Thank you, operator, and good morning. Today, we reported funds from operations of $25.9 million or $0.90 per share for the first quarter of 2012 compared to $19 million or $0.83 per share for the first quarter of 2011. These results exclude acquisition-related costs incurred in each of the referenced quarters.
Revenues increased to $83.1 million in the first quarter of '12 compared to $69.7 million in the first quarter of 2011. It was another excellent quarter for the company as all performance metrics continued to meet or exceed expectations and I will discuss a few of the most significant drivers of growth and then spend some time focusing on our markets and acquisition strategy.
Revenue producing sites in our same property portfolio increased by 147 sites 2011 increasing occupancy from 84.8% to 86.1%, an additional 147 revenue producing sites were added in recently acquired communities, which are not yet included in the same property portfolio. So, in total, we added 294 residents in this year's first quarter compared to 143 in 2011's first quarter.
In our same site portfolio, revenues grew by 5.3%, while expenses increased by 0.3%. NOI increased by 7.3% as compared to 4.2% and 1.7% in the first quarter of 2011 and 2010 respectively. NOI is also benefiting significantly from the continued momentum of quarterly occupancy gains.
Home sales topped 400 for the first time in any quarter improving strongly from the 357 sales in the first quarter of 2011. Applications continued to drive occupancy and sales as nearly 6600 people applied to live in our communities in the first quarter. This represents an annual rate of over 26,000, almost 3,000 more applications than in 2011.
And now what I'd like to do is review our markets. And as measured by revenues, approximately 85% of our business consists of open communities appealing to initial homemakers and those seeking affordable housing. It was the business segment which suffered most during the last decade as the industry recovered from its underwriting excesses and can be added to now the single-family credit bubble. The same property NOI growth for this segment, which excludes age-restricted in RV communities has nearly doubled from 2.7% in 2010 to 5.2% in 2011 as well as the first quarter of 2012.
As rental increases have been relatively consistent over the years, this improved NOI performance is attributable to both greater stability of the existing occupancy and resurgent demand for our product in the all age or open segment of the market. Narrowing the focus to our Midwest portfolio, which are 100% open communities, a focus on same property NOI growth by region reveals an even stronger market recovery.
The NOI generated by Michigan, Indiana and Ohio, which is how we define our Midwest portfolio grew by 0.2% from 2009 to 2010. That growth increased 14-fold to 2.9% from 2010 to 2011 and comparing the first quarter of '12 to the year 2011, growth of an additional 50% brings NOI growth to 4.5%. Again, the above results are strongly supported by occupancy trends. Our Midwest same property portfolio accounted for 27% of the occupancy gains in 2010 and 39% in 2011.
In the first quarter of 2012, the same property Midwest portfolio supplied 49% of the occupancy gains and that really grows to 75% when we consider residents added to our recent Michigan Kentland acquisition. Rental increases are also a major contribution to growth, a 3% rental increase and 45,000 occupied sites approximates $7 million per year. And as we look at these markets, we identify 3 major markets in the company portfolio. Florida with 12,500 sites is notable for stability and predictability, predictable and reliable growth. Florida's MH communities are essentially fully occupied and the RV communities present opportunities of scale and market penetration to achieve greater seasonal occupancies. Texas and Colorado will have over 7,300 sites by the end of the year as several expansions come online.
Since December 31, '07, these strong markets have added over 1500 sites growing to an occupancy, which currently exceeds 96%. There are over 3000 additional sites available for development in Texas and Colorado in future years. The Midwest portfolio with 29,500 sites was the hardest hit by industry and national downturn. While Florida, Texas and Colorado were primarily responsible for the company's growth over the last few years, it is in fact the Midwest market, which is now driving our growth and will likely continue current trends noted above, due to the availability of quality sites and strong locations and the bottoming of the economic cycle in this region. We are now benefiting from significantly improving performance of all 3 of our major markets, which are the primary generators of internal growth.
In general, there are also 3 growth opportunities presented by acquisitions and expansions. As discussed on prior calls, the company has had a solid pipeline of acquisitions under review. We are also under various stages of expansions in 7 communities in Texas, Oregon, and Colorado, where the communities are all full and demand remained strong. Today, I thought I'd share with you the following examples that present some of the basic modeling that we look at. Purchasing a fully stabilized community generating $800,000 of NOI at an 8% cap rate with revenue expense growth estimated at 3% per year. The $10 million investment will be generating an un-levered return of approximately 9.3% after 5 years.
The assumptions relative to expansion assume the development of land already zoned and owned by Sun. They involve constructing the sites, purchasing and renting homes to fill the expansions, and then selling the rental homes and thereby recouping the capital investment. The investment of an expansion will be generating an un-levered return of approximately 11.75% 5 years after construction is completed. This return is over 25% greater than the return on the purchase of a stabilized community that we just reviewed.
Now, consider the acquisition of a 67% occupied community the assumptions here are a bit more intricate and include the use of the rental homes to initially fill the community, as well as the 9% cap rate at purchase due to the lower occupancy and assumed deferred maintenance and the need for capital improvement. The investment will be generating an approximate un-levered return of 12.5% after 5 years more than 30% better than the return on the stabilized community.
The lower the initial occupancy or the greater the available vacancies to match up against absorption and demand, the better the return will be. Our focus is a balanced approach on all 3 of these growth opportunities with the current emphasis on the acquisition of communities with potential for solid occupancy growth. We own zoned land for expansions in our strongest markets and are active in developing those sites, where occupancy is now possible. And as I said, demand remains strong. We believe these opportunities are becoming available, because our owners cannot afford the cost of recapturing or regaining lost occupancy and there is very little or limited third-party help from fleet dealers today.
The rental program is profitable and critical to any community owner who wishes to maintain and build occupancy. Our experience with the program provides us with a capability to drive occupancy and cash flow in our expansions and acquisitions. We apply the same underwriting standards and background checks to rental applicants as we do to potential homebuyers. And we are looking for solid rental residents who have the capacity to eventually become our resident and own the homes. As a result, less than 50% of rental applications to live in our communities are actually approved. Our average return on capital in the rental program exceeds 16% after considering a vacancy factor in all direct rental expenses.
Manufactured homes today are built to last very similar to site-build housing. And it's not unusual for an older or newer community to have a number of 30 and 40-year-old homes which are neat and well-maintained. Our rental homes undergo a thorough refreshening and refurbishing upon each lease term to restore them to like new, all of which is expensed. It is because of this program to maintain asset quality that our homes retain their value during the average of 7 years that our home is in the program before it's sold. Upon the sale of the rental home, the owner then pays site rent that approximates $5,000 on average annually, and we have received all - substantial portion of the capital, we had invested in the home.
The goal of the rental program is to fill sites, where residents reside for 14 years on average and the home remains in the community generating a revenue stream for 30 to 40 years. We also benefit from being relieved of all maintenance costs on the homes upon sale. It's the success of this program which allows us to aggressively expand our communities and seek to buy communities with opportunities to increase occupancies, which in turn enhance and accelerate growth.
So, let us now turn to the 2000 acquisition of the Kentland portfolio in West Michigan and the role the rental program has played as it relates to that acquisition. Kentland consists of 18 communities comprised of 5,200 sites in the Western Michigan. When we acquired the Kentland portfolio, it was approximately 80% occupied and it had no rental program. By utilizing the rental program, our pro formas projected the occupancy to increase to 92% within 3 years, an NOI growth of about $3.5 million.
That objective for increased occupancy was broken down by year for the first 3 years had 240 sites, 248 sites and the 94 site increase in occupancy totaling 542 sites. I'm pleased to announce that in the first 9 months of ownership, we have added 289 sites of occupancy equal to 53% of our 3-year objective. A fill at the rate of 32 sites per month means that each month we are adding $150,000 of annual revenue nearly all of which translates into funds from operation.
So in summary, our primary markets are exhibiting strong internal growth from both rental and occupancy increases. Our expansions and acquisitions are outperforming pro-formas due to strong demand and we are looking at numerous acquisitions, which meet our criteria. With regard to FFO, we reaffirmed guidance of $3.17 to $3.27 per diluted share and we'd note as with prior years, our first quarter FFO is expected to be a strongest due to seasonal RV revenues, which are primarily recognized in the first and fourth quarter.
And at this time, myself, Karen and Jeff would be pleased to take any questions.
