UMH Properties, Inc. (NYSE:UMH) (TASE:UMH) reported Total Income
for the quarter ended June 30, 2023 of $55.3 million as compared to
$49.2 million for the quarter ended June 30, 2022, representing an
increase of 12.3%. Net Loss Attributable to Common Shareholders
amounted to $4.4 million or $0.07 per diluted share for the quarter
ended June 30, 2023 as compared to a Net Loss of $22.5 million or
$0.41 per diluted share for the quarter ended June 30, 2022.
Normalized Funds from Operations Attributable to Common
Shareholders (“Normalized FFO”), was $13.0 million or $0.21 per
diluted share for the quarter ended June 30, 2023, as compared to
$12.0 million or $0.22 per diluted share for the quarter ended June
30, 2022, and $11.7 million or $0.20 for the quarter ended March
31, 2023, representing a 4.5% per diluted share increase
sequentially.
A summary of significant financial information
for the three and six months ended June 30, 2023 and 2022 is as
follows (in thousands except per share amounts):
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Total Income |
|
$ |
55,290 |
|
|
$ |
49,223 |
|
Total Expenses |
|
$ |
46,371 |
|
|
$ |
41,258 |
|
Net Loss Attributable to
Common Shareholders |
|
$ |
(4,418 |
) |
|
$ |
(22,478 |
) |
Net Loss Attributable to Common Shareholders per Diluted Common
Share |
|
$ |
(0.07 |
) |
|
$ |
(0.41 |
) |
FFO (1) |
|
$ |
12,043 |
|
|
$ |
(320 |
) |
FFO (1) per Diluted Common
Share |
|
$ |
0.19 |
|
|
$ |
(0.01 |
) |
Normalized FFO (1) |
|
$ |
13,049 |
|
|
$ |
12,026 |
|
Normalized FFO (1) per Diluted
Common Share |
|
$ |
0.21 |
|
|
$ |
0.22 |
|
Diluted Weighted Average
Shares Outstanding |
|
|
61,236 |
|
|
|
54,215 |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Total Income |
|
$ |
107,897 |
|
|
$ |
95,091 |
|
Total Expenses |
|
$ |
91,611 |
|
|
$ |
79,082 |
|
Net Loss Attributable to
Common Shareholders |
|
$ |
(9,715 |
) |
|
$ |
(26,803 |
) |
Net Loss Attributable to
Common Shareholders per Diluted Common Share |
|
$ |
(0.16 |
) |
|
$ |
(0.50 |
) |
FFO (1) |
|
$ |
22,683 |
|
|
$ |
8,224 |
|
FFO (1) per Diluted Common
Share |
|
$ |
0.37 |
|
|
$ |
0.15 |
|
Normalized FFO (1) |
|
$ |
24,769 |
|
|
$ |
22,439 |
|
Normalized FFO (1) per Diluted
Common Share |
|
$ |
0.41 |
|
|
$ |
0.41 |
|
Diluted Weighted Average
Shares Outstanding |
|
|
60,186 |
|
|
|
53,224 |
|
A summary of significant balance sheet
information as of June 30, 2023 and December 31, 2022 is as follows
(in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Real Estate
Investments |
|
$ |
1,466,344 |
|
|
$ |
1,391,588 |
|
Total Assets |
|
$ |
1,393,869 |
|
|
$ |
1,344,596 |
|
Mortgages Payable, net |
|
$ |
444,797 |
|
|
$ |
508,938 |
|
Loans Payable, net |
|
$ |
182,434 |
|
|
$ |
153,531 |
|
Bonds Payable, net |
|
$ |
99,631 |
|
|
$ |
99,207 |
|
Total Shareholders’
Equity |
|
$ |
637,867 |
|
|
$ |
551,196 |
|
Samuel A. Landy, President and CEO, commented on
the results of the second quarter of 2023.
“We are pleased to announce another solid
quarter of operating results. During the quarter, we:
- Increased Rental and Related Income
by 11.4%;
- Increased Sales of Manufactured
Homes by 17.6%;
- Increased Community Net Operating
Income (“NOI”) by 16.0%;
- Increased Same Property NOI by
12.6%;
- Increased Same Property Occupancy
by 190 basis points from 86.0% to 87.9%;
- Improved our Same Property expense
ratio from 42.0% in the second quarter of 2022 to 40.1% at quarter
end;
- Increased our rental home portfolio
by 304 homes from March 31, 2023 and 534 homes from yearend 2022 to
approximately 9,600 total rental homes, representing an increase of
5.9%;
- Entered into a $25 million term
loan and a $25 million line of credit secured by rental homes and
their leases;
- Issued and sold approximately 2.9
million shares of Common Stock through our At-the-Market Sale
Programs at a weighted average price of $15.61 per share,
generating gross proceeds of $45.1 million and net proceeds of
$44.2 million, after offering expenses;
- Issued and sold approximately
712,000 shares of Series D Preferred Stock through our
At-the-Market Sale Program at a weighted average price of $21.85
per share, generating gross proceeds of $15.6 million and net
proceeds of $15.3 million, after offering expenses;
- Subsequent to quarter end, expanded
our revolving line of credit from $20 million to $35 million;
- Subsequent to quarter end, paid
down approximately $35 million on our floorplan inventory financing
revolving lines of credit;
- Subsequent to quarter end, issued
and sold approximately 2.1 million shares of Common Stock through
our At-the-Market Sale Program at a weighted average price of
$16.23 per share, generating gross proceeds of $34.8 million and
net proceeds of $34.3 million, after offering expenses; and
- Subsequent to quarter end, issued
and sold approximately 351,000 shares of Series D Preferred Stock
through our At-the-Market Sale Program at a weighted average price
of $21.55 per share, generating gross proceeds of $7.6 million and
net proceeds of $7.5 million, after offering expenses.”
Mr. Landy stated, “UMH occupancy and revenue
growth are meeting our expectations. Our communities are
experiencing strong demand which is translating to increased
occupancy, revenue, and NOI growth. The strength of our operating
results has increased our bottom line results as evidenced by our
sequential Normalized FFO growth. Normalized FFO for the second
quarter of 2023 was $0.21 per share as compared to $0.20 per share
in the first quarter.”
During 2023, same property NOI increased by
12.6% for the quarter and 9.1% for the first six months, compared
to the corresponding prior year periods. This increase was driven
by an increase in rental and related income of 9.0% and 7.6% for
the three and six months, respectively, partially offset by an
increase in same property expenses of 4.2% and 5.5%, respectively.
The growth in rental and related income is primarily attributed to
a strong increase in occupancy of 452 units and rental rate
increases of 4.7%. Same property occupancy is now 87.9% as compared
to 86.0% last year, representing an increase of 190 basis
points.”
“We have made substantial progress obtaining,
setting up and filling our inventory homes. Our inventory levels
were higher than usual which resulted in increased carrying costs,
including the high rate interest expense associated with our
floorplan lines. We have been reducing the balance on the floorplan
lines and subsequent to quarter end, we have paid down
approximately $35.0 million on these lines, the current balance is
approximately $4.1 million. We continued to reduce our inventory
and year to date, we have sold 82 new homes versus 59 in the prior
year and converted over 600 new homes to occupied rentals. This has
contributed to a $47.0 million increase in cash flows from
operating activities for the six months ended June 30,
2023.”
“Our sales for the quarter increased from $7.0
million to $8.2 million, representing an increase of 17.6%. Year to
date, sales have increased from $11.3 million to $15.5 million,
representing an increase of 37.6%.”
“UMH continues to execute on our long-term
business plan. We maintain a strong balance sheet to ensure that we
can execute our plan. We raise capital by issuing a combination of
equity, debt and perpetual preferred equity to invest in value-add
acquisitions, expansions, and greenfield development. These
investments take time to become accretive but allow us to generate
excellent long-term returns, in excess of what is available in the
stabilized acquisition market. We analyze every investment with a
long-term view. This strategy has allowed us to build a first-class
portfolio of manufactured housing communities that deliver
shareholders a resilient and growing dividend, greater scale, and
improved net asset value per share.”
UMH Properties, Inc. will host its Second
Quarter 2023 Financial Results Webcast and Conference Call. Senior
management will discuss the results, current market conditions and
future outlook on Wednesday, August 9, 2023, at 10:00 a.m. Eastern
Time.
The Company’s 2023 second quarter financial
results being released herein will be available on the Company’s
website at www.umh.reit in the “Financials” section.
To participate in the webcast, select
the webcast icon on the homepage of the Company’s website at
www.umh.reit, in the Upcoming Events section. Interested parties
can also participate via conference call by calling toll free
877-513-1898 (domestically) or 412-902-4147
(internationally).
The replay of the conference call will be
available at 12:00 p.m. Eastern Time on Wednesday, August 9, 2023,
and can be accessed by dialing toll free 877-344-7529
(domestically) and 412-317-0088 (internationally) and entering the
passcode 2526307. A transcript of the call and the webcast replay
will be available at the Company's
website, www.umh.reit.
UMH Properties, Inc., which was organized in
1968, is a public equity REIT that owns and operates 135
manufactured home communities containing approximately 25,700
developed homesites. These communities are located in New Jersey,
New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland,
Michigan, Alabama, South Carolina and Georgia. UMH also has an
ownership interest in and operates two communities in Florida,
containing 363 sites, through its joint venture with Nuveen Real
Estate.
Certain statements included in this press
release which are not historical facts may be deemed
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any such forward-looking
statements are based on the Company’s current expectations and
involve various risks and uncertainties. Although the Company
believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, the Company can
provide no assurance those expectations will be achieved. The risks
and uncertainties that could cause actual results or events to
differ materially from expectations are contained in the Company’s
annual report on Form 10-K and described from time to time in the
Company’s other filings with the SEC. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements whether as a result of new information, future events,
or otherwise.
Note:
(1) Non-GAAP Information: We assess and
measure our overall operating results based upon an industry
performance measure referred to as Funds from Operations
Attributable to Common Shareholders (“FFO”), which management
believes is a useful indicator of our operating performance. FFO is
used by industry analysts and investors as a supplemental operating
performance measure of a REIT. FFO, as defined by The National
Association of Real Estate Investment Trusts (“NAREIT”), represents
net income (loss) attributable to common shareholders, as defined
by accounting principles generally accepted in the United States of
America (“U.S. GAAP”), excluding gains or losses from sales of
previously depreciated real estate assets, impairment charges
related to depreciable real estate assets, the change in the fair
value of marketable securities, and the gain or loss on the sale of
marketable securities plus certain non-cash items such as real
estate asset depreciation and amortization. Included in the NAREIT
FFO White Paper - 2018 Restatement, is an option pertaining to
assets incidental to our main business in the calculation of NAREIT
FFO to make an election to include or exclude gains and losses on
the sale of these assets, such as marketable equity securities, and
include or exclude mark-to-market changes in the value recognized
on these marketable equity securities. In conjunction with the
adoption of the FFO White Paper - 2018 Restatement, for all periods
presented, we have elected to exclude the gains and losses realized
on marketable securities investments and the change in the fair
value of marketable securities from our FFO calculation. NAREIT
created FFO as a non-U.S. GAAP supplemental measure of REIT
operating performance. We define Normalized Funds from Operations
Attributable to Common Shareholders (“Normalized FFO”), as FFO
excluding amortization and certain one-time charges. FFO and
Normalized FFO should be considered as supplemental measures of
operating performance used by REITs. FFO and Normalized FFO exclude
historical cost depreciation as an expense and may facilitate the
comparison of REITs which have a different cost basis. However,
other REITs may use different methodologies to calculate FFO and
Normalized FFO and, accordingly, our FFO and Normalized FFO may not
be comparable to all other REITs. The items excluded from FFO and
Normalized FFO are significant components in understanding the
Company’s financial performance.
FFO and Normalized FFO (i) do not represent Cash
Flow from Operations as defined by U.S. GAAP; (ii) should not be
considered as alternatives to net income (loss) as a measure of
operating performance or to cash flows from operating, investing
and financing activities; and (iii) are not alternatives to cash
flow as a measure of liquidity.
The diluted weighted shares outstanding used in
the calculation of FFO per Diluted Common Share and Normalized FFO
per Diluted Common Share were 61.8 million and 60.8 million shares
for the three and six months ended June 30, 2023, respectively, and
55.2 million and 54.2 million shares for the three and six months
ended June 30, 2022, respectively. Common stock equivalents
resulting from stock options in the amount of 524,000 and 658,000
shares for the three and six months ended June 30, 2023,
respectively, were excluded from the computation of the Diluted Net
Loss per Share as their effect would be anti-dilutive. Common stock
equivalents resulting from stock options in the amount of 955,000
and 1.0 million shares for the three and six months ended June 30,
2022, respectively, were excluded from the computation of the
Diluted Net Loss per Share as their effect would be
anti-dilutive.
The reconciliation of the Company’s U.S. GAAP
net loss to the Company’s FFO and Normalized FFO for the three and
six months ended June 30, 2023 and 2022 are calculated as follows
(in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
6/30/23 |
|
|
6/30/22 |
|
|
6/30/23 |
|
|
6/30/22 |
|
Net Loss
Attributable to Common Shareholders |
|
$ |
(4,418 |
) |
|
$ |
(22,478 |
) |
|
$ |
(9,715 |
) |
|
$ |
(26,803 |
) |
Depreciation Expense |
|
|
13,751 |
|
|
|
11,984 |
|
|
|
27,124 |
|
|
|
23,701 |
|
Depreciation Expense from
Unconsolidated Joint Venture |
|
|
166 |
|
|
|
86 |
|
|
|
325 |
|
|
|
167 |
|
(Gain) Loss on Sales of
Depreciable Assets |
|
|
(5 |
) |
|
|
44 |
|
|
|
(37 |
) |
|
|
86 |
|
Decrease in Fair Value of
Marketable Securities |
|
|
2,548 |
|
|
|
10,044 |
|
|
|
4,943 |
|
|
|
41,794 |
|
(Gain) Loss on Sales of
Marketable Securities, net |
|
|
1 |
|
|
|
-0- |
|
|
|
43 |
|
|
|
(30,721 |
) |
FFO Attributable to
Common Shareholders |
|
|
12,043 |
|
|
|
(320 |
) |
|
|
22,683 |
|
|
|
8,224 |
|
Redemption of Preferred Stock
(2) |
|
|
-0- |
|
|
|
10,988 |
|
|
|
-0- |
|
|
|
12,020 |
|
Amortization of Financing
Costs(2) |
|
|
538 |
|
|
|
533 |
|
|
|
1,056 |
|
|
|
939 |
|
Non-Recurring Other Expense
(3) |
|
|
468 |
|
|
|
825 |
|
|
|
1,030 |
|
|
|
1,256 |
|
Normalized FFO
Attributable to Common Shareholders (2) |
|
$ |
13,049 |
|
|
$ |
12,026 |
|
|
$ |
24,769 |
|
|
$ |
22,439 |
|
(2) Normalized FFO as previously reported for
the three and six months ended June 30, 2022, was $8,695, or $0.16
per diluted share and $17,670, or $0.33 per diluted share,
respectively. During 2022, the Company incurred the carrying cost
of excess cash for the redemption of preferred stock. Additionally,
due to the change in sources of capital, amortization expense is
expected to become more significant and is therefore included as an
adjustment to Normalized FFO for the three and six months ended
June 30, 2023 and 2022. After making these adjustments for the
three and six months ended June 30, 2022, Normalized FFO was
$12,026, or $0.22 per diluted share and $22,439, or $0.41 per
diluted share, respectively.
(3) Consists of special bonus and restricted
stock grants for the August 2020 groundbreaking Fannie Mae
financing, which are being expensed over the vesting period ($431
and $862, respectively) and non-recurring expenses for the joint
venture with Nuveen ($3 and $50, respectively), one-time legal fees
($30 and $50, respectively), fees related to the establishment of
the UMH OZ Fund, LLC ($4 and $37, respectively), and costs
associated with an acquisition that was not completed ($0 and $31,
respectively) for the three and six months ended June 30, 2023.
Consists of special bonus and restricted stock grants for the
August groundbreaking Fannie Mae financing, which are being
expensed over the vesting period ($431 and $862, respectively) and
non-recurring expenses for the joint venture with Nuveen ($52),
early extinguishment of debt ($193) and one-time legal fees ($149)
for the three and six months ended June 30, 2022.
The following are the cash flows provided by
(used in) operating, investing and financing activities for the six
months ended June 30, 2023 and 2022 (in thousands):
|
|
2023 |
|
|
2022 |
|
Operating
Activities |
|
$ |
52,425 |
|
|
$ |
5,415 |
|
Investing Activities |
|
|
(93,819 |
) |
|
|
871 |
|
Financing Activities |
|
|
49,706 |
|
|
|
153,701 |
|
Contact: Nelli
Madden732-577-9997
# # # #
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