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SOUTHFIELD, MI-Sun Communities, Inc, a Southfield, MI,-based real estate investment trust that owns and operates manufactured housing communities, has been downgraded by an analyst.

The company’s stock, which is listed on the New York Stock Exchange as SUI, was downgraded from “in-line” to “underperform” by Salomon Smith Barney analyst Jonathan Litt. Litt cited concerns over Sun’s decision to offer discount financing — what Sun is calling “Home Buying Made Easy” — for manufactured housing. He also noted Sun did not meet analyst expectations for profitability in the second quarter.

For the quarter ended June 30, 2003, total revenues at Sun increased 7.5% to $43.2 million, compared with $40.2 million in the second quarter of 2002. Funds from operations (FFO) was $17.3 million in both periods. On a diluted per share basis, FFO was $0.84 compared to $0.85 for the same period in the prior year. Net income for the second quarter of 2003 was $4.5 million or $0.25 per diluted common share, compared with $7.0 million, or $0.39 per diluted common share for the same period in the prior year.

For 109 communities owned throughout both years, total revenues increased 3.0% for the six months ended June 30, 2003 and expenses increased 10.2%, which caused net operating income (NOI) to increase by 0.6%. Same property occupancy in the manufactured housing sites decreased from 91.4% at March 31, 2003 to 91.0% at June 30, 2003.

“Same site NOI growth has remained somewhat flat and below our expectations for the quarter,” Gary A. Shiffman, chairman and CEO, said at the time of the earnings announcement.

Home Buying Made Easy will offer financing at 4.99 to 5.99% interest, Sun said.

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