used are the SOFR and the SONIA Rate. The unrealized gains or losses on the derivative instruments are recorded in AOCI and are reclassified to Interest expense on the Consolidated Statements of Operations during the same period in which the hedged transaction affects earnings. We estimate that $16.3 million will be reclassified as a reduction to Interest expense over the next 12 months for all of our outstanding cash flow hedges. Cash flow from these derivative instruments is classified in the same category as the cash flow items being hedged on the Consolidated Statements of Cash Flows.

Derivative Contract Activity

During the three months ended March 31, 2024 and 2023, we entered into the following derivative contracts (with notional amounts in millions):

(1) The notional amount of the swap contract in local currency is £100.0 million. The USD equivalent amount is converted as of December 31, 2023.

During the three months ended March 31, 2024 and 2023, we terminated the following derivative contracts (amounts in millions):

(1) Includes seven forward swap contracts which were terminated in connection with the 2029 Notes issuance.

(2) These includestwo $100.0 million treasury rate locks andone $50.0 million forward swap which were terminated in connection with the 2033 Notes issuance.

The following table presents the gross fair value amounts of our derivative financial instruments and the associated notional amounts (in millions):

(1)Included within Other assets, net on the Consolidated Balance Sheets.

(2)Included within Other liabilities on the Consolidated Balance Sheets.

Refer to Note 16, "Fair Value Measurements," for additional information related to the fair value methodology used for derivative financial instruments.

The following table presents the gains / (losses) on derivatives in cash flow hedging relationships recognized in OCI (in millions):

The following table presents the amount of gains on derivative instruments reclassified from AOCI into earnings (in millions):

16. Fair Value Measurements

Our financial instruments consist primarily of cash, cash equivalents and restricted cash, notes and other receivables, derivative assets, debt, warrants and other liabilities. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, pursuant to ASC 820, "Fair Value Measurements and Disclosures." The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

ASC 820, "Fair Value Measurements and Disclosures," requires disclosure regarding determination of fair value for assets and liabilities and establishes a hierarchy under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:

Level 1 - Quoted unadjusted prices for identical instruments in active markets that we have the ability to access;

Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severity, etc.) in active markets or can be corroborated by observable market data; and

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The unobservable inputs reflect our assumptions about the assumptions that market participants would use.

Assets by Hierarchy Level

The table below sets forth our financial assets and liabilities (in millions) that required disclosure of fair value on a recurring basis as of March 31, 2024. The table presents the carrying values and fair values of our financial instruments as of March 31, 2024 and December 31, 2023, that were measured using the valuation techniques described above. The table excludes other financial instruments such as other receivables and accounts payable as the carrying values associated with these instruments approximate their fair value since their maturities are less than one year. These financial instruments are classified as Level 1 in the hierarchy.

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash, Cash Equivalents and Restricted Cash

The carrying values of cash, cash equivalents and restricted cash approximate their fair market values due to the short-term nature of the instruments. These are classified as Level 1 in the hierarchy.

Marketable Securities

The fair value of marketable securities is measured by the quoted unadjusted share price which is readily available in active markets (Level 1). We hadzero marketable securities as of March 31, 2024. The change in the marketable securities balance was as follows (in millions):

(1)During the year ended December 31, 2023, we sold our 41.8 million share position in Ingenia, generating $102.5 million of proceeds, net of $1.0 million of underwriting and other fees, with a realized loss of $8.0 million. The proceeds were used to pay down amounts drawn under our Senior Credit Facility.

Installment Notes Receivable on Manufactured Homes and Collateralized Receivables

Installment notes receivable on manufactured homes are recorded at fair value and are measured using model-derived indicative pricing using primarily unobservable inputs, inclusive of default rates, interest rates and recovery rates (Level 3). Refer to Note 4, "Notes and Other Receivables," and Note 5, "Collateralized Receivables and Transfers of Financial Assets," for additional information.

Notes Receivable from Real Estate Developers and Operators

Notes receivable from real estate developers and operators are recorded at fair value and are measured using model-derived indicative pricing using primarily unobservable inputs including interest rates and counterparty performance (Level 3). The carrying values of the notes generally approximate their fair market values either due to the nature of the note and / or the note being secured primarily by underlying real estate and other collateral and / or personal guarantees. Refer to Note 4, "Notes and Other Receivables," for additional information.

Derivative Assets and Liabilities - Interest Rate Derivatives

Interest rate derivatives are recorded at fair value and consist of treasury rate lock contracts, interest rate swaps and forward swaps. The fair value of these financial instruments are measured using observable inputs based on the 10-year Treasury note rate, the SOFR and SONIA Rates, respectively (Level 2).

Secured debt consists primarily of our mortgage term loans. The fair value of mortgage term loans is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans and instruments of comparable maturities (Level 2). Refer to Note 9, "Debt and Line of Credit," for additional information.

Secured borrowings on collateralized receivables - recorded at fair value and adjusted based on the same interest rates as the related collateralized receivables (Level 3). Refer to Note 5, "Collateralized Receivables and Transfers of Financial Assets," and Note 9, "Debt and Line of Credit," for additional information.

Unsecured Debt

Senior unsecured notes - the fair value of senior unsecured notes is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans and instruments of comparable maturities (Level 2). Refer to Note 9, "Debt and Line of Credit," for additional information.

Line of credit and other unsecured debt - consists primarily of our Senior Credit Facility. We have variable rates on our Senior Credit Facility. The fair value of the debt with variable rates approximates carrying value as the interest rates of these amounts approximate market rates (Level 2). The estimated fair value of our debt as of March 31, 2024 approximated its gross carrying value.

Other Financial Liabilities

We estimate the fair value of contingent consideration liabilities based on valuation models using significant unobservable inputs that generally consider discounting of future cash flows using market interest rates and adjusting for non-performance risk over the remaining term of the liability (Level 3).

Level 3 Reconciliation, Measurements and Transfers

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. Availability of secondary market activity and consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3. There were no transfers into or out of Level 3 during the three months ended March 31, 2024.

The following tables summarize changes to our financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three months ended March 31, 2024 and 2023 (in millions):

(1)Realized losses recorded within Loss on remeasurement of notes receivable on the Consolidated Statements of Operations.

(2)Realized gains recorded within Other income / (expense), net on the Consolidated Statements of Operations.

(3)Realized losses recorded within Income / (loss) from nonconsolidated affiliates within on the Consolidated Statements of Operations.

(1)Realized losses are recorded within Other income / (expense), net on the Consolidated Statements of Operations.

Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop fair value estimates. The fair value estimates are based on information available as of March 31, 2024. As such, our estimates of fair value could differ significantly from the actual carrying value.

17. Commitments and Contingencies

Legal Proceedings - Class Action Litigation

Since August 31, 2023, several putative class action complaints have been filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, against Datacomp Appraisal Systems, Inc., us, andnine other large MH operators in the U.S. The complaint alleges that the defendants have violated federal antitrust laws by sharing and receiving competitively sensitive non-public information to maintain artificially high site rents. The complaints have been consolidated into the case captioned In re Manufactured Home Lot Rents Antitrust Litigation, No. 1:23-cv-06715.

Plaintiffs seek both injunctive and monetary damages, as well as attorneys' fees. We are unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in this litigation. If an unfavorable result were to occur, it is possible that the impact could be material to our results of operations in the periods in which any such outcome becomes probable and estimable.

We believe that the plaintiffs' allegations are without merit and intend to defend against them vigorously. However, litigation is inherently uncertain and there can be no assurance regarding the likelihood that our defense of this litigation will be successful.

Other Legal Proceedings

We are involved in various other legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition.

Catastrophic Event-Related Charges

Hurricane Ian -When Hurricane Ian made landfall on Florida's western coast in September 2022, the storm primarily affected three properties in the Fort Myers area, comprising approximately 2,500 sites. These properties sustained significant flooding and wind damage from the hurricane. At other affected MH and RV properties, most of the damage was limited to trees, roofs, fences, skirting and carports. At affected marina properties, docks, buildings, and landscaping sustained wind and water damage.

We maintain property, casualty, flood and business interruption insurance for our community portfolio, subject to customary deductibles and limits.

Estimated property insurance recoveries, excluding business interruption recoveries, of $52.8 million related to Hurricane Ian were recorded in Notes and other receivables, net on the Consolidated Balance Sheets as of March 31, 2024.

The table below sets forth changes in estimated property insurance recoveries, excluding business interruption recoveries (in millions):

Changes in estimated property insurance recoveries related to Hurricane Ian during the three months ended March 31, 2024 were primarily the result of $3.0 million of incremental costs that exceeded the applicable deductible. The foregoing estimates are based on current information available, and we continue to assess these estimates. Actual charges and insurance recoveries could vary significantly from these estimates. Any changes to these estimates will be recognized in the period(s) in which they are determined.

We are actively working with our insurance providers on claims for business interruption recoveries. During the three months ended March 31, 2024 and 2023, we did not recognize any business interruption recoveries for lost earnings from the hurricane event. The related communities are under redevelopment. As such, we currently cannot estimate a date when operating results will be restored to pre-hurricane levels. Our business interruption insurance policy provides for up to 60 months of coverage from the date of restoration.

Other -In December 2023, one of our RV properties with approximately 300 sites sustained property damage due to heavy rainfall and flooding in the North Conway, New Hampshire area. Based on a preliminary review performed by an insurance adjuster, we recognized asset impairment charges of $7.0 million during the three months ended December 31, 2023, primarily related to site improvements, vacation rental cabins, and equipment. During the three months ended March 31, 2024, we recognized incremental charges of $4.7 million related to the impacted property, comprised of $3.1 million for impaired assets and $1.6 million for debris removal and cleanup. The charges were recorded within Catastrophic event-related charges, net in our Consolidated Statements of Operations. The foregoing estimates are based on current information available after the preliminary review of the damages incurred. Actual charges and insurance recoveries could differ from these estimates. Any changes to these estimates will be recognized in the period(s) in which they are determined.

18. Leases

Lessee Accounting

We lease land under non-cancelable operating leases at certain MH, RV, Marina and UK properties expiring at various dates through 2100. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of revenues at those properties. We also have other operating leases, primarily office space and equipment expiring at various dates through 2042.

Future minimum lease payments under non-cancellable leases as of March 31, 2024 where we are the lessee include (in millions):

Right-of-use ("ROU") assets and lease liabilities for finance and operating leases as included in our Consolidated Balance Sheets are as follows (in millions):

The components of lease costs for finance and operating leases as included in our Consolidated Statements of Operations are as follows (in millions):

Lease term, discount rates and additional information for finance and operating leases are as follows:

Lessor Accounting

We are not the lessor for any finance leases at our MH, RV, Marina or UK properties as of March 31, 2024.

Nearly all of our operating leases with our residents and customers at our MH, RV and UK properties where we are the lessor are either month-to-month or for a time period not to exceed one year. As of March 31, 2024, future minimum lease payments with our residents or customers would not exceed 12 months.

We do not have any operating leases with real estate operators on our MH or UK properties. At our RV communities and marinas, future minimum lease payments under non-cancellable leases with real estate operators where we are the lessor include the following as of March 31, 2024 (in millions):

The components of lease income for our operating leases, as included in our Consolidated Statement of Operations are as follows (in millions):

(1)Consists of rent primarily based on a percentage of operating revenues beyond target thresholds.

Failed Sale Leaseback

In connection with our acquisition of Park Holidays, we assumed ground lease arrangements for 34 UK properties that we concluded to be failed sale-leaseback transactions under ASC Topic 842, "Leases." The arrangements have maturities ranging from 2117 through 2197 with an option to repurchase for £1.00 at the end of the term. The obligation related to the underlying ground leases has been recorded as a financial liability in Other Liabilities on the Consolidated Balance Sheets. The financial liability was $357.1 million and $359.7 million as of March 31, 2024 and December 31, 2023, respectively. The following table presents the future minimum rental payments for this financial liability as of March 31, 2024 (in millions):

19. Recent Accounting Pronouncements

Recent Accounting Pronouncements - Adopted

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance for accounting for contracts, hedging relationships and other transactions affected by the reference rate reform, if certain criteria are met. The provisions of this standard were available for election through December 31, 2022. In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848," which defers the sunset date for Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. As of March 31, 2024, all of our debt and derivative instruments have been converted from LIBOR to alternative reference rates. The adoption of this ASU did not have a material impact on our Consolidated Financial Statements as the majority of our debt has fixed interest rates.

Recent Accounting Pronouncements - Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which adds interim and annual disclosure requirements to the US GAAP codification at the request of the SEC. The new guidance is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. These disclosure requirements are currently included in either SEC Regulation S-X or SEC Regulation S-K. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited and the amendments should be applied prospectively. If the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K by June 30, 2027, the amendments will be removed from the US GAAP codification and will not be effective.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which enhances disclosure of significant segment expenses that are regularly provided to the chief operating decision maker to assess segment performance, including each reported measure of segment profit or loss, an amount and description of the composition for other segment items to reconcile to segment profit or loss, interim disclosures of a reportable segment's profit or loss and assets, and the title and position of our chief operating decision maker. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments should be applied prospectively. We are currently evaluating the provisions of this amendment and the impact on our Consolidated Financial Statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires disclosure of specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, this amendment requires certain disclosure of income taxes paid disaggregated by federal, state and foreign taxes, and the amount of income taxes paid disaggregated by individual jurisdiction in which income taxes paid meet a quantitative threshold. The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. This ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments should be applied prospectively. We are currently evaluating the provisions of this amendment and the impact on our Consolidated Financial Statements and related disclosures.

20. Subsequent Events

Acquisitions

Subsequent to the three months ended March 31, 2024, we acquired the following properties:

(1)In conjunction with the acquisition, we issued 19,326 common OP units valued at $2.5 million.

We have evaluated our Consolidated Financial Statements for subsequent events through the date that this Form 10-Q was issued.