‘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
“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.
FREEHOLD, 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).
UMH 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
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,
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,
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.
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;
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,
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.
“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. 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.
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.
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?
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?
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. ###
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.
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.
