‘Just the Facts’ UMH Properties, per SEC filings, MarketScreener Reports Growth via Opportunity Zone Fund, REIT’s Manufactured Home Sales Reportedly Drop Sharply, Rental, COVID Impacts Assessed

JustFactsUMHPropertiesPerSECfilingsMarketScreenerReportsGrowthViaOpportunityZone FundREITsManufacturedHomeSalesDropSharplyRentalCOVIDimpactsAssessedMHProNews

“Sales of manufactured homes decreased 20% during the six months ended June 30, 2022 from the prior year.” Also, “The macro-economic environment and current housing fundamentals continue to favor home rentals.” And: “We have added an additional 151 rental homes during the first six months of 2022.” So says a few of the topline fact claims and viewpoints of UMH Properties (UMH) management in their recent report to the SEC, shareholders and possible investors. UMH is one of the manufactured home industry’s real estate investment trusts (REIT) operating in the manufactured home land-lease community sector. Two reports plus additional information and an analysis in brief are found herein.

On 8.10.2022 MarketScreener said that: “UMH PROPERTIES, INC. ANNOUNCES ACQUISITION OF A SOUTH CAROLINA COMMUNITY THROUGH ITS NEWLY-FORMED QUALIFIED OPPORTUNITY ZONE FUND.”

quotequotationMark198x330FREEHOLD, NJ, Aug. 10, 2022 (GLOBE NEWSWIRE) — UMH Properties, Inc. (NYSE: UMH) today announced that it closed on the acquisition of a manufactured home community located in Orangeburg, South Carolina for a purchase price of $5,200,000 through UMH’s newly formed qualified opportunity zone fund (“QOZF”). This community contains 186 developed homesites, of which approximately 42% are occupied. It is situated on approximately 39 acres in a qualified opportunity zone.

Samuel A. Landy, President and Chief Executive Officer, commented, “We are pleased to announce the acquisition of our second South Carolina community. This community is well-located and will benefit from our proven business plan. The community has been acquired through the QOZF, in which UMH invested a portion of the capital gains realized earlier this year from the sale of Monmouth Real Estate Investment Corp. UMH will also earn fees for sourcing acquisitions and managing the QOZF. In addition to seeking other opportunities to acquire existing communities requiring substantial capital investment that are located in qualified opportunity zones, the QOZF will also look to acquire development opportunities in qualified opportunity zones. The QOZF was designed to allow for deferral of tax on recently realized capital gains reinvested in the QOZF until December 31, 2026 and to potentially obtain certain other tax benefits. By providing quality affordable housing in opportunity zones, we will help make these areas even more attractive to employers who need housing for their employees. We look forward to further growth of the QOZF through acquisitions and development opportunities.”

UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 132 manufactured home communities with approximately 25,000 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, and South Carolina. UMH also has an ownership interest in and operates one community in Florida, containing 219 sites, through its joint venture with Nuveen Real Estate.  # # #

 

About a week before that MarketScreener provided the following based on SEC 10-Q filings by UMH Properties (UMH).

 

quotequotationMark198x330UMH PROPERTIES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/03/2022

Overview

The following discussion and analysis of the consolidated financial condition

and results of operations should be read in conjunction with the consolidated

financial statements and footnotes thereto included elsewhere herein and in the

Company’s annual report on Form 10-K for the year ended December 31, 2021.

The Company is a Maryland corporation that operates as a self-administered,

self-managed Real Estate Investment Trust (“REIT”) with headquarters in

Freehold, New Jersey. The Company’s primary business is the ownership and

operation of manufactured home communities, which includes leasing manufactured

home spaces on an annual or month-to-month basis to residents. The Company also

leases manufactured homes to residents and, through its wholly-owned taxable

REIT subsidiary, UMH Sales and Finance, Inc. (“S&F”), sells and finances the

sale of manufactured homes to residents and prospective residents of our

communities and for placement on customers’ privately-owned land.

 

As of June 30, 2022, the Company owned and operated 130 manufactured home

communities containing approximately 24,400 developed homesites. These

communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee,

Indiana, Michigan, Maryland, Alabama and South Carolina. The Company also has an

ownership interest in and operates one community in Florida through its joint

venture with Nuveen Real Estate.

 

The Company earns income from the operation of its manufactured home

communities, leasing of manufactured homesites, the rental of manufactured

homes, the sale and finance of manufactured homes and the brokering of home

sales and revenue under cable service agreements as well as from appreciation in

the values of the manufactured home communities and vacant land owned by the

Company. In addition, the Company receives property management and other fees

from its joint venture with Nuveen Real Estate. Management views the Company as

a single segment based on its method of internal reporting in addition to its

allocation of capital and resources. The Company also invests in equity

securities of other REITs which the Company generally limits to no more than

approximately 15% of its undepreciated assets. As of June 30, 2022, the

securities portfolio represented 2.7% of undepreciated assets.

 

The Company believes that its capital structure, which allows for the ownership

of assets using a balanced combination of equity obtained through the issuance

of common stock, preferred stock and debt, will enhance shareholder returns as

the properties appreciate over time.

 

The Company intends to continue to increase its real estate investments. Our

business plan includes acquiring communities that over time are expected to

yield in excess of our cost of funds and then investing in physical

improvements, including adding rental homes onto otherwise vacant sites. This

has resulted in increased occupancy rates and improved operating results. For

the three and six months ended June 30, 2022, rental and related income

increased 7% from the prior year period and Community Net Operating Income

(“NOI”), as defined below, increased 5% and 7%, respectively. Same property NOI,

which includes communities owned and operated as of January 1, 2021, increased

5% for the six months ended June 30, 2022 over the prior year period, primarily

due to a rental rate increase of 5%. We have been positioning ourselves for

future growth and will continue to seek opportunistic investments. In addition,

on behalf of our recently-formed joint venture with Nuveen Real Estate, we will

seek opportunities to acquire manufactured home communities that are under

development and/or newly developed and meet certain other investment guidelines.

 

Sales of manufactured homes decreased 20% during the six months ended June 30,

2022 from the prior year. Demand for quality affordable housing remains healthy

while inventory is scarce. Our property type offers substantial comparative

value that should result in increased demand.

 

The macro-economic environment and current housing fundamentals continue to

favor home rentals. Rental homes in a manufactured home community allow the

resident to obtain the efficiencies of factory-built housing and the amenities

of community living for less than the cost of other forms of affordable housing.

We continue to see strong demand for rental homes. We have added an additional

151 rental homes during the first six months of 2022. This brought the total

number of rental homes to approximately 8,900 rental homes, or 36.3% of total

sites. Occupied rental homes represented approximately 40.2% of total occupied

sites at quarter end. Occupancy in rental homes continues to be strong and was

at 94.6% as of June 30, 2022. We compare favorably with other types of rental

housing, including apartments, and we will continue to allocate capital to

rental home purchases, as demand dictates. We anticipate adding approximately

700 – 800 rental homes in 2022.

The following is a summary of the communities acquired during the six months ended June 30, 2022 (in thousands):

 

 

Number of                           Number of      Occupancy at

Community Date of Acquisition State Sites Purchase Price Acres Acquisition

Center Manor          March 31, 2022          PA                96     $         5,800              18                83 %

 

Mandell Trails          May 3, 2022           PA               132               7,375              65                70 %

 

La Vista Estates       May 25, 2022           AL               139

3,878              36                 6 %

 

Total as of June

30, 2022                                                       367     $        17,053             119                49 %

 

See PART I, Item 1 – Business in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2021 for a more complete discussion of the economic

and industry-wide factors relevant to the Company and the opportunities and

challenges, and risks on which the Company is focused.

 

Significant Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of

operations are based upon the Company’s consolidated financial statements, which

have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S. GAAP”). The preparation of these

consolidated financial statements requires management to make estimates and

judgments that affect the reported amounts of assets and liabilities, revenues

and expenses, and related disclosure of contingent assets and liabilities at the

date of the Company’s consolidated financial statements. Actual results may

differ from these estimates under different assumptions or conditions.

 

On a regular basis, management evaluates our assumptions, judgments and

estimates. Management believes there have been no material changes to the items

that we disclosed as our significant accounting policies and estimates under

Item 7, “Management’s Discussion and Analysis of Financial Condition and Results

of Operations,” in our Annual Report on Form 10-K for the year ended December

31, 2021.

 

Supplemental Measures

In addition to the results reported in accordance with GAAP, management’s

discussion and analysis of financial condition and results of operations include

certain non-GAAP financial measures that in management’s view of the business we

believe are meaningful as they allow the investor the ability to understand key

operating details of our business both with and without regard to certain

accounting conventions or items that may not always be indicative of recurring

annual cash flow of the portfolio. These non-GAAP financial measures as

determined and presented by us may not be comparable to related or similarly

titled measures reported by other companies and include Community Net Operating

Income (“Community NOI”), Funds from Operations Attributable to Common

Shareholders (“FFO”) and Normalized Funds from Operations Attributable to Common

Shareholders (“Normalized FFO”).

 

We define Community NOI as rental and related income less community operating

expenses such as real estate taxes, repairs and maintenance, community salaries,

utilities, insurance and other expenses. We believe that Community NOI is

helpful to investors and analysts as a direct measure of the actual operating

results of our manufactured home communities, rather than our Company overall.

Community NOI should not be considered a substitute for the reported results

prepared in accordance with GAAP. Community NOI should not be considered as an

alternative to net income (loss) as an indicator of our financial performance,

or to cash flows as a measure of liquidity; nor is it indicative of funds

available for our cash needs, including our ability to make cash distributions.

 

The Company’s Community NOI for the three and six months ended June 30, 2022 and 2021 is calculated as follows (in thousands):

Three Months Ended          Six Months Ended

6/30/22       6/30/21      6/30/22      6/30/21

 

Rental and Related Income            $   42,229     $ 39,341     $ 83,806     $ 78,054

Less: Community Operating Expenses       18,923       17,045       36,994

34,182

Community NOI                        $   23,306     $ 22,296     $ 46,812     $ 43,872

 

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 U.S. of America (“U.S. GAAP”), excluding

extraordinary items, as defined under U.S. GAAP, 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 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 Company’s FFO and Normalized FFO attributable to common shareholders for the

three and six months ended June 30, 2022 and 2021 are calculated as follows

(in

thousands):

Three Months Ended             Six Months Ended

6/30/22        6/30/21        6/30/22        6/30/21

 

Net Income (Loss) Attributable to

Common Shareholders                   $   (22,478 )   $    8,403     $  (26,803 )   $   15,242

Depreciation Expense                       11,984         11,184         23,701         22,192

Depreciation Expense from

Unconsolidated Joint Venture                   86              0            167              0

(Gain) Loss on Sales of Depreciable

Assets                                         44             (5 )           86             18

(Increase) Decrease in Fair Value

of Marketable Securities                   10,044         (9,291 )       41,794        (19,510 )

(Gain) Loss on Sales of Marketable

Securities, net                                 0           (436 )      (30,721 )          294

FFO Attributable to Common

Shareholders                                 (320 )        9,855          8,224         18,236

 

Adjustments:

Redemption of Preferred Stock               8,190              0          8,190              0

Non- Recurring Other Expense (1)              825            426          1,256            746

Normalized FFO Attributable to

Common Shareholders                   $     8,695     $   10,281     $   17,670     $   18,982

 

(1) For the three and six months ended June 30, 2022, 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

($52), early extinguishment of debt ($193) and one-time legal fees ($149).

For 2021, consists of special bonus and restricted stock grants for the

August 2020 groundbreaking Fannie Mae financing, which are being expensed

over the vesting period.

 

The following are the cash flows provided (used) by operating, investing and financing activities for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended

6/30/22       6/30/21

 

Operating Activities   $   5,415     $  33,203

Investing Activities         871       (49,573 )

Financing Activities     153,701        90,036

 

Changes In Results Of Operations

Rental and related income increased 7% from $39.3 million for the three months

ended June 30, 2021 to $42.2 million for the three months ended June 30, 2022.

Rental and related income increased 7% from $78.1 million for the six months

ended June 30, 2021 to $83.8 million for the six months ended June 30, 2022.

This increase was primarily due to the acquisitions made during 2021 and 2022,

as well as increases in rental rates and same property occupancy and additional

rental homes. The Company has been raising rental rates by approximately 3% to

4% annually at most communities. Same property occupancy remained stable at

86.7% as of June 30, 2021 and 2022. Occupied rental homes increased 2% from

approximately 8,300 homes at June 30, 2021 to 8,400 homes at June 30, 2022.

 

Community operating expenses increased 11% from $17.0 million for the three

months ended June 30, 2021 to $18.9 million for the three months ended June 30,

  1. Community operating expenses increased 8% from $34.2 million for the six

months ended June 30, 2021 to $37.0 million for the six months ended June 30,

  1. These increases were primarily due to an increase in personnel costs, real

estate taxes, insurance and water and sewer expenses.

 

Community NOI increased 5% from $22.3 million for the three months ended June

30, 2021 to $23.3 million for the three months ended June 30, 2022. Community

NOI increased 7% from $43.9 million for the six months ended June 30, 2021 to

$46.8 million for the six months ended June 30, 2022. These increases were

primarily due to the acquisitions during 2021 and 2022 and increases in rental

rates, occupancy and rental homes. The Company’s operating expense ratio

(defined as community operating expenses divided by rental and related income)

was 44.8% and 43.3% for the three months ended June 30, 2022 and 2021,

respectively. The Company’s Operating Expense Ratio was 44.1% and 43.8% for the

six months ended June 30, 2022 and 2021, respectively. Many recently acquired

communities have deferred maintenance requiring higher than normal expenditures

in the first few years of ownership. Because most of the community expenses

consist of fixed costs, as occupancy rates increase, these expense ratios are

expected to continue to improve. Since the Company has the ability to increase

its rental rates annually, increasing costs due to inflation and changing prices

have generally not had a material effect on revenue and income from continuing

operations.

 

Sales of manufactured homes decreased 27% from $9.6 million, or 120 homes, for

the three months ended June 30, 2021 to $7.0 million, or 86 homes, for the three

months ended June 30, 2022. Sales of manufactured homes decreased 20% from $14.0

million, or 193 homes, for the six months ended June 30, 2021 to $11.3 million,

or 147 homes, for the six months ended June 30, 2022. Cost of sales of

manufactured homes amounted to $4.8 million and $7.0 million for the three

months ended June 30, 2022 and 2021, respectively. Cost of sales of manufactured

homes amounted to $7.8 million and $10.5 million for the six months ended June

30, 2022 and 2021, respectively. The gross profit percentage was 31% and 27% for

the three months ended June 30, 2022 and 2021, respectively, and 31% and 25% for

the six months ended June 30, 2022 and 2021, respectively. Selling expenses,

which includes salaries, commissions, advertising and other miscellaneous

expenses, amounted to $1.2 million and $1.4 million for the three months ended

June 30, 2022 and 2021, respectively, and $2.4 million and $2.5 million for the

six months ended June 30, 2022 and 2021, respectively. Gain (loss) from the

sales operations (defined as sales of manufactured homes less cost of sales of

manufactured homes less selling expenses less interest on the financing of

inventory) amounted to a gain of $876,000 or 13% of total sales and a gain of

$1.2 million or 12% of total sales for the three months ended June 30, 2022 and

2021, respectively. Gain (loss) from the sales operations amounted to a gain of

$979,000 or 9% of total sales and a gain of $929,000 or 7% of total sales for

the six months ended June 30, 2022 and 2021, respectively. Many of the costs

associated with sales, such as salaries, and to an extent, advertising and

promotion, are fixed.

 

Home prices have continued their rise as fewer sellers are listing homes and

inventories decline. With the passage of time, the inherent relative

affordability of our property type becomes more and more apparent, which should

result in increased demand. The Company continues to be optimistic about future

sales and rental prospects given the fundamental need for affordable housing.

The Company believes that sales of new homes produce new rental revenue and

represent an investment in the upgrading of our communities.

 

General and administrative expenses increased 29% from $3.3 million for the

three months ended June 30, 2021 to $4.3 million for the three months ended June

30, 2022. General and administrative expenses increased 21% from $6.8 million

for the six months ended June 30, 2021 to $8.2 million for the six months ended

June 30, 2022. These increases were mainly due to an increase in personnel

costs, including an increase in stock-based compensation, including the cost of

previously issued special restricted stock grants for the groundbreaking Fannie

Mae financing completed in 2020, and other non-recurring expenses for the joint

venture, early extinguishment of debt and other legal expenses. General and

administrative expenses as a percentage of gross revenue (total income plus

interest, dividends and other income) was 8.4% and 8.3% for the three and six

months ended June 30, 2022, respectively, as compared to 6.5% and 7.4% for the

three and six months ended June 30, 2021, respectively. Without the special

bonus and restricted stock grants and the non-recurring expenses, this

percentage was 6.8% and 7.0% for the three and six months ended June 30, 2022,

respectively, as compared to 5.7% and 6.2% for the three and six months ended

June 30, 2021, respectively.

 

Depreciation expense increased 7% from $11.2 million for the three months ended

June 30, 2021 to $12.0 million for the three months ended June 30, 2022.

Depreciation expense increased 7% from $22.2 million for the six months ended

June 30, 2021 to $23.7 million for the six months ended June 30, 2022. This

increase was primarily due to the acquisitions and the increase in rental homes

during 2021 and 2022.

 

Interest income increased 35% from $792,000 for the three months ended June 30,

2021 to $1.1 million for the three months ended June 30, 2022. Interest income

increased 23% from $1.6 million for the six months ended June 30, 2021 to $2.0

million for the six months ended June 30, 2022. This increase was primarily due

to an increase in the average balance of notes receivable from $43.8 million at

June 30, 2021 to $55.1 million at June 30, 2022.

Dividend income decreased 44% from $1.3 million for the three months ended June

30, 2021 to $721,000 for the three months ended June 30, 2022. Dividend income

decreased 42% from $2.6 million for the six months ended June 30, 2021 to $1.5

million for the six months ended June 30, 2022. This decrease was due to reduced

dividends from the reduction of our securities portfolio. Dividends received

from our marketable securities investments were at a weighted average yield of

approximately 5.9% and 4.2% at June 30, 2022 and 2021, respectively.

 

The Company recognized a gain on sales of marketable securities of $30.7 million

for the six months ended June 30, 2022 as a result of the cash consideration

received in the MREIC merger. The Company recognized a gain on sales of

marketable securities of $436,000 for the three months ended June 30, 2021 and a

loss on sales of marketable securities of $294,000 for the six months ended June

30, 2021. Increase (decrease) in fair value of marketable securities decreased

from a gain of $9.3 million for the three months ended June 30, 2021 to a loss

of $10.0 million for the three months ended June 30, 2022. Increase (decrease)

in fair value of marketable securities decreased from a gain of $19.5 million

for the six months ended June 30, 2021 to a loss of $41.8 million for the six

months ended June 30, 2022. As of June 30, 2022, the Company had total net

unrealized losses of $56.1 million in its REIT securities portfolio.

 

Interest expense, including amortization of financing costs, increased 29% from

$5.0 million for the three months ended June 30, 2021 to $6.4 million for the

three months ended June 30, 2022. Interest expense, including amortization of

financing costs, increased 22% from $9.8 million for the six months ended June

30, 2021 to $11.9 million for the six months ended June 30, 2022. This increase

is mainly due to interest on the Series A Bonds.

Changes in Financial Condition

Total investment property and equipment increased 3% or $43.0 million during the

six months ended June 30, 2022. The Company acquired three communities with 367

developed homesites for approximately $17.1 million. The Company also added 151

rental homes to its communities during the first six months of 2022. The

Company’s occupancy rate on its rental homes portfolio was 94.6% at June 30,

2022 as compared to 95.5% at December 31, 2021.

Marketable securities decreased 59% or $66.8 million during the six months ended June 30, 2022. This decrease was due to a net decrease in the fair value of $41.8 million, primarily due to the MREIC merger.

Mortgages payable, net of unamortized debt issuance costs, increased 4% or $16.2

million during the six months ended June 30, 2022. This increase was due to a

new mortgage of $25.6 million offset by principal payments of $8.8 million.

 

Loans payable, net of unamortized debt issuance costs, increased 25% or $11.6

million during the six months ended June 30, 2022. This increase was due to an

increase of $11.5 million on our revolving lines of credit for the financing of

home sales and the purchase of inventory.

During the six months ended June 30, 2022, the Company also issued $102.7 million of its new 4.72% Series A Bonds due 2027.

Liquidity and Capital Resources

The Company’s focus is on real estate investments, including investment in

rental homes. Additionally, the Company invests in marketable debt and equity

securities of other REITs. The REIT securities portfolio provides the Company

with liquidity and additional income and serves as a proxy for real estate when

more favorable risk adjusted returns are not available. The Company generally

limits its marketable securities investments to no more than approximately

15% of its undepreciated assets.

 

The Company’s principal liquidity demands have historically been, and are

expected to continue to be, distributions to the Company’s shareholders,

acquisitions, capital improvements, development and expansions of properties,

debt service, purchases of manufactured home inventory and rental homes,

financing of manufactured home sales and payments of expenses relating to real

estate operations. We anticipate that the liquidity demands of the recent

properties acquired will be met by the operations of these acquisitions. The

Company’s ability to generate cash adequate to meet these demands is dependent

primarily on income from its real estate investments and marketable securities

portfolio, the sale of real estate investments and marketable securities,

refinancing of mortgage debt, leveraging of real estate investments,

availability of bank borrowings, lines of credit, and other incurrence of

indebtedness, proceeds from the DRIP, and access to the capital markets,

including through its 2022 Common ATM Program.

 

In addition to cash generated through operations, the Company uses a variety of

sources to fund its cash needs, including acquisitions. The Company may sell

marketable securities from its investment portfolio, borrow on its unsecured

credit facility or lines of credit, incur other indebtedness, finance and

refinance its properties, and/or raise capital through the DRIP and capital

markets, including through the Company’s ATM Programs. In order to provide

financial flexibility to opportunistically access the capital markets, the

Company has implemented a 2022 Common ATM Program. The 2022 Common ATM Program

allows the Company to offer and sell shares of the Company’s Common Stock,

having an aggregate sales price of up to $150 million from time to time through

the Distribution Agents.

 

The Company intends to continue to increase its real estate investments. Our

business plan includes acquiring communities that over time are expected to

yield in excess of our cost of funds and then investing in physical

improvements, including adding rental homes onto otherwise vacant sites. In

addition, on behalf of our recently-formed joint venture with Nuveen Real

Estate, we will seek opportunities to acquire manufactured home communities that

are under development and/or newly developed and meet certain other investment

guidelines. There is no guarantee that any of these additional opportunities

will materialize or that the Company will be able to take advantage of such

opportunities. The growth of our real estate portfolio and success of our joint

venture depends on the availability of suitable properties which meet the

Company’s investment criteria and appropriate financing. Competition in the

market areas in which the Company operates is significant. To the extent that

funds or appropriate communities are not available, fewer acquisitions will

be made.

 

The Company continues to strengthen its capital and liquidity positions. During

the six months ended June 30, 2022, the Company issued and sold 2.4 million

shares of Common Stock through our Common ATM Programs, at a weighted average

price of $24.29 per share, generating gross proceeds of $59.3 million and net

proceeds of $58.2 million, after offering expenses.

During the six months ended June 30, 2022, the Company also issued $102.7 million of its new 4.72% Series A Bonds due 2027 in an offering to investors in Israel and received $98.7 million in net proceeds, after offering expenses.

In addition, the Company raised $3.0 million from the issuance of common stock

in the DRIP during the six months ended June 30, 2022, which included Dividend

Reinvestments of $1.5 million. Dividends paid on the common stock for the six

months ended June 30, 2022 were $21.3 million, of which $1.5 million were

reinvested. Dividends paid on the Series C Preferred Stock and the Series D

Preferred Stock for the six months ended June 30, 2022 totaled $15.2 million.

 

Net cash provided by operating activities amounted to $5.4 million and $33.2

million for the six months ended June 30, 2022 and 2021, respectively. As of

June 30, 2022, the Company had cash and cash equivalents of $275.8 million,

marketable securities of $46.9 million, approximately $30.1 million available on

our revolving lines of credit for the financing of home sales and purchases of

inventory, $15 million available on our line of credit secured by rental homes

and rental homes leases and $50 million available on our unsecured credit

facility, with an additional $50 million potentially available pursuant to an

accordion feature. Subsequent to quarter end, the Company drew down $50 million

on its credit facility.

 

On July 26, 2022, pursuant to its June 16, 2022 notice of redemption, the

Company redeemed all 9.9 million issued and outstanding shares of its 6.75%

Series C Preferred Stock at a redemption price of $25.00 per share liquidation

preference plus accrued and unpaid dividends to, but not including, the July 26,

2022 redemption date in an amount of $0.2578 per share, for a total payment of

$25.2578 per share, or $249.6 million.

 

The Company owns 130 communities, of which 32 are unencumbered. Except for 13

communities in the borrowing base for our unsecured credit facility, these

unencumbered communities can be used to raise additional funds. Our marketable

securities, unencumbered properties, and lines of credit provide the Company

with additional liquidity. The Company also holds a 40% equity interest in its

joint venture with Nuveen Real Estate, which owns one newly developed community

that is unencumbered.

 

As of June 30, 2022, the Company had total assets of $1.4 billion and total

liabilities of $901.4 million. The Company’s net debt (net of unamortized debt

issuance costs and cash and cash equivalents) to total market capitalization as

of June 30, 2022 was approximately 19% and the Company’s net debt, less

securities to total market capitalization as of June 30, 2022 was approximately

17%. As of June 30, 2022, the Company had mortgages totaling $58.8 million due

within the next 12 months. The Company believes that it has the ability to meet

its obligations and to generate funds for new investments.

 

Impact of COVID-19

 

The following discussion is intended to provide certain information regarding

the impacts of the COVID-19 pandemic on our business and management’s efforts to

respond to those impacts.

We continue to monitor our operations and government recommendations and have

taken steps to make the safety, security and welfare of our employees, their

families and our residents a top priority.

Collections are consistent with pre-pandemic levels and we have collected 93% of July 2022 site and home rent as of today’s date. Some of our residents benefitted from the federal government’s funding of the Emergency Rental Assistance Programs that were enacted in each state.

The impact of the COVID-19 pandemic remains uncertain and dependent on future

developments, including the possible emergence of new variants of the original

virus and the ongoing roll-out of vaccines and their efficacy. We will continue

to monitor these rapidly evolving developments and respond in the best interests

of our employees, residents and shareholders. At this time, we believe that the

COVID-19 pandemic and its consequences will not have a material adverse effect

on our operations.

 

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this Form 10-Q, that are not historical facts are

forward-looking statements within the meaning of Section 27A of the Securities

Act of 1933, as amended (the “Securities Act”), and Section 21E of the

Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements provide our current expectations or forecasts of

future events. Forward-looking statements include statements about the Company’s

expectations, beliefs, intentions, plans, objectives, goals, strategies, future

events, performance and underlying assumptions and other statements that are not

historical facts. Forward-looking statements can be identified by their use of

forward-looking words, such as “may,” “will,” “anticipate,” “expect,” “believe,”

“intend,” “plan,” “should,” “seek” or comparable terms, or the negative use of

those words, but the absence of these words does not necessarily mean that a

statement is not forward-looking.

 

The forward-looking statements are based on our beliefs, assumptions and

expectations of our future performance, taking into account all information

currently available to us. Forward-looking statements are not predictions of

future events. These beliefs, assumptions and expectations can change as a

result of many possible events or factors, not all of which are known to us.

Some of these factors are described below and under the headings “Business”,

“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition

and Results of Operations.” These and other risks, uncertainties and factors

could cause our actual results to differ materially from those included in any

forward-looking statements we make. Any forward-looking statement speaks only as

of the date on which it is made. New risks and uncertainties arise over time,

and it is not possible for us to predict those events or how they may affect us.

Except as required by law, we are not obligated to, and do not intend to, update

or revise any forward-looking statements, whether as a result of new

information, future events or otherwise. Important factors that could cause

actual results to differ materially from our expectations include, among others:

  • changes in the real estate market conditions and general economic conditions;
  • risks and uncertainties related to the COVID-19 pandemic;
  • the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations affecting manufactured housing communities and illiquidity of real estate investments;
  • increased competition in the geographic areas in which we own and operate manufactured housing communities;
  • our ability to continue to identify, negotiate and acquire manufactured housing communities and/or vacant land which may be developed into manufactured housing communities on terms favorable to us;
  • our ability to maintain rental rates and occupancy levels;
  • changes in market rates of interest;
  • inflation, including increases in commodity prices and the cost of purchasing manufactured homes;
  • our ability to purchase manufactured homes for rental or sale;
  • our ability to repay debt financing obligations;
  • our ability to refinance amounts outstanding under our credit facilities at maturity on terms favorable to us;
  • our ability to comply with certain debt covenants;
  • our ability to integrate acquired properties and operations into existing operations;
  • the availability of other debt and equity financing alternatives;
  • continued ability to access the debt or equity markets;
  • the loss of any member of our management team;
  • our ability to maintain internal controls and processes to ensure all transactions are accounted for properly, all relevant disclosures and filings are made in a timely manner in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected;
  • the ability of manufactured home buyers to obtain financing;
  • the level of repossessions by manufactured home lenders;
  • market conditions affecting our investment securities;
  • changes in federal or state tax rules or regulations that could have adverse tax consequences;
  • our ability to qualify as a real estate investment trust for federal income tax purposes; and,
  • those risks and uncertainties referenced under the heading “Risk Factors” contained in this Form 10-Q and the Company’s other filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021.

You should not place undue reliance on these forward-looking statements, as

events described or implied in such statements may not occur. The

forward-looking statements contained in this Form 10-Q speak only as of the date

hereof and the Company expressly disclaims any obligation to publicly update or

revise any forward-looking statements whether as a result of new information,

future events, or otherwise.

© Edgar Online, source Glimpses. ###

 

Additional Information with More MHProNews Analysis and Commentary in Brief

MarketScreener and Yahoo Finance are the sources for the financial trends and facts on UMH Properties.

MarketScreenerUMHProperitiesScreenshot 2022-08-14 141713MHProNews
“In the business world, the rear-view mirror is always clearer than the windshield.” – Warren Buffett. That begs a key question. Why don’t more people LOOK at the rearview mirror so they can learn more about the patterns that influence what’s ahead? Note: depending on your browser or device, many images in this report can be clicked to expand. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts.
UMHPropertiesYahooFinance-8.12.2022-UMHReitStockTrendsMHProNews
Notice 1: In some browsers, you click on the image to open in a new window and then click the image again in order to see that image in that open window in a larger size. Note 2: depending on your browser or device, many images in this report can be clicked to expand. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts.

Next, UMH Properties, unlike several Manufactured Housing Institute (MHI) larger, consolidating member brands, seem to draw the ire of MHAction and their peers less frequently than others.

Manufactured Home Communities (a.k.a. ‘Mobile Home Parks’ – SIC) – Exploring UMH Properties; Fellow Manufactured Housing Institute Member Yes! Communities Suits and Settlements; plus MH Markets Updates

UMH has disclosed the apparent strengths and weaknesses of their rental home acquisition program. As they continue to press rentals, their manufactured home sales have recently suffered. Coincidence?

Additionally, as MHProNews noted, for a variety of reasons, pro-MHI sources have all but admitted that manufactured home communities are in some cases losing value during this period of inflation.

Burying Lead? Manufactured Home Community (MHC) Research Reveals MHC Owners Losing Money While Roaring Biden-Era Inflation, Predatory Operators Pressure Residents; plus MHVille Markets

UMH has been supporting MHI twice at the Home on the Hill.

Former MHI and MHARR Executive Danny Ghorbani’s Keen Insights on History and Value of ‘Homes on the Hill’ for Manufactured Housing – Exclusive Q&A

UMH could, in theory, be a possible source for leadership for the formation of a new post-production trade group.  But they have not publicly voiced concerns about MHI and their lobbying in some time. Would a pivot benefit their shareholders? Is there any doubt about that?

Follow the Money Trail in Manufactured Housing, Recent Nonprofit Research Reports on MHVille Shed Light on Manufactured Housing Industry Potential and Woes; plus Sunday Weekly Headlines Recap

 

While MHI has played friendly with UMH by giving them awards what do those ‘awards’ actually mean when ‘black hats’ are predatory brands are getting awards too?

MHI2022ExcellenceAwardsFeaturedImage
https://www.manufacturedhomepronews.com/file-under-you-cant-make-this-up-wacky-wednesday-explores-manufactured-housing-institute-mhi-excellence-award-winners-and-their-legal-challenges-plus-mhmarkets-updates/

Those points noted, here are two of the UMH pitch videos for their new property in Sebring, FL. Florida is a new market for the primarily Midwestern and Mid-Atlantic based manufactured home community REIT.

 

 

MHProNews plans a follow up report in the near term on UMH Properties. Stay tuned for those additional facts and analysis. ###

 

Manufactured Home Community REIT Equity LifeStyle Properties (ELS), Quarterly – Expenses Grew Faster than Income – New Home Sales, Rent v Owners – Facts, Official Statements, Critical Analysis

Pondering'TheOnlyPlaceSuccessComesBeforeWorkIsInTheDictionary'Vince LombardiHowItAppliesInAllProfessionsIncludingManufacturedHousingLifeHacksAnaylsisMastMHProNews
https://www.manufacturedhomepronews.com/masthead/pondering-the-only-place-success-comes-before-work-is-in-the-dictionary-vince-lombardi-how-it-applies-in-all-professions-including-manufactured-housing-life-hacks-analysis/
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Again, our thanks to free email subscribers and all readers like you, our tipsters/sources, sponsors and God for making and keeping us the runaway number one source for authentic “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)

CongRepAlGreenDeskTamasKovachLATonyKovachPhoto12.3.2019ManufacturedHomeProNews
Our son has grown quite a bit since this 12.2019 photo. All on Capitol Hill were welcoming and interested in our manufactured housing industry related concerns. But Congressman Al Green’s office was tremendous in their hospitality. Our son’s hand is on a package that included the Constitution of the United States, bottled water, and other goodies.

By L.A. “Tony” Kovach – for MHProNews.com.

Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.

For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.

http://latonykovach.com

Connect on LinkedIn: http://www.linkedin.com/in/latonykovach

 

Related References:

The text/image boxes below are linked to other reports, which can be accessed by clicking on them.

Follow the Money Trail in Manufactured Housing, Recent Nonprofit Research Reports on MHVille Shed Light on Manufactured Housing Industry Potential and Woes; plus Sunday Weekly Headlines Recap

HUD Code Manufactured Housing Production Grows June 2022, per Official Data – Additional Facts, Analysis, Commentary; plus Manufactured Home Communities REITs, Manufactured Housing Stocks Update

State-by-State, Regional, National Manufactured Housing Data for Production, Shipments for May 2022, Compare Manufactured Home to Conventional Housing, Other Research Reports; and MHStock Updates

Manufactured Housing Institute (MHI) ‘News’ Odd Admission-Claims to Members-CrossMods, HR 7651 Manufactured Housing Affordability and Energy Efficiency Act; plus Sunday Weekly MH-Headlines Recap

 

Lawmakers Approve Affordable Home Ownership Study, Manufactured Housing Institute (MHI) Affiliate Alerts ‘Predatory’ Conduct by Deep Pocket Investors; plus Manufactured Home REITs, Equities Update

Feds Admit FHA Title I ‘Uncompetitive’ After MHARR Meeting, Ginnie Mae Asks ‘Input Could Repeal 10-10 Rule’ – May Yield More Manufactured Home Loans – Analysis; plus MH REITs, Equities Update

 

Manufactured Housing Institute (MHI) Helped Raise Profile of DOE Energy Rule in Media, Homes on the Hill, But Critics Say MHI Strategy Won’t Work – Examples; plus Sunday Weekly Headline Recap

Manufactured Housing Institute (MHI) Outside Attorney David Goch’s Statement to Angry, Threatening Member Speaks Volumes; plus Sunday Weekly MHVille Headlines in Review

TellingManufacturedHousingStoryHonestlyPersuasivelyBeneficiallyProfitablyFactsEvidenceBrightLineDistinctionsPlusSundayWeeklyManufacturedHomeRecapMHProNews
https://www.manufacturedhomepronews.com/telling-manufactured-housing-story-honestly-persuasively-beneficially-and-profitably-with-facts-evidence-bright-line-distinctions-plus-sunday-weekly-manufactured-home-recap/
RandyRoweGreenCourtePartners5PointPlanForManufacturedHomeIndustryRecoveryRevisionsPlusSundayWeeklyMHVilleHeadlinesWithSatiricalReviewMHProNews
https://www.manufacturedhomepronews.com/randy-rowe-green-courte-partners-5-point-plan-for-manufactured-home-industry-recovery-revisions-plus-sunday-weekly-mhville-headlines-with-satirical-review/

 

 

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