SUN COMMUNITIES INC
S-3D, 1996-09-13
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1





  As filed with the Securities and Exchange Commission on September 13, 1996
                             Registration No. 333-
________________________________________________________________________________
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-3

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                             SUN COMMUNITIES, INC.
      (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENT)

       MARYLAND                                                  38-2730780
 (State or Other Jurisdiction of Incorporation or            (I.R.S. Employer
 Organization)                                               Identification No.)
                                _______________
                                        
                                GARY A. SHIFFMAN
                                   PRESIDENT
                             31700 MIDDLEBELT ROAD
                                   SUITE 145
                        FARMINGTON HILLS, MICHIGAN 48334
                                 (810) 932-3100

 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                             of Agent for Service)
                                _______________

                        Copies of all correspondence to:

                            JEFFREY L. FORMAN, ESQ.
                       JAFFE, RAITT, HEUER & WEISS, P.C.
                              ONE WOODWARD AVENUE
                                   SUITE 2400
                            DETROIT, MICHIGAN  48226


     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon
as practicable after the effective date of this Registration Statement.

     If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.    X
      -----

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box.      
                                                    -----

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  
                                                        -----

<PAGE>   2

 If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  ______

 If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  ______.

                            _____________________

                       CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
                                                                     Proposed Maximum          Amount of
                Title of Each Class of Securities                   Aggregate Offering      Registration Fee
                                                                        Price (1)
 <S>                                                                 <C>                      <C>
 500,000 Shares of Common Stock, $.01 par value                       $14,156,250.00           $4,882.00
</TABLE>

(1)  Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c), based upon the average of the high and low prices reported on
the New York Stock Exchange on September 6, 1996.
                       __________________________________
<PAGE>   3





                      PROSPECTUS DATED SEPTEMBER 10, 1996




PROSPECTUS
                                 500,000 SHARES

                             SUN COMMUNITIES, INC.

                 DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
                                  COMMON STOCK

          The Dividend Reinvestment and Stock Purchase Plan (the "Plan") of the
Company provides to holders of the Company's shares of Common Stock (the "Common
Stock") and holders of limited partnership interests ("OP Units;" holders of
Common Stock and OP Units who elect to participate in the Plan are sometimes
hereinafter collectively referred to as "Participants") in Sun Communities
Operating Limited Partnership, a Michigan limited partnership (the "Operating
Partnership") controlled by the Company as a result of the Company's
approximately 89% general partnership interest therein, a method of purchasing
additional shares of Common Stock without paying any service fees, brokerage
commissions or other charges.

          State Street Bank and Trust Company (the "Agent") is Administrator of
the Plan and acts as Agent for Participants.  As Agent, it will use
distributions on the Common Stock and OP Units held, and optional cash payments
made, by the Participants in the Plan to acquire additional Common Stock for the
accounts and Participants.

          Participants in the Plan may have cash distributions on all or a
portion of their Common Stock and OP Units automatically reinvested.
Participants may terminate their accounts at any time in the manner provided for
in the Plan.

          The shares of Common Stock purchased under the Plan may be, at the
Company's option, newly issued shares of Common Stock or shares of Common Stock
purchased for Participants in the open market.  The price of shares of Common
Stock purchased from the Company with reinvested distributions and optional cash
payments will be equal to 95% of the average of the high and low sales prices of
the Common Stock reported on the New York Stock Exchange Composite Tape on the
twelve trading days prior to the date on which distributions are made, as more
fully described in this Prospectus.  The price to Participants of Common Stock
purchased in the open market will be 95% of the average price of Common Stock
purchased for the Plan by the Agent over the period of days such Common Stock is
purchased.  The Company reserves the right to modify the pricing or any other
provision of the Plan at any time.

          If you are not a member of the Plan, you may join the Plan by
delivering a signed Enrollment Form to the Agent.  An Enrollment Form can be
obtained by request from the Agent.  Upon receipt of the Enrollment Form by the
Agent, your enrollment will be processed and the Agent will send you a
confirmation. Participation in the Plan is strictly voluntary.  At any time, you
may terminate your account and withdraw your shares, subject to the terms
outlined in this Prospectus.  Stockholders and holders of OP Unit who do not
wish to participate in the Plan will continue to receive distributions by check
as declared and paid.

          This Prospectus relates to the offer and sale of up to 500,000
authorized and unissued shares of Common Stock registered for purchase under the
Plan (the "Offering").  We suggest that you read the Prospectus carefully and
retain it for future reference.
<PAGE>   4

     The Common Stock is traded in the New York Stock Exchange under the symbol
"SUI."  The last reported sale price of the Common Stock as reported on the New
York Stock Exchange on September 9, 1996, was $28.75 per share.

 SEE "RISK FACTORS" ON PAGE 5 FOR CERTAIN FACTORS RELATING TO AN INVESTMENT IN
                                THE SECURITIES.
                           _______________________

         THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
           COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
               OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
                 ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
                      REPRESENTATION TO THE CONTRARY IS A
                                CRIMINAL OFFENSE.        
                           _______________________

          THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
                ON OR ENDORSED THE MERITS OF THIS OFFERING.  ANY
                  REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

               The date of this Prospectus is September 10, 1996.





                                     - 2 -
<PAGE>   5


                             AVAILABLE INFORMATION

     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files, reports and other information with the Securities and Exchange
Commission (the "Commission").  Such reports, proxy statements and other
information can be inspected at the Public Reference Section maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New
York, New York 10048.  Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.  In addition, the Company's Common Stock is listed
on the New York Stock Exchange and such reports, proxy statements and other
information concerning the Company can be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.

     The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby.  This Prospectus does not contain portions of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance, reference is
made to the copy of such contract or documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto.  For further information
regarding the Company and the Securities, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.


                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference.

     1.   The Company's Annual Report on Form 10-K for the year ended December
          31, 1995, filed with the Commission on March 18, 1996, as amended by
          Form 10-K/A, filed with the Commission on April 18, 1996, and as
          amended by Form 10-K/A, filed with the Commission on May 3, 1996.

     2.   The Company's current report on Form 8-K dated March 20, 1996 and
          filed with the Commission on March 26, 1996.

     3.   The Company's current report on Form 8-K dated April 2, 1996 and
          filed with the Commission on April 4, 1996.

     4.   The Company's current report on Form 8-K dated April 24, 1996 and
          filed with the Commission on April 29, 1996.

     5.   The Company's current report on Form 8-K dated May 1, 1996 and
          filed with the Commission on May 3, 1996.

     6.   The Company's current report on Form 8-K dated August 20, 1996
          and filed with the Commission on August 22, 1996.





                                     - 3 -
<PAGE>   6


     7.   The Company's Quarterly Report on Form 10-Q for the quarter ended
          March 31, 1996, filed with the Commission on May 3, 1996.

     8.   The Company's Quarterly Report on Form 10-Q for the quarter ended
          June 30, 1996, filed with the Commission on August 14, 1996.

     9.   The description of the Common Stock contained in the Company's
          Registration Statement on Form 8-A dated November 23, 1993, No.
          1-12616.

     All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of all Securities to which this Prospectus relates shall be
deemed to be incorporated by reference in this Prospectus and shall be part
hereof from the date of filing of such document.

     Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Securities
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement.  Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.

     The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents). Written requests
for such copies should be addressed to Jeffrey P. Jorissen, the Company's Senior
Vice President and Chief Financial Officer at 31700 Middlebelt Road, Suite 145,
Farmington Hills, Michigan 48334, telephone number (810) 932-3100.

     As used herein, the term "Company" includes Sun Communities, Inc., a
Maryland corporation, and one or more of its subsidiaries (including the
Operating Partnership, Sun Communities Finance Limited Partnership (the
"Financing Partnership"), Sun Home Services, Inc., and Sun Management, Inc.).

                                  THE COMPANY

     The Company owns and operates manufactured housing communities concentrated
in the midwestern and southeastern United States.  The Company is a fully
integrated real estate company which, together with its affiliates and
predecessors, has been in the business of acquiring, operating, and expanding
manufactured housing communities since 1975.  As of August 1, 1996, the Company
owned and managed a portfolio of 79 manufactured housing community properties
(the "Properties") located in twelve states and Canada containing an aggregate
of approximately 28,600 developed sites and approximately 2,900 potential
expansion sites.  Consistent with the Company's strategy of growth through
acquisitions, the Company has acquired 48 of the Properties since its initial
public offering in December 1993.  The Company believes that it is the largest
United States owner of manufactured housing communities in the United States (by
number of communities).

     The Company is the sole general partner of, and, as of August 1, 1996, held
approximately 89% of the interests in, Sun Communities Operating Limited
Partnership, a Michigan limited partnership (the





                                     - 4 -
<PAGE>   7


"Operating Partnership").  Substantially all of the Company's assets are held
by or through the Operating Partnership.  The ownership and management of the
Properties is allocated among the Subsidiaries; however, subject to the tax and
other risks discussed in the section entitled "Risk Factors": (i) the Company
controls the management of all the Properties either directly or through a
management contract with Sun Management, Inc., a Michigan corporation ("Sun
Management") cancelable upon 30 days written notice; and (ii) stockholders in
the Company achieve substantially the same economic benefits as direct
ownership, operation, and management of the Properties, except that 5% of the
cash flow from operating activities of Sun Home Services, Inc., a Michigan
corporation ("Home Services") and Sun Management (estimated to be an aggregate
of no greater than approximately $2,000 in 1996) will be distributed to Gary A.
Shiffman, Milton M. Shiffman (Gary A. Shiffman and Milton M. Shiffman are
sometimes hereinafter collectively referred to as the "Principals"), and
Jeffrey P. Jorissen, each an officer of the Company, as the holders of all the
common stock of Home Services and Sun Management.  There is no assurance that
such distributions will not increase in the future.  As sole general partner of
the Operating Partnership, the Company has the exclusive power to manage and
conduct the business of the Operating Partnership, subject to certain limited
exceptions.

     The Company's executive and principal property management office is located
at 31700 Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334, and its
telephone number is (810) 932-3100.  The Company has regional property
management offices in Elkhart, Indiana and Tampa, Florida.


                                  RISK FACTORS

     Prospective investors should carefully consider, among other factors, the
matters described below.

CONFLICTS OF INTEREST

     Failure to Enforce Terms of Management Contract.  Through their ownership
of all of the common stock of Sun Management, the Principals and Jeffrey P.
Jorissen, an officer of the Company (the Principals and Jeffrey P. Jorissen are
sometimes hereinafter collectively referred to as the "Subsidiary Shareholders")
have a 5% interest in Sun Management.  Sun Management has entered into a
management contract with the Financing Partnership with respect to each of the
Properties subject to the Mortgage Debt (as defined below), which was not
negotiated on an arm's length basis.  The Subsidiary Shareholders will have a
conflict of interest with respect to their obligations as officers and/or
directors of the Company to enforce the terms of the management contract.  The
failure to enforce the material terms of this agreement could have an adverse
effect on the Company.  The Operating Partnership, on account of its ownership
of the preferred stock of Sun Management, and the Subsidiary Shareholders, on
account of their ownership of the common stock of Sun Management, are entitled
to 95% and 5%, respectively, of cash flow from operating activities of Sun
Management.

     Failure to Enforce Terms of Home Services Agreement.  Through their
ownership of all of the common stock of Home Services, the Subsidiary
Shareholders have a 5% interest in Home Services.  Home Services has entered
into an agreement with the Operating Partnership for sales, brokerage, and
leasing services, which was not negotiated on an arm's length basis.  The
Subsidiary Shareholders will have a conflict of interest with respect to their
obligations as officers and/or directors of the Company to enforce the terms of
the services agreement.  The failure to enforce the material terms of this
agreement could have an adverse effect on the Company.  The Operating
Partnership, on account of its ownership of the preferred stock of Home
Services, and the Subsidiary Shareholders, on account of their ownership of the
common stock of Home Services, are entitled to 95% and 5%, respectively, of the
cash flow from operating activities of Home Services.

     Tax Consequences Upon Sale of Properties.  Prior to the redemption of
partnership interests in the Operating Partnership ("OP Units") for Common
Stock, the Principals will have tax consequences





                                     - 5 -
<PAGE>   8


different from those of the Company and its public stockholders upon the sale
of any of the 24 Properties acquired from partnerships previously affiliated
with the Principals (the "Sun Partnerships") and, therefore, the Principals and
the Company, as partners in the Operating Partnership, may have different
objectives regarding the appropriate pricing and timing of any sale of those
Properties. Consequently, the Principals may influence the Company not to sell
those Properties even though such sale might otherwise be financially
advantageous to the Company.

PRINCIPALS' ABILITY TO EXERCISE INFLUENCE

     As of August 1, 1996, the Principals owned, in the aggregate, approximately
5% of the Common Stock (assuming redemption of all outstanding OP Units) and are
exempt from certain limitations on ownership.  See "-- Ownership Limits and
Limits on Change in Control."  Accordingly, the Principals will have substantial
influence on the Company and on the outcome of any matters submitted to the
Company's stockholders for approval, which influence might not be consistent
with the interests of other stockholders.  In addition, although there is no
current agreement, understanding, or arrangement for the Principals, as
stockholders, to act together on any matter, the Principals would be in a
position to exercise significant influence over the affairs of the Company if
they were to act together in the future.

ADVERSE CONSEQUENCES OF DEBT FINANCING

     The Company is subject to the risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest, the risk that existing
indebtedness will not be able to be refinanced, or that the terms of such
refinancing will not be as favorable as the terms of such indebtedness and the
risk that necessary capital expenditures for such purposes as renovations and
other improvements will not be able to be financed on favorable terms or at all.
If a property is mortgaged to secure payment of indebtedness and the Company is
unable to meet mortgage payments, the property could be transferred to the
mortgagee with a consequent loss of income and asset value to the Company.

     As of August 1, 1996, the Financing Partnership had outstanding $30.0
million of indebtedness that is collateralized by mortgage liens on five of the
Properties (the "Mortgage Debt").  If the Company fails to meet its obligations
under the Mortgage Debt, the lender would be entitled to foreclose on all or
some of the Properties securing such debt, which could have a material adverse
effect on the Company and its ability to make expected distributions and could
threaten the continued viability of the Company.

     The Company has a one-time right to obtain the release of one Property from
the lien of the Mortgage Debt.  In the event the Company desires to obtain the
release of a Property from the lien of such debt, such release may only be
obtained by satisfaction of each of the following: (i) prepayment of such debt
in an amount equal to 125% of the loan amount allocated to the Property being
released; (ii) payment of certain prepayment expenses that may be incurred by
the lender in connection with a partial prepayment of such debt; and (iii)
satisfaction of a specified debt service coverage ratio with respect to the
remaining four Properties not being released.  In the event the Company is
unable to obtain the release of a Property from any such lien, it would be
unable to consummate a sale of such Property which might otherwise be in the
best interest of the Company.

CHANGES IN INVESTMENT AND FINANCING POLICIES WITHOUT STOCKHOLDER APPROVAL

     The investment and financing policies of the Company, and its policies with
respect to certain other activities, including its growth, debt, capitalization,
distributions, REIT status, and operating policies, are determined by the Board
of Directors.  Although the Board of Directors has no present intention to do
so, these policies may be amended or revised from time to time at the discretion
of the Board of Directors without notice to or a vote of the stockholders of the
Company.  Accordingly, stockholders may





                                     - 6 -
<PAGE>   9


not have control over changes in policies of the Company and changes in the
Company's policies may not fully serve the interests of all stockholders.

DEPENDENCE ON KEY PERSONNEL

     The Company is dependent on the efforts of its executive officers,
particularly the Principals.  While the Company believes that it could find
replacements for these key personnel, the loss of their services could have a
temporary adverse effect on the operations of the Company.  The Company does not
currently maintain or contemplate obtaining any "key-man" life insurance on the
Principals.

OWNERSHIP LIMIT AND LIMITS ON CHANGES IN CONTROL

     9.8% Ownership Limit; Inapplicability to Founders.  In order to qualify and
maintain its qualification as a REIT, not more than 50% of the outstanding
shares of the capital stock of the Company may be owned, directly or indirectly,
by five or fewer individuals.  Thus, ownership of more than 9.8% of the
outstanding shares of Common Stock by any single stockholder has been
restricted, with certain exceptions, for the purpose of maintaining the
Company's qualification as a REIT under the Internal Revenue Code of 1986, as
amended (the "Code").  Such restrictions in the Company's charter do not apply
to the Principals and Robert B. Bayer, a former director and officer of the
Company (Robert B. Bayer and the Principals are sometimes hereinafter
collectively referred to as the "Founders"), who may acquire additional shares
of Common Stock through the redemption of OP Units, through the Stock Option
Plan, from other stockholders or otherwise, but in no event will they be
entitled to acquire additional shares such that the five largest beneficial
owners of the Company's stock hold more than 50% of the total outstanding stock.
Additionally, the Company's charter allows certain transfers of such shares
without the transferees being subject to the 9.8% ownership limit, provided such
transfers do not result in an increased concentration in the ownership of the
Company.  The Company's Board of Directors, upon receipt of a ruling from the
Internal Revenue Service (the "Service"), an opinion of counsel or other
evidence satisfactory to the Board of Directors and upon such other conditions
as the Board of Directors may direct, may also exempt a proposed transferee from
this restriction.

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

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

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





                                     - 7 -
<PAGE>   10


REAL ESTATE INVESTMENT CONSIDERATIONS

     General.  Income from real property investments, and the Company's
resulting ability to make expected distributions to stockholders, may be
adversely affected by the general economic climate, local conditions such as
oversupply of manufactured housing sites or a reduction in demand for
manufactured housing sites in an area, the attractiveness of the Properties to
tenants, zoning or other regulatory restrictions, competition from other
available manufactured housing sites and alternative forms of housing (such as
apartment buildings and site-built single-family homes), the ability of the
Company to provide adequate maintenance and insurance, and increased operating
costs (including insurance premiums and real estate taxes).  The Company's
income would also be adversely affected if tenants were unable to pay rent or
sites were unable to be rented on favorable terms.  If the Company were unable
to promptly relet or renew the leases for a significant number of the sites, or
if the rental rates upon such renewal or reletting were significantly lower than
expected rates, then the Company's funds from operations and ability to make
expected distributions to stockholders could be adversely affected.  In
addition, certain expenditures associated with each equity investment (such as
real estate taxes and maintenance costs) generally are not reduced when
circumstances cause a reduction in income from the investment.  Furthermore,
real estate investments are relatively illiquid and, therefore, will tend to
limit the ability of the Company to vary its portfolio promptly in response to
changes in economic or other conditions.

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

     Changes in Laws.  Costs resulting from changes in real estate tax laws
generally may be passed through to tenants and will not affect the Company.
Increases in income, service or other taxes, however, generally are not passed
through to tenants under leases and may adversely affect the Company's funds
from operations and its ability to make distributions to stockholders.
Similarly, changes in laws increasing the potential liability for environmental
conditions existing on properties or increasing the restrictions on discharges
or other conditions may result in significant unanticipated expenditures, which
would adversely affect the Company's funds from operations and its ability to
make distributions to stockholders.

     Investments in Mortgages.  Although the Company currently has no plans to
invest in mortgages other than an approximately $4.0 million mortgage loan it
has made to an entity that operates two manufactured housing communities in
Alberta, Canada (the "Canadian Mortgage"), the Company may invest in additional
mortgages in the future.  By virtue of its investment in the Canadian Mortgage
and if the Company were to invest in additional mortgages, it is and would be
subject to the risks of such investment, which include the risk that borrowers
may not be able to make debt service payments or pay principal when due, the
risk that the value of mortgaged property may be less than the amounts owed, and
the risk that interest rates payable on the mortgages may be lower than the
Company's costs of funds.  If any of the above occurred, funds from operations
and the Company's ability to make expected distributions to stockholders could
be adversely affected.

     Development of New Communities.  The Company is not restricted from
engaging in the development of new communities in the future.  The manufactured
housing community development business involves significant risks in addition to
those involved in the ownership and operation of established manufactured
housing communities, including the risks that financing may not be available on
favorable terms for development projects, that construction and lease-up may not
be completed on schedule resulting in increased debt service expense and
construction costs, that long-term financing may





                                     - 8 -
<PAGE>   11


not be available upon completion of construction, and that sites may not be
leased on profitable terms.  If the Company entered the manufactured housing
community development business, and if any of the above occurred, the Company's
ability to make expected distributions to stockholders could be adversely
affected.

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

     Environmental Matters.  Under various Federal, state and local laws,
ordinances and regulations, an owner of real estate is liable for the costs of
removal or remediation of certain hazardous or toxic substances on or in such
property.  Such laws often impose such liability without regard to whether the
owner knew of, or was responsible for, the presence of such hazardous or toxic
substances.  The presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
rent such property or to borrow using such property as collateral.  Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person.  Certain environmental laws impose liability for
release of asbestos-containing materials ("ACMs") into the air and third parties
may seek recovery from owners or operators of real properties for personal
injury associated with ACMs.  In connection with the ownership (direct or
indirect), operation, management, and development of real properties, the
Company or the Operating Partnership, as the case may be, may be considered an
owner or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable
for removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property.  All of the
Properties have been subject to a Phase I or similar environmental audit (which
involves general inspections without soil sampling or ground water analysis)
completed by independent environmental consultants.  These environmental audits
have not revealed any significant environmental liability that would have a
material adverse effect on the Company's business.  No assurances can be given
that existing environmental studies with respect to any of the Properties reveal
all environmental liabilities, that any prior owner of a Property did not create
any material environmental condition not known to the Company, or that a
material environmental condition does not otherwise exist as to any one or more
Properties.

     Uninsured Loss.  The Company maintains comprehensive liability, fire, flood
(where appropriate), extended coverage, and rental loss insurance with respect
to the Properties with policy specifications, limits, and deductibles
customarily carried for similar properties.  Certain types of losses, however,
may be either uninsurable or not economically insurable, such as losses due to
earthquakes, riots, or acts of war.  Should an uninsured loss occur, the Company
could lose both its investment in and anticipated profits and cash flow from a
property.

ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT

     Taxation as a Corporation.  The Company expects to qualify and has made an
election to be taxed as a REIT under the Code, commencing with the calendar year
beginning January 1, 1994. Although the Company believes that it is organized
and will operate in such a manner, no assurance can be given that the Company is
organized or will be able to operate in a manner so as to qualify or remain so
qualified. Qualification as a REIT involves the satisfaction of numerous
requirements (some on an annual and quarterly basis) established under highly
technical and complex Code provisions for which there are only limited judicial
or administrative interpretations, and involves the determination of various
factual matters and circumstances not entirely within the Company's control.





                                     - 9 -
<PAGE>   12


     If the Company were to fail to qualify as a REIT in any taxable year, the
Company would be subject to Federal income tax (including any applicable
alternative minimum tax) on its taxable income at corporate rates. Moreover,
unless entitled to relief under certain statutory provisions, the Company also
would be disqualified from treatment as a REIT for the four taxable years
following the year during which qualification is lost. This treatment would
reduce the net earnings of the Company available for investment or distribution
to stockholders because of the additional tax liability to the Company for the
years involved. In addition, distributions to stockholders would no longer be
required to be made.

     Other Tax Liabilities. Even though the Company qualifies as a REIT, it is
subject to certain Federal, state and local taxes on its income and property. In
addition, the management operations relating to the Properties subject to the
mortgages granted in connection with the Mortgage Debt and the Company's sales
operations, which are conducted through Sun Management and Home Services,
respectively, generally will be subject to Federal income tax at regular
corporate rates.

ADVERSE EFFECT OF DISTRIBUTION REQUIREMENTS

     The Company may be required from time to time, under certain circumstances,
to accrue as income for tax purposes interest and rent earned but not yet
received. In such event, the Company could have taxable income without
sufficient cash to enable the Company to meet the distribution requirements of a
REIT. Accordingly, the Company could be required to borrow funds or liquidate
investments on adverse terms in order to meet such distribution requirements.

ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A PARTNERSHIP

     The Company believes that the Operating Partnership and the Financing
Partnership have each been organized as partnerships and will qualify for
treatment as such under the Code. If the Operating Partnership and the Financing
Partnership fail to qualify for such treatment under the Code, the Company would
cease to qualify as a REIT, and the Operating Partnership and the Financing
Partnership would be subject to Federal income tax (including any alternative
minimum tax) on their income at corporate rates.

ADVERSE EFFECT ON PRICE OF SHARES AVAILABLE FOR FUTURE SALE

     Sales of a substantial number of shares of Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices for
shares. The Principals hold 943,456 shares of Common Stock.  In addition, up to
3,208,519 shares of Common Stock may be issued in the future to the Principals,
the general partners of the Sun Partnerships other than the Principals (the
"Former General Partners"), and the sellers of certain properties as a result of
the potential redemption of their outstanding OP Units (both Common and
Preferred OP Units).  Except in certain limited circumstances or with the prior
written consent of Lehman Brothers Inc. and the Company, the Principals and the
Former General Partners may not sell more than one-third of such holder's shares
prior to December 15, 1995 or two-thirds of such holders' shares prior to
December 15, 1996.  After December 15, 1996, the Principals and the Former
General Partners may sell remaining unsold shares pursuant to registration
rights or an available exemption from registration. Also, the former owner of
one of the Properties will be issued OP Units with an aggregate value of $10.85
million over the 11-year period beginning in January 1997 and continuing on an
annual basis through 2007.  In addition, 1,461,513 shares have been reserved for
issuance pursuant to the Company's Stock Option Plan and 1993 Non-Employee
Director Stock Option Plan (of which 353,997 shares were issued to the
Principals upon the exercise of options pursuant to the Company's Stock Option
Plan), and the Principals' employment agreements provide for incentive
compensation payable in shares of Common Stock. These shares may be sold without
the consent of Lehman Brothers Inc. and the Company.  No prediction can be made
regarding the effect that future sales of shares of Common Stock will have on
the market price of shares.





                                     - 10 -
<PAGE>   13


ADVERSE EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK

     One of the factors that may influence the price of the Company's shares in
the public market will be the annual distributions to stockholders relative to
the prevailing market price of the Common Stock. An increase in market interest
rates may tend to make the Common Stock less attractive relative to other
investments, which could adversely affect the market price of Common Stock.

                            DESCRIPTION OF THE PLAN

     Set forth below, in question and answer format, is a description of the
Plan. Those holders of Common Stock and OP Units who do not participate in the
Plan will receive cash distributions, as declared, by check as usual.

PARTICIPATION

1. Who is eligible to enroll in the Plan?

     Any common stockholder with Common Stock registered in his or her name on
the records of our agent, State Street Bank and Trust Company (the "Agent") or
holder of OP Units (an "OP Unitholder"), may enroll in the Plan. If a
stockholder has Common Stock registered in the name of someone else (for
example, with a bank, broker or trustee), the holder may be able to arrange for
that entity to handle the reinvestment of distributions. STOCKHOLDERS SHOULD
CONSULT DIRECTLY WITH THE ENTITY HOLDING THEIR COMMON STOCK TO DETERMINE IF THEY
CAN ENROLL IN THE PLAN. IF NOT, THE STOCKHOLDER SHOULD REQUEST HIS OR HER BANK,
BROKER OR TRUSTEE TO HAVE SOME OR ALL OF THEIR SHARES REGISTERED IN THE
STOCKHOLDER'S OWN NAME IN ORDER TO PARTICIPATE DIRECTLY.

     Stockholders and OP Unitholders who are citizens or residents of a country
other than the United States, its territories and possessions should make
certain that their participation does not violate local laws governing taxes,
currency and exchange controls, stock registration, foreign investments and
related matters.

2. How does an eligible stockholder or OP Unitholder participate?

     To enroll in the Plan, an eligible stockholder or OP Unitholder must sign
the Enrollment Form and mail it to the Agent. If the Common Stock or OP Unit is
registered in more than one name (such as joint tenants, trustees, etc.), all
registered holders must sign. You may obtain an Enrollment Form at any time by
contacting the Agent at the following address:

                      State Street Bank and Trust Company
         Sun Communities Dividend Reinvestment and Stock Purchase Plan
                                 P.O. Box 8204
                                Boston, MA 02266
                                 (800) 257-1770

     If the "Optional Cash Payments" box on the Enrollment Form is checked, the
Agent will apply any optional cash payment received with the Enrollment Card or
with a subsequent payment form to the purchase of shares of Common Stock under
the Plan.

3. When may an eligible stockholder or OP Unitholder join the Plan?

     As an eligible stockholder or OP Unitholder, you may join the Plan at any
time. Participation will begin when the first distribution after the Enrollment
Form, designating the reinvestment of distributions, is received by the Agent,
provided there is sufficient time for processing prior to the record date for
that





                                     - 11 -
<PAGE>   14


distribution. The Company's distributions are expected to be made in the months
of January, April, July and October.

REINVESTMENT

4. When will distributions be reinvested toward the purchase of additional
   shares?

     The distributions on the Common Stock and OP Units are expected to be paid
in the months of January, April, July and October. The reinvestment of
distributions will generally begin on the date the distribution will be made and
will normally extend over a period of two to five business days.

5. May I reinvest less than the full amount of my distributions?

     By selecting the "Partial Reinvestment" option on your Enrollment Form, you
may elect to receive cash distributions on a specified number of your shares and
OP Units, and reinvest the distributions on the balance of your shares and OP
Units.

6. How and when can a Participant change the amount of distributions to be
   reinvested?

     A Participant may change the distribution reinvestment option at any time
by submitting a newly executed Enrollment Form to the Agent or by writing to the
Agent. A form may be obtained by contacting the Agent. Any change in the number
of shares or OP Units with respect to which the Agent is authorized to reinvest
distributions must be received by the Agent prior to the record date for a
distribution to permit the new number to apply to that distribution.  The
Company's distributions are expected to be paid in the months of January, April,
July and October.

OPTIONAL CASH PAYMENTS

7. How does the cash payment option work?

     Each Participant may purchase additional Common Stock by making optional
cash payments at any time. Participants have no obligation to make any optional
cash payments. Optional cash payments may be made at irregular intervals and the
amount of each optional cash payment may vary, but no optional cash payment may
be less than $500 and the total optional cash payments invested by each record
holder of Common Stock or OP Unitholder may not exceed $10,000 per calendar
quarter.

     An optional cash payment may be made by enclosing a check or money order
with the Enrollment Form when enrolling; and thereafter by forwarding a check or
money order to the Agent with a payment form which will be attached to each
statement of account. Checks and money orders must be in United States dollars
and should be made payable to "State Street Bank and Trust Company". No interest
will be paid on optional cash payments held by the Agent pending the purchase of
Common Stock (See Question 9).

     Optional cash payments must be received by the Agent no later than ten
calendar days prior to the next distribution payment date. Optional cash
payments received by the Agent will be returned to Participants upon written
request received by the Agent at least ten calendar days prior to the next
distribution payment date.





                                     - 12 -
<PAGE>   15


SHARE PURCHASES

8. What is the source of Common Stock to be purchased under the Plan?

     Shares purchased under the Plan will be, at the Company's discretion,
either newly issued shares of the Company or shares purchased in the open
market, or a combination of the foregoing. Newly issued shares will be purchased
by the Agent directly from the Company. Shares purchased in the open market will
be purchased by the Agent on the New York Stock Exchange or any securities
exchange where the Company's Common Stock is traded, in the over-the-counter
market, or in negotiated transactions, and may be subject to such terms with
respect to price, delivery and other matters as to which the Agent may agree.

9. When will shares be purchased?

     Shares will be purchased by the Agent in the open market, generally
beginning on the day on which a distribution is made and usually extending over
two to five business days. Newly issued shares will be purchased on the
distribution payment date. In order to allow sufficient time for processing,
optional cash payments must be received no later than ten calendar days prior to
the distribution payment date. Optional cash payments received by the Agent
subsequent to ten calendar days prior to a distribution payment date will be
applied to the purchase of Common Stock on the distribution payment date falling
in the next succeeding quarter.

10. What is the price of shares purchased under the Plan?

     If shares are purchased from the Company, the price of such shares will be
95% of the average of the daily high and low sale prices of Common Stock on the
New York Stock Exchange Composite Tape on the twelve trading days prior to the
applicable distribution payment date. If there is no trading reported in the
Common Stock on the New York Stock Exchange Composite Tape on any of such dates,
the purchase price per share shall be determined by the Company on the basis of
such market quotations or other means as it shall deem appropriate, provided,
however, that under no circumstances will the purchase price per share be less
than the present par value of the Common Stock. If shares are purchased on the
open market, the price of such shares will be 95% of the average price of all
shares purchased for the Plan over the period of days such purchases are made in
the open market with the proceeds of the distributions and optional cash
payments then being invested. No participant shall have any authority or power
to direct the time or price at which Common Stock may be purchased.

11. How many shares will be purchased for Participants?

     The number of shares to be purchased for a participant will depend on the
net amount of the Participant's distribution and optional cash payments and the
price of the shares. Each Participant's account will be credited with the number
of shares, including fractions calculated to four decimal places, equal to the
total of a Participant's funds available for investment, divided by the purchase
price of the shares.

COSTS

12. What costs are associated with investments in the Plan?

     No fees are associated with any purchases under the Plan. All costs of
administration of the Plan and all fees, commissions and expenses incurred in
connection with any open market purchases made pursuant to the Plan will be paid
by the Company.





                                     - 13 -
<PAGE>   16


13. What are the costs associated with selling shares held in the Plan?

     The Agent will charge brokerage commissions, transfer taxes (if any), and a
$5.00 service fee for each authorization to sell shares held in the Plan.

CUSTODIAL SERVICE

14. How does the custodial service work?

     All shares of Common Stock that are purchased by Participants on the
reinvestment of their distributions are held in the name of the Agent or its
nominee and the shares are added to the Participants' balance in the Plan.

DISTRIBUTIONS

15. Will Participants be credited with distributions on shares held in their
    accounts under the Plan?

     Yes. As the record holder for the shares of Common Stock held in
Participants' accounts under the Plan, the Agent will receive distributions
(less any applicable tax withholding requirements imposed on the Company) for
all Plan shares held on the applicable record date, will credit such
distributions to Participants' accounts on the basis of shares held in these
accounts, and will automatically reinvest such distributions in additional
Common Stock or pay such distributions in cash, according to the directions in
each Participant's Enrollment Form.

SALE OF PLAN SHARES

16. Can the shares held in the Plan be sold through the Agent?

     A Participant can instruct the Agent to sell any or all of the whole shares
held in the Plan. The written notification to the Agent should include the
number of shares that are to be sold. The Agent will make the sale as soon as
practicable after receipt of a Participant's request and a check for the
proceeds less brokerage commission, transfer taxes (if any), and a $5.00 service
fee will usually be sent by the Agent on the settlement date, which will be five
business days from the date of sale. No Participant shall have the authority or
power to direct the date or sales price at which Common Stock may be sold. Any
such request that does not clearly indicate the number of shares to be sold will
be returned to the Participant with no action taken. A withdrawal/termination
form is provided on the reverse side of the account statement for this purpose.
This notice should be addressed to State Street Bank and Trust Company.

ISSUANCE OF STOCK CERTIFICATES

17. Will stock certificates be issued for shares purchased?

     Stock certificates will not be issued unless a written request is made to
the Agent. The number of shares you hold in the Plan will be shown on your
regular statement of account. This service protects against loss, theft or
destruction of stock certificates.

18. How does a Participant request a stock certificate issuance?

     By contacting the Agent in writing, you may request, without charge, a
stock certificate for any or all of the whole shares held for you in the Plan.
Certificates for fractional shares will be not issued under any circumstances.





                                     - 14 -
<PAGE>   17


TERMINATION OF PLAN PARTICIPATION

19. How do I terminate my participation in the Plan?

     In order to terminate participation in the Plan, a Participant must notify
the Agent in writing. After receipt of such notice, distributions will be sent
to the stockholder or OP Unitholder in the usual manner.

20. When will a termination notice be effective?

     A termination notice will be effective upon receipt by the Agent, providing
such notice is received not later than the record date for a distribution.

21. How are shares distributed upon termination?

     Upon termination, a certificate for all whole shares held by a Participant
under the Plan will be issued. Alternatively, a Participant may specify in the
termination notice that some of all of the shares be sold. Any fractional shares
held in the Plan at the time of termination will be converted to cash and the
Participant will receive a check for the net proceeds.

TAX CONSEQUENCES

22. What are the income tax consequences of participation in the Plan?

     The reinvestment of distributions does not relieve the Participant of any
income tax which may be payable on such distributions.

     Distributions paid with respect to Common Stock which a Participant
reinvests in Common Stock will be treated for Federal income tax purposes as
having been received by the Participant in the form of a taxable stock
distribution. Accordingly, an amount equal to the fair market value on the date
of purchase of shares acquired with reinvested distributions will be treated as
a distribution to the extent that the Company has current or accumulated
earnings and profits for Federal income tax purposes. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a
Participant to the extent that such distributions do not exceed the adjusted
basis of the Participant's shares. To the extent such distributions exceed the
adjusted basis of a Participant's shares, they will be included in income as
capital gain.  In addition, in the event that the Company designates a part or
all of the amount so distributed as a capital gain distribution, such amount
would be treated by the Participant as a long-term capital gain. Participants'
statements of account will show the fair market value on the date of purchase of
the Common Stock purchased with reinvested distributions, and a Form 1099-DIV
mailed to Participants at year-end will show total income, the amount of any
return of capital distribution, and the amount of any capital gain distribution.

     Distributions paid with respect to OP Units will be taxable to OP
Unitholders only to the extent that such distributions exceed such OP
Unitholder's tax basis for such OP Unitholder's limited partner interest in the
Operating Partnership. Any distribution of cash in excess of an OP Unitholder's
tax basis in the Operating Partnership will generally be taxable as capital
gain, assuming that the Operating Partnership interest constitutes a capital
asset in the hands of the OP Unitholder.

     An OP Unitholder's basis for such OP Unitholder's interest in the Operating
Partnership is generally equal to the amount of cash contributed by the OP
Unitholder to the Operating Partnership, or in the case of other property
contributed to the Operating Partnership, the OP Unitholder's tax basis in such
contributed property, increased by: (i) an OP Unitholder's assumption of the
liabilities of the Operating Partnership; (ii) the Operating Partnership's
taxable income allocated to an OP Unitholder; (iii) any Operating Partnership
liabilities properly allocable to an OP Unitholder, and decreased, but not below





                                     - 15 -
<PAGE>   18


zero, by: (i) distributions paid to an OP Unitholder; (ii) losses allocated to
an OP Unitholder; (iii) liabilities of an OP Unitholder assumed by the
Operating Partnership, and (iv) reductions in liabilities of the Operating
Partnership properly allocable to an OP Unitholder.

     Distributions to OP Unitholders will be reported on K-1 forms delivered to
each OP Unitholder in connection with the filing of the Federal partnership tax
return for the Operating Partnership.

     The Internal Revenue Service has ruled in private letter rulings that
brokerage commissions paid by a corporation on behalf of participants in a
dividend reinvestment plan (i.e., in the case of open market purchases of
shares) were to be treated as constructive distributions to the participants.
Such constructive distributions were subject to income tax in the same manner as
distributions and included in the participants' cost basis of the shares
purchased. Accordingly, if the Company pays brokerage commissions with respect
to any open market purchase made by the Agent, the Company intends to take the
position that Participants received their proportionate amount of such
commissions as additional distributions. This information return sent by the
Agent to you and the Internal Revenue Service at the end of the year will show
the amount of such distributions paid to you. While the matter is not free from
doubt, the Company intends to take the position that administrative expenses of
the Plan paid by the Company are not constructive distributions to Participants.

     The tax basis of Common Stock acquired for a Participant under the Plan by
reinvestment of distributions will be equal to the fair market value of the
Common Stock on the applicable date of purchase, plus the Participant's share of
brokerage commissions, if any. The holding period of Common Stock acquired under
the Plan will begin on the day following the date on which the Common Stock was
purchased for the Participant's account.

     A Participant in the Plan will not realize any taxable income when the
Participant receives certificates for shares of Common Stock credited to the
Participant's account, either upon the Participant's request for such
certificates or upon withdrawal from or termination of the Plan.  However, a
Participant will recognize gain or loss when shares of Common Stock or rights
applicable to Common Stock acquired under the Plan are sold or exchanged. The
amount of such gain or loss will be the difference between the amount received
for the Participant's shares of Common Stock and the tax basis thereof.

     The Internal Revenue Service has ruled in connection with similar plans
that a dividend reinvestment plan will not adversely affect the qualification of
a real estate investment trust. In addition, a real estate investment trust
should be able to include amounts deemed distributed as dividends under such a
plan for purposes of its dividends-paid deduction.

     The foregoing summary of certain Federal income tax considerations
regarding the Plan is based on current law, is for general information only, and
is not tax advice. This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular investors in light of their personal
investment circumstances, or certain types of investors (including insurance
companies, tax-exempt organizations, financial institutions or broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) subject to special treatment under the Federal income tax laws. THOSE
CONSIDERING PARTICIPATION IN THE PLAN ARE URGED TO CONSULT WITH THEIR OWN TAX
ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES (INCLUDING THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES) THAT MAY RESULT FROM THEIR PARTICIPATION IN
THE PLAN AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

     The income tax consequences for Participants who do not reside in the
United States may vary from jurisdiction to jurisdiction.





                                     - 16 -
<PAGE>   19


23.  How are Federal income tax withholding provisions applied to stockholders
     and OP Unitholders who participate in the Plan?

     If you fail to provide certain federal income tax certifications in the
manner required by the law, distributions on stock and proceeds from the sale
of any shares held for your account are subject to Federal income tax
withholding, currently at the rate of 31%. Certain stockholders (including most
corporations) are, however, exempt from the above withholding requirements,
provided that certain certifications are made.

PLAN ADMINISTRATION

24. How will the Plan be administered?

     State Street Bank and Trust Company, Transfer Agent for the Company, or a
successor selected by the Company will administer the Plan for Participants,
keep records, send statements of account to Participants, answer Participants'
questions and perform other duties related to the Plan.

25. Who should Participants contact for answers to questions regarding the
    Plan?

     All inquiries regarding the Plan should be sent to:

                      State Street Bank and Trust Company
         Sun Communities Dividend Reinvestment and Stock Purchase Plan
                                 P.O. Box 8204
                                Boston, MA 02266
                                 (800) 257-1770

26. What kind of reports will be sent to Participants in the Plan?

         As soon as practicable after each purchase, a statement of account
will be mailed to you by the Agent. These statements are your continuing record
of current activity and should be retained for tax purposes. In addition, each
Participant will receive all communications sent to other stockholders,
including any annual and quarterly reports to stockholders, proxy statements
and distribution income information for tax reporting purposes. Participants
should be aware that it is important to retain all statements received as there
could be a fee incurred when requesting the Agent to supply past history.

27. What are the responsibilities of the Agent and the Company under the Plan?

         In administering the Plan, neither the Agent, the Company nor any
agent for either will be liable for any act done in good faith or for any good
faith omission to act, including, without limitation, any claim of liability
arising out of failure to terminate a Participant's account upon such
Participant's death, the prices at which Common Stock is purchased for the
Participant's account, the times when purchases are made or fluctuations in the
market value of the Common Stock. Neither the Agent, the Company nor any agent
for either shall have any duties, responsibilities or liabilities except such
as are expressly set forth in the Plan. Since the Company has delegated all
responsibility for administering the Plan to the Agent, the Company
specifically disclaims any responsibility for any of the Agent's actions or
inactions in connection with the administration of the Plan.





                                     - 17 -
<PAGE>   20


ADDITIONAL INFORMATION

28. Can shares held in the Plan be pledged or assigned?

         Shares held in the Plan may not be pledged or assigned, and any such
purported pledge or assignment shall be void. If you wish to pledge or assign
shares, you must request that a stock certificate for such shares be issued in
your name. Stock certificates for fractional shares will not be issued under
any circumstances.

29. How will your shares held by the Agent be voted at stockholders' meetings?

         Shares held for you by the Agent will be voted as you direct. Each
Participant will receive a proxy voting card for the total or their whole
shares, including shares that they hold in the Plan. If no instructions are
received, the shares will not be voted.

30. What happens if the Company has a Common Stock rights offering?

         If the Company makes rights available to holders of Common Stock to
purchase additional Common Stock or any other securities of the Company, the
Agent will, unless otherwise instructed by the Participant, sell the rights
accruing to shares of Common Stock held in each Participant's account and
invest the proceeds in additional Common Stock on the next distribution payment
date for the Common Stock. A Participant who wishes to receive any rights
directly may do so by sending to the Bank, at least 20 days prior to the
expiration of the rights offering, a written request that the rights accruing
to shares in his account be sent to him, and the Participant will then have the
opportunity to exercise his rights until the expiration of the rights offering.

31. What happens if the Company issues a Common Stock distribution or declares
    a Common Stock split?

         Any Common Stock distribution or Common Stock resulting from splits of
Common Stock, both full and fractional, credited to Participants' accounts will
be added to such accounts.

32.  What happens if reinvestment of a Participant's distributions or optional
     cash payments would cause the Participant or any other person to exceed
     the Ownership Limit set forth in the Company's Charter, or otherwise
     violate the Company's Charter?

     The Company's Charter places certain restrictions upon the ownership,
directly or constructively, of the Common Stock, including the limitation of
ownership of the Common Stock by any one person to 9.8% of the outstanding
shares (the "Ownership Limit"), subject to certain exceptions. To the extent
any reinvestment of distributions elected by a stockholder or OP Unitholder or
investment of an optional cash payment would cause such stockholder, OP
Unitholder, or any other person to exceed the Ownership Limit or otherwise
violate the Company's Charter, such reinvestment would be void ab initio, and
such stockholder or OP Unitholder will be entitled to receive cash
distributions or a refund of his optional cash payment (each without interest)
in lieu of such reinvestment.

33. May the Plan be changed or discontinued?

     The Company reserves the right to amend, modify, suspend, or terminate the
Plan, but such action shall have no retroactive effect that would prejudice the
interests of the Participants. In the event of termination, certificates for
whole shares held by each Participant in the Plan will be delivered to such
Participant together with a check for the net proceeds of the value of any
fractional shares.





                                     - 18 -
<PAGE>   21


34. What law governs the Plan?

     The terms and conditions of the Plan and its operation shall be governed
by the laws of the State of Maryland.

35. How is the Plan to be interpreted?

     Any question of interpretation arising under the Plan will be determined by
the Company, and any such determination will be final.

                                USE OF PROCEEDS

     The net proceeds from the sale of Common Stock offered pursuant to the
Plan will be used for general corporate purposes of the Company.

                                 LEGAL MATTERS

     The legality of the Common Stock offered hereby will be passed upon for
the Company by Jaffe, Raitt, Heuer & Weiss, Professional Corporation, Detroit,
Michigan.

                                    EXPERTS

     The consolidated financial statements and consolidated financial statement
schedules of the Company as of December 31, 1995 and 1994, and for the years
ended December 31, 1995, 1994 and 1993 included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been incorporated herein
in reliance on the report of Coopers & Lybrand L.L.P., independent certified
public accountants, and upon the authority of said firm as experts in
accounting and auditing.





                                     - 19 -
<PAGE>   22



<TABLE>
<S>                                                                           <C>

      No  dealer, salesperson or other individual has
been authorized to give any information or to make any
representations not contained or incorporated by                                   500,000 SHARES
reference in this Prospectus in connection with any
offering to be made by  the Prospectus.  If given  or
made, such information or representations must not be
relied upon as having been authorized by the  Company.
This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the Securities,
in any jurisdiction  where, or  to any person to  whom,
it is unlawful  to make such  offer or  solicitation.
Neither the delivery of this Prospectus nor any offer
or sale made hereunder shall, under any circumstance,
create an implication that there has been no change in
the facts set forth in this Prospectus or in  the
affairs of the Company since the date hereof.                                    SUN COMMUNITIES, INC.




                     TABLE OF CONTENTS

                        PROSPECTUS
                                                                                    COMMON STOCK
                                                    Page                           ______________
                                                    ____    

Available Information . . . . . . . . . . . . . . .  3
Incorporation of Certain Documents
  by Reference  . . . . . . . . . . . . . . . . . .  3                               PROSPECTUS
The Company . . . . . . . . . . . . . . . . . . . .  4                            
Risk Factors  . . . . . . . . . . . . . . . . . . .  5
Description of the Plan . . . . . . . . . . . . . . 11                             ______________
Use of Proceeds . . . . . . . . . . . . . . . . . . 19                        
Legal Matters . . . . . . . . . . . . . . . . . . . 19
Experts . . . . . . . . . . . . . . . . . . . . . . 19






                                                                                      SEPTEMBER 10, 1996
        

</TABLE>



<PAGE>   23



                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.        OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered.


<TABLE>
     <S>                                                                                 <C>
     Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  4,882
     Legal Fees and Expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5,000
     Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,000
     Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,500
                                                                                          --------
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,382
</TABLE>

ITEM 15.         INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Company's charter authorizes the Company to obligate itself to
indemnify its present and former directors and officers and to pay or reimburse
expenses for such individuals in advance of the final disposition of a
proceeding to the maximum extent permitted from time to time by Maryland law.
The Company's bylaws obligate it to indemnify and advance expenses to present
and former directors and officers to the maximum extent permitted by Maryland
law.  The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made a party by reason of their
service in those capacities unless it is established that: (i) the act or
omission of the director or officer was material to the matter giving rise to
the proceeding; and (a) was committed in bad faith or, (b) was the result of
active and deliberate dishonesty; (ii) the director or officer actually
received an improper personal benefit in money, property, or services; or (iii)
in the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful.

     The MGCL permits the charter of a Maryland corporation to include a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages, except to the extent that:
(i) it is proved that the person actually received an improper benefit or
profit in money, property or services; or (ii) a judgment or other final
adjudication is entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding.  The
Company's charter contains a provision providing for elimination of the
liability of its directors or officers to the Company or its stockholders for
money damages to the maximum extent permitted by Maryland law from time to
time.

     The partnership agreement of the Operating Partnership also provides for
indemnification of the Company and its officers and directors to the same
extent indemnification is provided to officers and directors of the Company in
its charter, and limits the liability of the Company and its officers and
directors to the Operating Partnership and its respective partners to the same
extent the liability of the officers and directors of the Company to the
Company and its stockholders is limited under the Company's charter.





                                      II-1
<PAGE>   24



ITEM 16.         EXHIBITS

<TABLE>
<CAPTION>
                                 
                EXHIBIT NO.   DESCRIPTION
                -----------   -----------
                <S>           <C>
                      4.1     Form of Common Stock Certificate (Incorporated by reference from
                              Exhibit 2 to Amendment No. 1 to Form S-11 filed by the Company on
                              November 5, 1993, File No. 33-69340)

                      4.2     Articles VI and VII of the Company's Amended and Restated Articles
                              of Incorporation (Incorporated by reference from Exhibit 3.1 to
                              Amendment No. 1 to Form S-11 filed by the Company on November 5,
                              1993, File No. 33-69340)
             
                     *5.1     Opinion of Jaffe, Raitt, Heuer & Weiss, Professional Corporation, as
                              to validity of securities

                    *23.1     Consent of Coopers & Lybrand L.L.P., independent accountants

                    *23.2     Consent of Jaffe, Raitt, Heuer & Weiss, Professional Corporation,
                              (included as part of Exhibit 5.1)

                    *24.1     Power of Attorney (included on the signature pages of this
                              Registration Statement)
</TABLE>


   *Filed herewith


ITEM 17.         UNDERTAKINGS

   The undersigned Registrant hereby undertakes:

   (1)        To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:

(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table set forth in this registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;

provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.





                                      II-2
<PAGE>   25


     (2)         That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the Securities offered herein, and
the offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.

     (3)         To remove from registration by means of a post-effective
amendment any of the Securities being registered which remain unsold at the
termination of the offering.

     The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof; and
insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.





                                      II-3
<PAGE>   26



                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Farmington Hills, State of Michigan, on September 6,
1996.

                                               SUN COMMUNITIES, INC.,
                                               a Maryland corporation


                                             By:  /s/ Jeffrey P. Jorissen
                                                  -----------------------------
                                                  Jeffrey P. Jorissen, Senior
                                                  Vice President,
                                                  Treasurer, Chief Financial
                                                  Officer and Secretary

                               POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Milton M. Shiffman, Gary A.  Shiffman,
and Jeffrey P. Jorissen, or any of them, his attorneys-in-fact and agents, with
full power of substitution and resubstitution for him in any and all
capacities, to sign any or all amendments or post-effective amendments to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith or in connection with the registration of the
Common Stock under the Securities Act of 1933, with the Securities and Exchange
Commission, granting unto each of such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary in connection with such matters as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that
each of such attorneys-in-fact and agents or his substitute or substitutes may
do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>

 NAME                                                                      TITLE                                      DATE
 ----                                                                      -----                                      ----
 <S>                                                       <C>                                                   <C>     

 /s/ Milton M. Shiffman                                     Chairman of the Board of Directors                   September 6, 1996
 -----------------------------------------------                                                                         
      Milton M. Shiffman
 /s/ Gary A. Shiffman                                       Chief Executive Officer, President, and Director     September 6, 1996
 -----------------------------------------------                                                                         
      Gary A. Shiffman

 /s/ Jeffrey P. Jorissen                                    Chief Financial Officer, Senior Vice President,      September 6, 1996
 -----------------------------------------------            Secretary, and Principal Accounting Officer
      Jeffrey P. Jorissen                                  


 /s/ Carl R. Weinert                                        Director                                             September 6, 1996
 -----------------------------------------------                                                                         
      Carl R. Weinert
 /s/ Paul D. Lapides                                        Director                                             September 6, 1996
 -----------------------------------------------                                                                         
      Paul D. Lapides

 /s/ Ted J. Simon                                           Director                                             September 6, 1996
 -----------------------------------------------                                                                         
      Ted J. Simon
 /s/ Clunet R. Lewis                                        Director                                             September 6, 1996
 -----------------------------------------------                                                                         
      Clunet R. Lewis

 /s/ Ronald L. Piasecki                                     Director                                             September 7, 1996
 -----------------------------------------------                                                                         
      Ronald L. Piasecki
</TABLE>





                                      II-4
<PAGE>   27



                               INDEX TO EXHIBITS



<TABLE>
<CAPTION>

                     Exhibit
                       No.                                    Description
                     -------                                  -----------
                      <S>       <C>          
                       4.1       Form of Common Stock certificate (Incorporated by reference from
                                 Exhibit 4.1 to Amendment No. 1 to Form S-11 filed by the Company on
                                 November 5, 1993, File No. 33-69340)
                       4.2       Articles VI and VII of the Company's Amended and Restated Articles
                                 of Incorporation (Incorporated by reference from Exhibit 3.1 to
                                 Amendment No. 1 to Form S-11 filed by the Company on November 5,
                                 1993, File No. 33-69340)

                      *5.1       Opinion of Jaffe, Raitt, Heuer & Weiss, Professional Corporation, as
                                 to validity of securities

                      *23.1      Consent of Coopers & Lybrand L.L.P., independent accountants
                      *23.2      Consent of Jaffe, Raitt, Heuer & Weiss, Professional Corporation
                                 (included as part of Exhibit 5.1)

                      *24.1      Power of Attorney (included on the signature pages of this
                                 Registration Statement)


                                 *Filed herewith
</TABLE>





                                      II-5

<PAGE>   1
                                                                    EXHIBIT 5.1




                    [JAFFE, RAITT, HEUER & WEISS LETTERHEAD]





                               September 10, 1996


Sun Communities, Inc.
31700 Middlebelt Road, Suite 145
Farmington Hills, Michigan 48334

     Re:  Sun Communities, Inc.

Gentlemen:

     We have acted as counsel to Sun Communities, Inc. (the "Company"), a
Maryland corporation, in connection with the registration by the Company of
500,000 shares of Common Stock, $.01 par value per share ("Common Stock"), to be
issued pursuant to the Company's Dividend Reinvestment and Stock Purchase Plan,
as described in the Registration Statement on Form S-3 filed with the Securities
and Exchange Commission on September 11, 1996 (together with all amendments
thereto, the "Registration Statement").

     We do not purport to be experts on or to express any opinion in this letter
concerning any law other than the laws of the State of Michigan and the Maryland
General Corporation Law of Maryland, and this opinion is qualified
accordingly.\ This opinion is limited to the matters expressly set forth in 
this letter, and no opinion is to be inferred or may be implied beyond the 
matters expressly so stated. In rendering the opinion contained in this letter,
we have assumed without investigation that the information supplied to us by 
the Company is accurate and complete.

     Based upon and subject to the foregoing, it is our opinion that the shares
of Common Stock to be offered under the Registration Statement have been duly
authorized, and upon the issuance and sale thereof in the manner referred to in
the Registration Statement, will be validly issued, fully paid and
non-assessable.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

                               Very truly yours,

                          JAFFE, RAITT, HEUER & WEISS
                            Professional Corporation

                             /s/ Jeffrey L. Forman

                               Jeffrey L. Forman

<PAGE>   1



                                                                 EXHIBIT 23.1



                       CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated February 23, 1996, on our audits of the
consolidated financial statements and financial statement schedule of Sun
Communities, Inc. which report is incorporated by reference from the Annual
Report on Form 10-K for the year ended December 31, 1995.

We also consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated February 14, 1996, on our audits of
the historical summaries of combined gross income and direct operating expenses
of the Aspen Properties for the years ended December 31, 1995, 1994 and 1993
which report is incorporated by reference from the March 20, 1996 Form 8-K of
Sun Communities, Inc.

We also consent to the reference to our firm under the caption "Experts."



Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Detroit, Michigan
September 12, 1996


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