Sun Communities Pays For Eugene, Oregon Property With $28.3 Million In Newly Created Preferred Units
The real estate investment trust issued 283,126 Series M Preferred Units at $100 each to the seller rather than paying cash for the acquisition.
Sun Communities' operating partnership issued 283,126 Series M Preferred Units on Thursday — face value $28.3 million — as the consideration for an indirect acquisition of real property in Eugene, Oregon, sidestepping an immediate cash outlay by admitting the seller as a new limited partner instead.
What The 8-K Says
The 8-K, accepted by EDGAR on Friday, discloses that Sun Communities — acting as general partner of Sun Communities Operating Limited Partnership — executed the Thirteenth Amendment to its Fourth Amended and Restated Agreement of Limited Partnership on Thursday to create the new Series M Preferred Units class and complete the deal.
The seller, Saint Lucia/Rowan Oak MHC, contributed its interest in the Eugene property and related assets to Sun ACQ II LLC, a Sun Communities subsidiary, under a contribution agreement dated June 30, 2026. In exchange, the partnership issued 283,126 Series M Preferred Units at $100.00 each — $28.3 million in face value — plus certain other consideration that the filing does not separately quantify. Saint Lucia/Rowan Oak MHC is now admitted as a limited partner of the operating partnership.
The issuance was made without SEC registration, relying on the private-placement exemption under Section 4(a)(2) of the Securities Act. The 8-K was signed by Ileana McAlary, Sun Communities' General Counsel, Executive Vice President, and Secretary.
How The Series M Units Are Structured
The partnership amendment sets a stepped quarterly distribution rate on the $100.00 issue price: 3.2% annually through October 1, 2027, rising to 3.4% through October 1, 2028, and 3.6% per year after that.
Holders can convert each unit into Sun Communities common stock at any time after issuance. The conversion math is fixed: $100.00 divided by a conversion price of $174.00 per share, subject to adjustment for certain capital events. At that rate, the full 283,126 units would convert into roughly 162,716 shares of common stock — though the filing notes certain limitations apply.
On the capital stack, the Series M units sit near the bottom of the preferred tier. They rank senior to Sun Communities' common operating partnership units and its Series A-3 preferred units, but junior to every other existing preferred unit series in the partnership — a position the amendment makes explicit by listing Series C through Series L preferred units all ahead of them.
The Redemption Clock And What To Watch
The structure gives Saint Lucia/Rowan Oak MHC two exit paths beginning October 1, 2027. Starting on that date, the holder can demand cash redemption at $100.00 per unit plus any accrued but unpaid distributions — effectively putting the acquisition price back to Sun Communities in cash. Alternatively, the holder can convert into common stock at the $174.00 conversion price.
The choice matters for Sun Communities shareholders. A cash redemption would require the partnership to fund $28.3 million (plus accrued distributions) out of its own resources. Conversion, by contrast, would add roughly 162,716 shares to the common unit count, diluting existing holders but preserving cash. SUI shares edged up about 0.5% to $110.51 in Friday trading after the deal was disclosed — well below the $174.00 conversion price, meaning conversion would be economically unattractive for the holder unless the stock appreciates substantially before the redemption window opens.
The first decision point arrives October 1, 2027, when Saint Lucia/Rowan Oak MHC gains the right to demand cash redemption at $100.00 per unit — or to hold and wait for the stock to close the gap to the $174.00 conversion price.
