Blue Orca-做空Sun Communities公司（英）

1 THIS RESEARCH REPORT EXPRESSES SOLELY OUR OPINIONS. We are short sellers. We are biased. So are long investors. So is SUI. So are the banks that raised money for the Company. If you are invested (either long or short) in SUI so are you. Just because we are biased does not mean that we are wrong. Use BOC Texas, LLC’s research opinions at your own risk. This report and its contents are not intended to be and do not constitute or contain any financial product advice. Investors should seek their own financial, legal and tax advice in respect of any decision regarding any securities discussed herein. You should do your own research and due diligence before making any investment decisions, including with respect to the securities discussed herein. We have a short interest in SUI securities and therefore stand to realize significant gains in the event that the price of such securities declines. Please refer to our full disclaimer located on the last page of this report. We are short Sun Communities, Inc. (“SUI” or the “Company”), an egregious mess of conflicts of interest and dubious executive behavior which we believe manipulates critical financial disclosures to inflate adjusted funds from operation (“AFFO”) and organic growth. Our diligence reveals that SUI’s CEO received an undisclosed $4 million loan from the family of a purportedly independent Director who has sat on the Audit Committee and chaired the Compensation Committee for close to a decade. Put simply, undisclosed to investors, the family of a Board member overseeing the CEO’s compensation and Company controls has been lending the CEO money to finance the purchase of luxury real estate. Stunningly, this is not the only undisclosed personal loan we uncovered from a SUI Board member to the CEO. Incredibly, SUI’s CEO was also embroiled in a scandal involving the falsification of his mother’s medical records to facilitate the fraudulent sale of $63 million of life insurance policies he took out on his mother’s life. Although he was not charged or formally accused of wrongdoing by law enforcement, in a sworn deposition, the physician who faked the medical records accused the CEO of personally directing the insurance fraud scheme. Further, an attorney provided a sworn statement that a Department of Homeland Security agent involved in the investigation said that the CEO “should be in prison.” This scandal, in our view, raises significant questions as to management credibility and trustworthiness as a steward of investor capital. Management credibility is central to SUI’s valuation because SUI is such a curious outlier compared to peers: by our estimate, SUI’s peers (including its closest comp in the same industry) report 4-8x more recurring capex than SUI. The reason? We believe that SUI arbitrarily excludes 26% of its mobile home / RV sites from recurring capex disclosures. It also excludes regular, reoccurring capital spending required to replace departing tenants, an accoun