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As filed with the Securities and Exchange Commission on August 31, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUN COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENT)
MARYLAND 38-2730780
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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GARY A. SHIFFMAN
PRESIDENT
31700 MIDDLEBELT ROAD
SUITE 145
FARMINGTON HILLS, MICHIGAN 48334
(248) 932-3100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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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: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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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. X
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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.
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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.
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Amount of
Title of Each Class of Securities Aggregate Offering Price (1) Registration Fee
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Common Stock, $.01 par value (2) $2,769,488.75 $770.00
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(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 August 26, 1999.
(2) Includes rights to purchase Junior Participating Preferred Stock of the
Company (the "Rights"). Since no separate consideration is paid for the Rights,
the registration fee therefor is included in the fee for the Common Stock.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETED AND MAY CHANGE.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT WE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION
PROSPECTUS DATED AUGUST 31, 1999
PROSPECTUS
78,428 SHARES
SUN COMMUNITIES, INC.
COMMON STOCK
This prospectus covers the sale of up to 78,428 shares of Sun Communities,
Inc. common stock by certain stockholders. We will not receive any proceeds from
the sale of the shares by the stockholders.
The common stock is listed on 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 August 26, 1999, was $35.3125 per share.
SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN FACTORS RELATING TO AN INVESTMENT
IN THE SHARES.
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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.
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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 August 31, 1999.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Sun Communities,
Inc., a Maryland corporation (hereinafter sometimes referred to as "we", "us",
or the "Company") filed with the Securities and Exchange Commission (the "SEC")
utilizing a "shelf" registration process. Under this shelf process, the selling
stockholders may, from time to time, sell the common stock described in this
prospectus. We may prepare a prospectus supplement at any time to add, update or
change information contained in this prospectus. Except for those instances in
which a specific date is referenced, the information in this prospectus is
accurate as of August 31, 1999. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information".
We believe that we have included or incorporated by reference all
information material to investors in this prospectus, but certain details that
may be important for specific investment purposes have not been included. To see
more detail, you should read the exhibits filed with or incorporated by
reference into the registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the SEC's
public reference rooms. Our SEC filings are also available to the public over
the Internet at the SEC's web site at http://www.sec.gov. In addition, our
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 SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the following documents we filed with the SEC and our
future filings with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we or any underwriters sell all of the
securities:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998,
filed with the Commission on March 17, 1999.
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed with the Commission on May 7, 1999.
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
filed with the Commission on August 2, 1999.
4. Our Current Report on Form 8-K dated December 15, 1998, filed with the
Commission on January 8, 1999.
5. The description of our common stock contained in our Registration
Statement on Form 8-A dated November 23, 1993.
6. The description of rights to purchase our Junior Participating
Preferred Stock contained in our Registration Statement on Form 8-A
dated May 27, 1998.
You may request a copy of these filings at no cost, by writing or calling us at
the following address:
Sun Communities, Inc.
31700 Middlebelt Road
Suite 145
Farmington Hills, MI 48334
Attn: Corporate Secretary
(248) 932-3100
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You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
THE COMPANY
As used herein, the term "Company" includes Sun Communities, Inc., a
Maryland corporation, and one or more of its subsidiaries (including the
Operating Partnership and Sun Home Services, Inc.).
We own and operate manufactured housing communities concentrated in the
midwestern and southeastern United States. We are a fully integrated real estate
company which, together with our affiliates and predecessors, has been in the
business of acquiring, operating, and expanding manufactured housing communities
since 1975. As of June 30, 1999, we owned, managed, and/or financed a portfolio
of 108 manufactured housing community properties (the "Properties") located in
sixteen states containing an aggregate of approximately 38,500 developed sites
and approximately 2,650 sites suitable for development. We are also in the
process of developing an additional ten communities that we estimate will
contain approximately 5,100 sites in the aggregate.
We are the sole general partner of, and, as of June 30, 1999, held
approximately 86% of the interests (not including preferred limited partnership
interests) in, Sun Communities Operating Limited Partnership, a Michigan limited
partnership (the "Operating Partnership"). Substantially all of our assets are
held by or through the Operating Partnership. The ownership and management of
the Properties is allocated among our subsidiaries. However, subject to the tax
and other risks discussed in the section entitled "Risk Factors", our
stockholders 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"), 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 (Jeffrey
P. Jorissen and the Principals are sometimes hereinafter collectively referred
to as the "Senior Officers"), each an officer of the Company, as the holders of
all the common stock of Home Services. As sole general partner of the Operating
Partnership, we have the exclusive power to manage and conduct the business of
the Operating Partnership, subject to certain limited exceptions.
Our executive and principal property management office is located at 31700
Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334, and telephone
number is (248) 932-3100. We have regional property management offices in
Elkhart, Indiana and Tampa, Florida.
RISK FACTORS
You should consider carefully the following information, together with the
other information contained in or incorporated by reference in this prospectus,
in considering whether to purchase the common stock described in this
prospectus.
CONFLICTS OF INTEREST
Failure to Enforce Terms of Home Services Agreement. Gary A. Shiffman,
Milton M. Shiffman, and Jeffrey P. Jorissen (hereinafter collectively referred
to as the "Senior Officers"), each an officer of the Company, have an aggregate
5% interest in Home Services through their ownership of all of the common stock
of Home Services and are thus entitled to 5% of the cash flow from the operating
activities of Home Services (the Operating Partnership is entitled to the
remaining 95% of such cash flow). Home Services has entered into an agreement
with the Operating Partnership for sales, brokerage, and leasing services that
was not negotiated on an arm's length basis. Thus, the Senior Officers will have
a conflict of interest with respect to their obligations as officers and/or
directors of the Company to enforce the terms of this services agreement due to
their right to receive 5% of the cash flow from the operating activities of Home
Services. The failure to enforce the material terms of this agreement could have
an adverse effect on the Company.
Tax Consequences Upon Sale of Properties. Gary A. Shiffman and Milton M.
Shiffman (hereinafter sometimes collectively referred to as the "Principals")
hold limited partnership interests in the Operating Partnership ("Common OP
Units") that they received in connection with the sale of 24 Properties the
Company acquired from partnerships previously affiliated with the Principals
(the "Sun Partnerships"). Prior to the redemption of Common OP Units for our
common stock (the "Common Stock"), the Principals will have tax consequences
different from those of the Company and its public stockholders upon the sale of
any of the Sun Partnerships. 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
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to sell those Properties even though such sale might otherwise be financially
advantageous to the Company.
ADVERSE CONSEQUENCES OF DEBT FINANCING
We are subject to the risks normally associated with debt financing,
including the following risks:
- our cash flow will be insufficient to meet required payments of
principal and interest;
- existing indebtedness will not be able to be refinanced;
- the terms of such refinancing will not be as favorable as the terms of
such existing indebtedness; and
- 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 June 30, 1999, we had outstanding $63.6 million of indebtedness that
is collateralized by mortgage liens on thirteen of the Properties (the "Mortgage
Debt"). In addition, as of June 30, 1999, we had entered into four capitalized
lease obligations having an aggregate value of $36.9 million. Each capitalized
lease obligation involves a lease for a manufactured housing community providing
that we will lease the community for a certain number of years and then have the
option to purchase the community at or prior to the end of the lease term. In
each case, if we fail to exercise our purchase right, the landlord has the right
to require us to buy the property at the same price for which we had the
purchase option. If we fail to meet our obligations under the Mortgage Debt, the
lender would be entitled to foreclose on all or some of the Properties securing
such debt. If we fail to satisfy our lease obligations or an obligation to
purchase the property, the landlord/seller would be entitled to evict us from
the property. In each event, this could have a material adverse effect on us and
our ability to make expected distributions, and could threaten our continued
viability.
CHANGES IN INVESTMENT AND FINANCING POLICIES WITHOUT STOCKHOLDER APPROVAL
Our investment and financing policies, and our policies with respect to
certain other activities, including our growth, debt, capitalization,
distributions, real estate investment trust ("REIT") status, and operating
policies, are determined by our Board of Directors. Although the Board of
Directors has no present intention to do so, these policies may be amended or
revised from time to time at the discretion of the Board of Directors without
notice to or a vote of our stockholders. Accordingly, stockholders may not have
control over changes in our policies and changes in our policies may not fully
serve the interests of all stockholders.
DEPENDENCE ON KEY PERSONNEL
We are dependent on the efforts of our executive officers, particularly the
Senior Officers. While we believe that we could find replacements for these key
personnel, the loss of their services could have a temporary adverse effect on
our operations. We do not currently maintain or contemplate obtaining any
"key-man" life insurance on the Senior Officers.
OWNERSHIP LIMIT AND LIMITS ON CHANGES IN CONTROL
9.8% Ownership Limit. In order to qualify and maintain our qualification as
a REIT, not more than 50% of the outstanding shares of our capital stock may be
owned, directly or indirectly, by five or fewer individuals. Thus, ownership of
more than 9.8% of our outstanding shares of common stock by any single
stockholder has been restricted, with certain exceptions, for the purpose of
maintaining our qualification as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"). Such restrictions in our charter do not apply to the
Principals and Robert B. Bayer, a former director and officer of the Company.
The 9.8% ownership limit, as well as our ability to issue additional shares
of Common Stock or shares of other stock (which may have rights and preferences
over the Common Stock), may discourage a change of control of the Company and
may also: (1) deter tender offers for the Common Stock, which offers may be
advantageous to stockholders; and (2) limit the opportunity for stockholders to
receive a
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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. Our Board of Directors has been divided into three classes
of directors. The term of one class will expire each year. Directors for each
class will be chosen for a three-year term upon the expiration of such class's
term, and the directors in the other two classes will continue in office. The
staggered terms for directors may affect the stockholders' ability to change
control of the Company even if a change in control were in the stockholders'
interest.
Preferred Stock. Our charter authorizes the Board of Directors to issue up
to 10,000,000 shares of preferred stock and to establish the preferences and
rights (including the right to vote and the right to convert into shares of
Common Stock) of any shares issued. The power to issue preferred stock could
have the effect of delaying or preventing a change in control of the Company
even if a change in control were in the stockholders' interest.
Rights Plan. We adopted a stockholders rights plan in 1998 that provides
that our stockholders (other than a stockholder attempting to acquire a 15% or
greater interest in the Company) will have the right to purchase stock in the
Company at a discount in the event any person attempts to acquire a 15% or
greater interest in the Company. Because this plan could make it more expensive
for a person to acquire a controlling interest in the Company, it 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.
REAL ESTATE INVESTMENT CONSIDERATIONS
General. Income from real property investments, and our 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); or
- our ability to provide adequate maintenance and insurance, and
increased operating costs (including insurance premiums and real
estate taxes).
Our income would also be adversely affected if tenants were unable to pay
rent or sites were unable to be rented on favorable terms. If we were unable to
promptly relet or renew the leases for a significant number of the sites, or if
the rental rates upon such renewal or reletting were significantly lower than
expected rates, then our 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 our ability to vary
our 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 our ability to lease sites and on rents charged at the
Properties or at any newly acquired properties. We may be competing with others
that have greater resources than us and whose officers and directors have more
experience than our officers and directors. In addition, other forms of
multi-family residential properties, such as private and federally funded or
assisted multi-family housing projects and single-family housing, provide
housing alternatives to potential tenants of manufactured housing communities.
Changes in Laws. Costs resulting from changes in real estate tax laws
generally may be passed through to tenants and will not affect us. Increases in
income, service or other taxes, however, generally are not passed through to
tenants under leases and may adversely affect our funds from operations and our
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
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or other conditions may result in significant unanticipated expenditures, which
would adversely affect our funds from operations and our ability to make
distributions to stockholders.
Investments in Mortgages. As of June 30, 1999, we had made two investments
in mortgage loans. Our initial investment is an approximately $15.1 million
mortgage loan to two entities, one of which operates a manufactured housing
community, and the other which operates a combination manufactured
housing/recreational vehicle community, each in Delaware. The other investment
is a $4.0 million mortgage loan to a developer completing the development of a
manufacturing housing community in Texas. In addition, we may invest in
additional mortgages in the future. By virtue of our investment in these
mortgages, we are subject to the following risks of such investment:
- the borrowers may not be able to make debt service payments or pay
principal when due;
- the value of mortgaged property may be less than the amounts owed; and
- interest rates payable on the mortgages may be lower than our cost of
funds.
If any of the above occurred, funds from operations and our ability to make
expected distributions to stockholders could be adversely affected.
Development of New Communities. We are engaged in the development of new
communities. 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 following risks:
- financing may not be available on favorable terms for development
projects;
- construction and lease-up may not be completed on schedule resulting
in increased debt service expense and construction costs;
- long-term financing may not be available upon completion of
construction; and
- sites may not be leased on profitable terms.
If any of the above occurred, our 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 our ability to increase rents and to recover increases
in operating expenses and the costs of capital improvements. Enactment of such
laws has been considered from time to time in other jurisdictions. Certain
Properties are located, and 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, we 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 our 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 us, or that a material
environmental condition does not otherwise exist as to any one or more
Properties.
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Uninsured Loss. We maintain 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, we could lose both our
investment in and anticipated profits and cash flow from a property.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
Taxation as a Corporation. We expect to qualify and have made an election
to be taxed as a REIT under the Code, commencing with the calendar year
beginning January 1, 1994. Although we believe that we are organized and will
operate in such a manner, no assurance can be given that we are 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 our control.
If we were to fail to qualify as a REIT in any taxable year, we would be
subject to Federal income tax (including any applicable alternative minimum tax)
on its taxable income at corporate rates. Moreover, unless entitled to relief
under certain statutory provisions, we also would be disqualified from treatment
as a REIT for the four taxable years following the year during which
qualification is lost. This treatment would reduce our net earnings available
for investment or distribution to stockholders because of the additional tax
liability to us for the years involved. In addition, distributions to
stockholders would no longer be required to be made.
Other Tax Liabilities. Even though we qualify as a REIT, we are subject to
certain Federal, state and local taxes on our income and property. In addition,
our sales operations, which are conducted through Home Services, generally will
be subject to Federal income tax at regular corporate rates.
ADVERSE EFFECT OF DISTRIBUTION REQUIREMENTS
We 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, we could have taxable income without sufficient cash to enable us
to meet the distribution requirements of a REIT. Accordingly, we 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
We believe that the Operating Partnership and other various Company
subsidiary partnerships have each been organized as partnerships and will
qualify for treatment as such under the Code. If the Operating Partnership and
such other partnerships fail to qualify for such treatment under the Code, we
would cease to qualify as a REIT, and the Operating Partnership and such other
partnerships 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. As of June 30, 1999, the Senior Officers held 1,184,638 shares of Common
Stock. In addition, as of June 30, 1999, up to 4,127,250 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). The Principals and
the Former General Partners may sell such shares pursuant to registration rights
or an available exemption from registration. Also, Water Oak, Ltd., a former
owner of one of the Properties, will be issued Common OP Units with an aggregate
value of $10.2 million over the 10-year period beginning in January, 2000 and
continuing on an annual basis through 2009. In addition, as of June 30, 1999,
2,113,524 shares have been reserved for issuance (of which options for 532,378
shares have been exercised and 165,000 shares of restricted stock have been
issued as of June 30, 1999) pursuant to our 1993 Employee Stock Option Plan and
1993 Non-Employee Director Stock Option Plan. The Principals' employment
agreements provide for incentive compensation payable in shares of Common Stock.
We have also reserved 240,000 shares of Common Stock for issuance commencing
January 31, 2002 pursuant to our Long Term Incentive Plan which is for the
benefit of all of our salaried employees other than our officers. No prediction
can be made regarding the effect that future sales of shares of Common Stock
will have on the market price of shares.
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ADVERSE EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that may influence the price of the Common Stock in the
public market will be the annual distributions to stockholders relative to the
prevailing market price of the Common Stock. An increase in market interest
rates may tend to make the Common Stock less attractive relative to other
investments, which could adversely affect the market price of Common Stock.
SELLING STOCKHOLDERS
Each of the Selling Stockholders is a holder of Common OP Units and/or
shares of Common Stock. We are the sole general partner of the Operating
Partnership. Under the terms of the Operating Partnership's Second Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement"), the
Common OP Units are redeemable for shares of Common Stock. As of the date of
this prospectus, the redemption ratio is one share for each Common OP Unit
redeemed, but such redemption ratio is subject to adjustment in certain events
pursuant to anti-dilution provisions contained in the Partnership Agreement. The
Common Stock offered by this prospectus has been issued to the Selling
Stockholders in redemption of Common OP Units held by the Selling Stockholders.
None of the Selling Stockholders is an affiliate of the Company.
The following table sets forth certain information regarding the Selling
Stockholders and the shares of Common Stock beneficially owned by each of them:
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Shares Beneficially
Shares of Common Owned After
Stock Beneficially Number of Completion of
Owned Prior to the Shares the Offering (2)(3)
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Selling Stockholder Offering (1) Being Offered Number Percent
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- -------------------------------- -------------------------- --------------------- ---------------------- ------------
- -------------------------------- -------------------------- --------------------- ---------------------- ------------
Susan K. Smith 108,221 70,000 38,221 (4)
- -------------------------------- -------------------------- --------------------- ---------------------- ------------
Roger E. Dean, as Trustee of 4,214 4,214 0 (4)
the Roger E. Dean Trust
created under agreement dated
11/20/86
- -------------------------------- -------------------------- --------------------- ---------------------- ------------
Verna W. Dean, as Trustee of 4,214 4,214 0 (4)
the Verna W. Dean Trust
created under agreement dated
11/20/86
- -------------------------------- -------------------------- --------------------- ---------------------- ------------
TOTAL 116,649 78,428 38,221
- -------------------------------- -------------------------- --------------------- ---------------------- ------------
</TABLE>
(1) The number set forth in this column is the number of shares of Common Stock
held by each such Selling Stockholder and/or the number of shares of Common
Stock that would be received upon a conversion of Common OP Units held by
each such Selling Stockholder.
(2) Assumes that all shares of Common Stock being offered and registered
hereunder (the "Shares") are sold, although no Selling Stockholder is
obligated to sell any Shares.
(3) Based upon 17,334,623 shares of Common Stock outstanding as of July 29,
1999.
(4) Less than one percent (1%).
USE OF PROCEEDS
We will not receive any of the proceeds of any sale by the Selling
Stockholders.
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Stockholders. As used herein, "Selling Shareholders" includes pledgees, donees,
transferees or other successors in interest (collectively with the Selling
Stockholders, the "Sellers") selling shares received from a Selling Shareholder
after the
-8-
<PAGE> 10
date of this Prospectus. The Sellers, directly or through brokers, dealers,
underwriters, agents or market makers, may sell some or all of the Shares. Any
broker, dealer, underwriter, agent or market maker participating in a
transaction involving the Shares may receive a commission from the Sellers.
Usual and customary commissions may be paid by the Sellers. The broker, dealer,
underwriter or market maker may agree to sell a specified number of the Shares
at a stipulated price per Share and, to the extent that such person is unable to
do so acting as an agent for the Sellers, to purchase as principal any of the
Shares remaining unsold at a price per Share required to fulfill the person's
commitment to the Sellers.
A broker, dealer, underwriter or market maker who acquires the Shares from
the Sellers as a principal for its own account may thereafter resell such Shares
from time to time in transactions (which may involve block or cross transactions
and which may also involve sales to or through another broker, dealer,
underwriter, agent or market maker, including transactions of the nature
described above) on the New York Stock Exchange, in negotiated transactions or
otherwise, at market prices prevailing at the time of the sale, or at negotiated
prices. In connection with such resales, the broker, dealer, underwriter, agent
or market maker may pay commissions to or receive commissions from the
purchasers of the Shares. The Sellers also may sell some or all of the Shares
directly to purchasers without the assistance of a broker, dealer, underwriter,
agent or market maker and without the payment of any commissions.
Other than any commissions or discounts paid or allowed by the Selling
Stockholders to underwriters, dealers, brokers or agents, all expenses incurred
in connection with this offering are being borne by us.
Pursuant to the registration rights granted to the Selling Stockholders in
connection with the issuance of Common OP Units to the Selling Stockholders, we
have agreed to indemnify the Selling Stockholders and any person who controls a
Selling Stockholder against certain liabilities and expenses arising out of or
based upon the information set forth or incorporated by reference in this
prospectus, and the registration statement of which this prospectus is a part,
including liabilities under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any broker, dealer, underwriter, agent or
market maker and, if any such broker, dealer, underwriter, agent or market maker
purchases any of the Shares as principal, any profits received on the resale of
such Shares, may be deemed to be underwriting commissions or discounts under the
Securities Act.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon by
Jaffe, Raitt, Heuer & Weiss, Professional Corporation, Detroit, Michigan. Arthur
A. Weiss, who is a director of the Registrant, is a shareholder of Jaffe, Raitt,
Heuer & Weiss, P.C. In addition, as of August 19, 1999, certain shareholders of
Jaffe, Raitt, Heuer & Weiss, P.C. beneficially owned approximately 68,800 shares
of our Common Stock.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to our Annual Report on Form 10-K for the year ended December 31, 1998
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
-9-
<PAGE> 11
================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained or incorporated by
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.
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus.....................2
Where You Can Find More Information.......2
The Company...............................3
Risk Factors..............................3
Selling Stockholders......................8
Use of Proceeds...........................8
Plan of Distribution......................8
Legal Matters.............................9
Experts...................................9
</TABLE>
================================================================================
78,428 SHARES
SUN COMMUNITIES, INC.
COMMON STOCK
--------------
PROSPECTUS
---------------
================================================================================
AUGUST 31, 1999
-10-
<PAGE> 12
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..............................................$ 770
Legal Fees and Expenses....................................... 5,000
Accounting Fees and Expenses.................................. 3,000
Miscellaneous................................................. 2,500
-------
Total.........................................................$11,270
=======
</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> 13
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
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)
4.3 Rights Agreement, dated as of April 24, 1998, between the
Company and State Street Bank and Trust Company
(Incorporated by reference to Exhibit 99.1 of the Company's
Current Report on Form 8-K dated April 24, 1998)
*5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation as to legality of securities
*23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants
*23.2 Consent of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation (included in Exhibit 5.1)
*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:
(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 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> 14
(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> 15
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 August 16,
1999.
SUN COMMUNITIES, INC.,
a Maryland corporation
By: /s/ Jeffrey P. Jorissen
-------------------------------------------------
Jeffrey P. Jorissen, Chief Financial Officer,
Secretary and Principal Accounting Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Sun Communities, Inc. 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 shares of 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 August 16, 1999
- ------------------------------------------
Milton M. Shiffman
/s/ Gary A. Shiffman Chief Executive Officer, President, August 16, 1999
- ------------------------------------------
Gary A. Shiffman and Director
/s/ Jeffrey P. Jorissen Senior Vice President, Treasurer, August 16, 1999
- ------------------------------------------
Jeffrey P. Jorissen Chief Financial Officer, and
Secretary (principal accounting and
financial officer)
/s/ Paul D. Lapides Director August 16, 1999
- ------------------------------------------
Paul D. Lapides
/s/ Ted J. Simon Director August 16, 1999
- ------------------------------------------
Ted J. Simon
/s/ Clunet R. Lewis Director August 6, 1999
- ------------------------------------------
Clunet R. Lewis
/s/ Ronald L. Piasecki Director August 11, 1999
- ------------------------------------------
Ronald L. Piasecki
</TABLE>
II-4
<PAGE> 16
<TABLE>
<S> <C> <C>
/s/ Arthur A. Weiss Director August 12, 1999
- ------------------------------------------
Arthur A. Weiss
</TABLE>
II-5
<PAGE> 17
INDEX TO 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)
4.3 Rights Agreement, dated as of April 24, 1998, between the
Company and State Street Bank and Trust Company (Incorporated
by reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K dated April 24, 1998)
*5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, as to legality of securities
*23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
*23.2 Consent of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation (included in Exhibit 5.1)
</TABLE>
*Filed herewith.
II-6
<PAGE> 1
EXHIBIT 5.1
[JAFFE, RAITT, HEUER & WEISS LETTERHEAD]
August 31, 1999
Sun Communities, Inc.
31700 Middlebelt Road, Suite 145
Farmington Hills, Michigan 48334
Gentlemen:
We have acted as counsel to Sun Communities, Inc. (the "Company"), a
Maryland corporation, in connection with the registration by the Company of
78,428 shares (the "Shares") of Common Stock, $.01 par value per share ("Common
Stock") pursuant to a Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission on or about August 31, 1999 (the
"Registration Statement"). This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. 229.601(b)(5), in connection with 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 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.
For purposes of this opinion letter, we have examined copies of the
following documents:
A. An executed copy of the Registration Statement;
B. The Company's Articles of Amendment and Restatement (the "Charter");
C. Second Amended and Restated Limited Partnership Agreement of Sun
Communities Operating Limited Partnership;
D. The first through one hundred first amendments, inclusive, to the
Second Amended and Restated Limited Partnership Agreement of Sun
Communities Operating Limited Partnership;
E. The Bylaws of the Company;
F. The Company's corporate minute book; and
G. An Officer's Certificate (the "Certificate"), a copy of which is
attached to this letter as Exhibit A.
The documents listed in items A-G above are collectively referred to as the
"Documents".
In rendering our opinion, we have assumed, without independent
verification, that: (i) all signatures are genuine; (ii) all Documents submitted
to us as originals are authentic; and (iii) all Documents submitted
<PAGE> 2
[JAFFE, RAITT, HEUER & WEISS LETTERHEAD]
Sun Communities
August 31,1999
Page 2
to us as copies conform to the originals of such Documents. Our review has been
limited to examining the Documents and applicable law.
To the extent that any opinion in this letter relates to or is dependent
upon factual information, we have relied exclusively upon the factual
representations and warranties set forth in the Certificate, and we have not
undertaken to independently verify any such facts or information.
Based upon, subject to and limited by the foregoing, we are of the opinion
that, as of the date hereof:
1. The Shares that have been issued are validly issued, fully paid, and
non-assessable.
2. The Shares that may be issued in the future in exchange for Common OP
Units (as such term is defined in the Registration Statement) have
been duly authorized.
3. Upon issuance in the manner described in the Registration Statement of
the Shares that are to be issued in exchange for the Common OP Units,
such Shares will be validly issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement, and to the use of the name of our firm in the
Prospectus under the caption "LEGAL MATTERS".
Very truly yours,
JAFFE, RAITT, HEUER & WEISS
Professional Corporation
/s/ Jeffrey L. Forman
Jeffrey L. Forman
<PAGE> 3
EXHIBIT "A"
OFFICER'S CERTIFICATE
The undersigned, the duly elected and acting President and Chief Executive
Officer of SUN COMMUNITIES, INC., a Maryland corporation (the "Corporation"),
hereby represents and warrants the following to Jaffe, Raitt, Heuer & Weiss,
professional corporation ("JRH&W"):
1. Sun Communities, Inc. ("Sun") is a corporation formed under the laws
of the State of Maryland.
2. The Articles of Amendment and Restatement of the Company have not been
amended since November 8, 1993.
3. The Second Amended and Restated Limited Partnership Agreement of Sun
Communities Operating Limited Partnership, a Michigan limited
partnership, has not been amended other than pursuant to amendments
prepared by JRH&W.
August 27, 1999
-------------------------------------
Gary A. Shiffman, President and Chief
Executive Officer
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 12, 1999 relating to the
financial statements and financial statement schedules, which appears in Sun
Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1998. We also consent to the references to us under the headings "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
August 31, 1999
