Ladies and gentlemen, thank you for standing by and welcome to the Sun Communities Second Quarter 2013 Earnings Conference Call on the 25th of July 2013. At this time, management would like me to inform you that certain statements made during this conference, which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in this morning's press release form and from time to time, in the company's periodic filings with the SEC. The company undertakes no obligations to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I'd like to introduce management with us today. Gary Shiffman, Chairman and Chief Executive Officer; Karen Dearing, Chief Financial Officer; and Jeff Jorissen, Director of Corporate Development. [Operator Instructions] I would now like to turn the conference over to Gary Shiffman. Please go ahead, sir.

Thank you, operator, and good morning. Today we reported funds from operations of $27 million or $0.69 per share for the second quarter of 2013 compared to $23.1 million or $0.78 per share in the second quarter of 2012. For the 6 months of 2013, $58.7 million or $1.62 per share compared to $49 million or $1.68 per share in the first half of 2012. These results exclude transaction costs related to acquisition activity in all periods. Revenues for the 6 months increased by 23% from $165 million in 2012 to $203 million in 2013. And now we will turn to a review of the portfolio. During the first 6 months of 2013, revenue-producing sites increased by 1,115 of which 848 are in our same-site portfolio and 267 are increases in our communities acquired in 2012 and 2013. The increase of 1,115 sites exceeds the entire increase in occupied sites for the year 2012. At the end of 2010, occupancy in Michigan, our largest market, was 79%. Today it is 87.4% and at the current rate of occupancy growth, will reach 95% in a little over 2 years. Michigan continues to be a strong and profitable market for us. Florida, Texas and Colorado comprise nearly 17,000 sites, and are already at or above 95% occupancy levels. Taken as a whole at current rates of fill, our entire manufactured home portfolio will reach 95% occupancy in a little over 2.5 years. When we achieve 95% occupancy, our annual purchases of homes will decline significantly as we will only need to replace homes, which move out. Nearly 1/2 of those move outs will be replaced by move ins from dealers and relocations. The remainders will come from new home buys, which will be financed by sales from our existing portfolio of rental…

[Operator Instructions] And our first question does come from the line of Jana Galan with Bank of America.

I wanted to follow-up on your comments of the RV business now kind of creating a year-round platform given the locations, and maybe if we could talk a little bit about FFO in second quarter and your guidance for third quarter. And how we kind of -- how you see this seasonally playing out and what could be your stronger quarters?

Yes, I guess I would share with everyone, we're very pleased and what we view is now a year-round business, which gives us a little bit of rounding from quarter-to-quarter and takes off some of the seasonality that we've experienced due to the Snowbird RV business that we had in the South for 6 of the 12 months. So I think you'll see a pretty much evenness throughout the year.

Now, I -- as we move towards incorporating Morgan, I think historically the company would've seen Q1 and Q4 as our highest quarters, and the second and third quarter were coming at -- coming after that, with the inclusion of Morgan, what you'll see is the first quarter and the third quarter will be our highest quarters and then the fourth quarter and second quarter will tend to be our lowest quarter. You've got the northern RV Communities not operating fully yet, the southern community kind of dropping off and highest expenses in the second quarter related to our MH portfolio. So yes, I think there was a -- I think there might be some modeling seasonality adjustments that need to be made and particularly in what was on the Street for the second quarter and what's on the Street for the third quarter.

And our next question does come from the line of David Harris with Imperial Capital.

I have a question on the expansion sites. Would you characterize these expansion sites more in the senior category or are we talking more all age?

They'd be all age communities, very limited, only one community is senior.

Okay. And are we still talking of expansion -- time to fully lease these? I know you gave your monthly lease up rates. Are we still talking about 18 months typically given the size of your expansion?

We model these out in an absorption of 6 to 8 per month, so you could multiply that times the amount of sites and they tend to be anywhere from 100 sites to 150 sites in size roughly.

Okay. So the project you referred to the leasing up, I think that the first one you referred to at 13 obviously, you're -- that's going much faster than you pro forma-ed?

Yes. That's a tough -- the River Ranch in Texas but that's going better than pro forma.

Okay, okay. And then excuse me, going back on the subject, you probably addressed over several quarters, but the dividend has not been changed for an extended period of time. I think you made reference to potentially revealing that in due course. Is the board likely to be looking at that this year or do you think it would be more of a 2014 event?

I think I've shared on other calls that while its reviewed each quarter, the board is intending to look at it after first quarter 2014.

[Operator Instructions] And our next question does come from Josh Patinkin with BMO Capital Markets.

I'm curious to know what you guys thought about the Michigan MH portfolio that ELS brought to market this last quarter?

Sure, Josh. I think that we've looked at it extensively. We've -- from time to time, had dialogue regarding it. We're very familiar with the assets. A lot of them in our backyard and there are high points to that portfolio and low points depending upon the actual locations and the conditions of the communities. So other than that, I'm not -- I saw the purchase price, the total amount of communities. But I'm not familiar very much with the details and how it breaks down.

Okay. And then 9% cap rate, is that indicative of you think of your Michigan assets or how would you characterize that?

No, I think that I would -- again, I don't know the details, cap rates can be tough to determine on whether they're trailing periods, forward periods, current periods, what is also included in them. But I think that, that cap rate is indicative of the fact that there are some tough hurdles to overcome in that portfolio. There's some occupancies there in the 50%, 60% level, and some challenging regional demographics. And then there are some quality properties in there that with the right investment could turn around and do very, very well. So that's tough for me to comment on what a cap rate should or shouldn't be on that portfolio.

Okay. And looking at the RV business and the platform that you mentioned you're investing in, I'm curious to know how much is booked online versus how much is booked on the web? I'm sorry, at the call center?

I think that we're probably just one month into it, and I know I don't have that information...

Josh, we do track the information. I just don't know the answer to that, so I can follow up with you.

Okay. So at the start, you're just one month in. What do you think the effects on occupancy could be over time?

I think that overall, I shared within the comment that -- in particularly the Morgan portfolio, we're looking for revenue growth, it's a factor of both repositioning and investing in the properties and the platform, whether it be the online, the social media, the restructuring of our business and anticipating growth of 7% to 9% in revenue for the next 3 to 5 years there. So we can get a good investment.

Okay. Sure. And lastly, Indiana. You mentioned on the last call that the market conditions were improving there. Has that continued through the second quarter?

Yes, Josh. We're still seeing -- stronger growth in Indiana. I think -- which one -- it's the revenue-producing sites of our total that were produced in India, is about 16% of our gains year-to-date. That's about double what we saw last year.

And our next question is a follow-up question from the line of David Harris with Imperial Capital.

I have a question on the Mortgage market. You don't have much debt maturing this year, but there's a little coming next year. You got some debt out with Fannie -- yes, Fannie I think. Could you just talk about the appetite for lending from the insurance companies and other participants on the marketplace. And also if there's much of a difference in the rates they're talking about compared to the GSEs.

Well, I'll speak to the current state of affairs with the mortgage debt and the other available debt out there. It's remained -- the appetite has been very strong. We received both incoming calls and we have our pulse on the market out there, and there's no shortage of available lenders in our segment. And I know that there is certain debt we are now looking ahead at and I'll let Karen touch on what those maturities are.

We have -- the portfolio that we're-- have been spending a bit of time on is the $185 million that comes up, I think it's July of next year. So we're spending significant time looking at all sort of lending sources, whether it be life or whether it be commercial bank CMBS. So we're looking at all of those markets.

Is it much of a spread between the terms, Karen?

I think rates -- and from what I've heard, rates in the life companies are about 100 basis points lower than what we're seeing in other areas. But I...

I'm not seeing much change at this time either. So what we've been able to accomplish last year, seems like we can still accomplish today.

And if -- should we think of rates moving up comparable to the move that we've seen on the residential sides, so we're kind of 100 basis points up perhaps from the low point on the longer-term debt that you might be looking at?

I think that the -- be quite candid with you, I think we'll be able to answer that better after we get the term sheets on the debt we're pricing right now.

Okay. And you're actively doing that now, so you'll probably do this ahead of the actual maturity date on the debt that you're referring to for next year?

There's an early prepayment. I mean, there's -- we can prepay January 1, I believe 6 months window on that debt.

Could you lock rates today on -- around these discussions or is -- do you have to really wait until -- you could?

Sure.

Okay. Better price?

Absolutely.

[Operator Instructions] And at this time, I'm not showing any further questions. I would like to turn the call back over to Mr. Shiffman for any closing comments.

Sure. I'd just want to thank everyone for their participation. As always, Karen and I and Jeff are available to follow-up on any calls, and we look forward to again having the conference call after next quarter is completed. Thank you.

Thank you very much. Ladies and gentlemen, this will conclude the Sun Communities 2013 Second Quarter Earnings Conference Call. We thank you for your participation on today's call. You may now disconnect your lines at this time.