Welcome to the Sun Community's Fourth Quarter 2016 Earnings Conference Call on February 23, 2017. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumption, the company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in this morning's press release form and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I'd like to introduce management with us today. Gary Shiffman, Chairman and Chief Executive Officer, John McLaren President and Chief Operating Officer, and Karen Dearing, Chief Financial Officer. I would now like to turn the call over to Mr. Shiffman, CEO. Mr. Shiffman, you may begin.

Good morning, and thank you for joining us. Since 2016 was marked by sustained success in achieving strong results for our stakeholders, we delivered another year of industry leading results with same community NOI growth of 7.1% of the year and 9.1% for the fourth quarter, driven by revenue increases of over 6% for the year and the quarter. We've now increased or maintain occupancy for 20 consecutive quarters and ended 2016 with same community accuracy of 96.6 % and overall portfolio occupancy of 96.2 %. We expect continued high occupancy going forward, given the strong fundamentals, creating demand for our communities. In 2016, we received more than 45,000 applications for our available home sites, a ratio of 10 applications per available site, supporting our view that Sun offers a compelling, affordable product and desirable locations throughout the United States and Ontario, Canada. Home sales, another strong indicator of industry demand, was a consistent contributor throughout the year. In 2016, we sold a record number of homes, totaling nearly 3200 up approximately 28% over 2015, which was our previous record. Of these sales, over 1/3 were former rental homes, which demonstrates the benefits that a well-managed rental program can offer including filling expansion sites, generating income from otherwise vacant home sites, and introducing future homeowners to our communities. On the external growth front, we completed our largest single acquisition today in Carefree which increased our site count by over 30%. Since 2011, we have executed on our strategic plan to grow our market shares in the RV, age restricted, and high barrier to entry markets with either one off or platform acquisitions. The acquisition of Carefree accelerated our efforts and help solidify Sun as one of the nations highest quality manufactured homes and RV owner operators. With Carefree, our resident…

Thanks, Gary. It is my pleasure to speak with you about our 2016 operational performance for the fourth quarter in the year. I've had the opportunity to meet a number of our analysts and investors during 2016 and look forward to interacting with more of you in 2017. Before I jump into Sun's operational performance this past year, I thought it would be appropriate to spend some time discussing the integration of Carefree. As you're well aware, Sun purchased Carefree in the beginning of June for roughly $1.7 billion, enhancing Sun's irreplaceable portfolio with additional high-quality RV assets, retirement communities, and exposure to the Western states. The RV winter season is in full swing and operations in Carefree are proceeding smoothly. As Gary has discussed in the past, integrative acquisitions is one of Sun's core competencies, having added approximately $4.3 billion in assets over the past five years, we've developed a very efficient and effective process of integrating large acquisitions on the Sun's platform. With respect to Carefree, the integration we now consider to be substantially complete and successfully on boarded over 1300 team members and restricted her asset and property managed teams to ensure that our former Carefree team members had the appropriate support. We view culture as one of the key risk factors in making an acquisition successful, so we gave a great deal of consideration to blending the Carefree and Sun's cultures to ensure the team members felt empowered, invested, and secure during the integration process. Our team sense of ownership and empowerment raises the quality of service provided to residents, which ultimately serves to strengthen our brand by building what we refer to as our resident salesforce. Cultures everything here at Sun. We treasure what we have collaboratively built. In addition to culture, we seamlessly merged…

Thanks, John. For the fourth quarter ended December 31, 2016, Sun delivered funds from operations of $0.91 per diluted share an increase of 12.3% from the prior year's fourth quarter. For the year, FFO was $3.79 per diluted share up 4.4% year-over-year increase. As John discussed, these results were driven by strong performance across our platform, including solid same community performance, increases in revenue-producing sites, the contribution from Carefree and other acquisitions, and ongoing momentum in home sales. Now, I'd like to turn to our transaction activity and balance sheet. During the quarter, we completed a $58.5 million secured borrowing with an attractive fixed interest rate of 3.3% in a seven year term. We also repaid $79.1 million of mortgage loans in the fourth quarter and $28.9 million of mortgages in 2017. These repayments substantially addressed our 2017 maturities and a small portion of 2018 maturities. As of December 31, 2016, Sun had approximately $3.1 billion of debt outstanding with a weighted average interest rate of 4.48% and a weighted average maturity of 8.5 years. At year-end 2016, we had $8.2 million of cash on hand and a net debt to trailing 12 month EBITDA ratio of 7.5 times, which shows ongoing progress towards our anticipated leverage in the mid-six times by mid-2017 as a full 12 months of Carefree EBITDA is recognized. During the fourth quarter of 2016, and in January 2017, we sold 300,000 shares of common stock through our at-the-market equity sales program at a weighted average price of $76.43 per share. Net proceeds from the sales were $22.6 million. And now, turning to guidance. In 2017, we expect our FFO for the year to be in a range of $4.16 to $4.24 per diluted share. And FFO for the first quarter of 2017 to be in…

[Operator Instructions]. The first question comes from the line of Nick Joseph with Citigroup. Please state your question.

Its Michael Bilerman here for Nick, Gary, or Karen, maybe you can walk through a little bit and talk about G&A growth and coming up this year about 13% growth up to 73 million that's after 35% growth last year and sort of been in this range of 14% to 16% of NOI upwards of 90 basis points and above of JAV, you're almost a $10 billion company, I guess at what point should we start thinking about efficiencies on the G&A front, have you guys gone through a process of trying to reduce G&A in any way so that incremental investments could have a bigger effect on the bottom line, maybe just help us understand and bridge the gap a little bit of why we continue to see G&A's up doubled in three years so just better understanding of what is going on would be helpful.

Sure. I have a few things to say about G&A, so we have had very significant growth in the company in the past couple of years. And yes, G&A has grown. If we're looking from 2016 to 2017 the primary increases -- reasons for the increase are really a full year of salary additions for carefree personnel we brought on in comparison of the partial year in 2016 that plus some increased deferred compensation amortization is really the two reasons for it and as we've discussed previously, we hired and we've incentivized our people to assure that performance and integration of all of those acquired properties. So, we look at it, absent those two factors G&A would be increasing about 2% over last year. And we do our G&A as a percentage of revenue so we are making good progress to reducing G&A as a percentage of revenue, its down to 7.4% from 7.7% last year, we have a goal of reaching 7% at the end of 2018, at that level I think we would be right in line with averages and we think we're very, very scalable at this time if opportunity should arise and the other thing I want to say about G&A is just a reminder that we do not perform a property management allocation and if we were to allocate say 4%, a 4% property management fee our G&A would approximate 4.7 % of revenues for 2017 which we think is very well in-lined with averages.

This is Nick I just want to touch on leverage, you mentioned 7.5% on trailing and trending to the mid-sixes and mid-17, I think in past calls you talked about being comfortable under seven times, I just want to make sure that’s still the fact and if there's any kind of additional deleveraging that you expect this year or just the earning from carefree.

The 6.5 times that I noted in my comments are really a reflection of the carefree EBITDA coming in through a full-year carefee EBITDA coming in through June of 2017.

And is your target still below seven times?

Our target is below 11 times, we're comfortable where we are at now with the way the properties are growing, you would have some natural deleveraging but does give us a little bit of room as far as acquisitions.

Okay and then just last question on acquisitions, you've been active for the last two years in terms of one-off properties as well as larger portfolio deals. So can you talk about the pipeline today and expectations for '17, if you think it will be more one-off deals or if there are any larger portfolios on the market?

I think we look to continue what we would view as normalize acquisitions onesies and twosies shared before that there are handful of high quality portfolios out there that often others tends to track but there's nothing, I think in the foreseeable future that right now we're aware of. So it would be acquisition activity that's normalized year and as I shared in my comments on the last call, we're also looking to lever operations scalability to create opportunistic value by acquiring maybe some functionally obsolete type communities that are well located and have the ability to benefit from Sun's management and we bought four of them as I shared by the third-quarter call and they'll be a part of what we are doing but just a part of the onesies and twosies we will be acquiring throughout the year.

Our next question comes from the line of Ryan Burke with Green Street Advisors. Please state your question.

Karen, I want to make sure I understand your comments on G&A. So you've a target of 7% of revenue by, when was it?

The end of 2018.

The end of 2018, and can you talk us through just how you get there? I mean how much of this is the assumption of increasing revenues versus the assumption of actually reducing G&A line items or pieces of the line items.

I think it definitely is a combination of both. We do have pretty strong growth inherent in the portfolio but we are continuing to work on automating our processes, I talked about in prior calls we're doing several projects to improve our efficiencies and to take some of our manual processes into automated processes so we expect it to be a combination of both.

Okay, and then perhaps a question for John, your peak rent growth back in early 2000's was 5%, I think you're guiding to something in the mid-3% range for 2017. What would keep Sun in the sector more broadly from getting back up to that 5% rent growth number?

Historically we have been sort of in the world of 2% to 4% increases even in the toughest of economic times and frankly this is one of the reasons why we've always referred to our industry as somewhat recession resistant and I think if you look at sort of our occupancy growth over these years I think you would find that we've gone from a rent increase level of about 2.5% range up to what we're guiding in 2017 of 3.6.

Okay, so it sounds like we shouldn’t necessarily expect that rent growth is going to get back up to that 5% perhaps even though this is a sort of very recession resistant revenue stream perhaps that was just different times?

I think we can expect it to be in the fours.

Okay and then last question, I think this is my annual check in on Fannie and Freddie, the FHFA at the end of 2016 started to give a little bit of a nudge to Fannie and Freddie to try and figure out how to support shadow lending [ph], a lot has to happen for that to actually play out but Gary what are the implications for your portfolio if and when that happens?

It's a great question Ryan and I'll give you my annual response which is after 30 years of being in this industry and hearing from the federal government make requests and Fannie and Freddie respond occasionally we just really haven't seen it and we don't see anything at this time that we would expect to change, of course we would welcome additional opportunities to fund homes for our residents but really not aware of any change actually taking place in the foreseeable future.

Our next question comes from the line of Drew Babin with Robert W. Baird. Please state your question.

I was hoping you could walk through kind of the quarter by quarter cadence of the new sites being added throughout the year, could that be more backend loaded or spread evenly throughout the year expansion site?

Yes, Drew, we're going to add 1800 on each site in 18 communities primarily Michigan from Texas and from Texas and so other one-off states but they are primarily loaded to the second half of the year.

Okay. And then, can you talk about the process of converting some of the Carefree transient sites to seasonal and annual and anything that's challenging about that or anything that you've learned throughout that process?

So Drew, this is John. I mean, the conversion of transient sites to annual seasonal sites is really one of our sort of key drivers for occupancy. And it's a process that we have refined over the course of many, many years. So for us as we found through many of these acquisitions, it's really, because of the refinement in that process it's pretty easy to bolt it on with the acquisitions that we've had and we get pretty good success rate out of the gate. Some of what contributes to that is the level of effort that we put into the communities and, you know, we talked before about how important our relationship with our residents is and when you build that and they see it hit the ground running with the kind of improvements that we do and the relationship that we establish, it bodes well to driving more of our customers that direction. So we're pretty excited about it.

And lastly, if you could just talk about the directionally the performance of your more mid-Western legacy-type communities versus some of the more recently added age restricted product, more in that Sun belt, is operating performance been roughly more between those two types of portfolios or are you seeing any kind of bifurcation there?

I'd say that really both types of communities performed exceedingly well in 2016. You know, and we don't really look at them differently. Certainly our programs and what we do from a strategic stand point from one to the next might differ a little bit but it's all kind of put in there to make sure we get the most out of the opportunity that's in front of us regardless of whether it's age restricted or a family community.

Our next question comes from the line of Gwen Clark with Evercore ISI. Please state your question.

On the age restricted versus all ages is it possible to break out the rent growth between the different asset classes?

Well as far as rent increases, Gwen -- this is John. We really don't break them apart but generally speaking, the all age communities tend to get a little higher rent increase in all economic cycles and experience by the point of increased turnover during more challenging economic cycles.

Is it possible to say what that delta was like this year with these points?

I don't think we have it, Gwen but if you want to get back in touch with John or Karen we can probably discuss it a little bit more.

Okay, great. And then just one other one, on external growth can you talk about just what you're seeing on the acquisition side and whether you guys are contemplating more dispositions?

It's Gary, and John you can fill in anything that you want but I think our disposition plan was graphed up in 2014 and we sold about 30 communities and obviously we've been growing since. We identified some communities in the Carefree portfolio that we're under consideration for disposition but we were not able to actually execute on those properties. Since then, under John's oversight in the operations department, we've seen very healthy and significant growth in those actual properties and he has been a proponent of continuing to manage those properties for continued growth and review at some future time. And on the acquisition side, we expect to -- we do have a very good pipeline, very similar to what we've had in each of the previous years, but as I indicated there all single or double community acquisitions. So, it will be much like previous years where we didn't have platform acquisitions like American Land Lease and Carefree.

Thank you. There are no further questions at this time. That does conclude our question-and-answer session. I will now turn the conference back over to Mr. Gary Shiffman for closing remarks.

As always, I want to thank everybody for participating. Myself, Karen, and John are available for any follow-up discussions and we certainly look forward to speaking to everybody after first quarter is completed. Thanks.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.