UMH PROPERTIES, INC. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• FFO Growth: Third consecutive quarter of year-over-year normalized FFO growth. Normalized FFO per diluted share for Q3 2024 was $0.24, up 9% year-over-year and 4% sequentially. Year-to-date normalized FFO increased 28% to $50.3 million.
• Occupancy and Demand: Communities experienced strong demand, with overall occupancy up 271 units year-over-year to 87.4%. Anticipate further occupancy growth with over 200 homes on order and 300 recently delivered.
• Capital Raises: Issued and sold ~5.7 million shares through common ATM, raising net proceeds of $107 million, used to pay down line of credit and invest in business plan. Also issued Series D preferred stock.
• Refinancing: Anticipate proceeds from refinancing community mortgages will exceed maturing principal balances, though impacted by interest rates and coverage ratios.
• Self-Storage: Acquired a 246-unit self-storage facility adjacent to communities, with self-storage units adjacent to many communities and managed by same staff as communities.

Segment Performance

• Rental: Third quarter rental and related income was $51.9 million, up 8% from $48.1 million last year. Occupancy rates for rental homes remained stable at 94% compared to prior year. Converted 179 new homes to rental during the quarter, with a net increase of 117 homes. Anticipate adding 800 new rental homes in 2025.
• Sales: Sold 100 homes in the third quarter, with gross home sales revenue of approximately $8.7 million, up 10% from last year. Gross sales margin increased to 38% from 33% the prior year. Gross sales profit increased 30% to $3.3 million from $2.6 million last year.

Guidance

• 2024 Revision: Tightened full-year normalized FFO guidance to $0.92 to $0.94 per diluted share, down from prior range of $0.91 to $0.95. Represents ~8% annual normalized FFO growth at midpoint over 2023.
• 2025 Plan: Plan to issue full-year 2025 guidance concurrent with fourth quarter and year-end results.

Risks

• Refinancing Impact: Interest rate fluctuations could affect proceeds from refinancing community mortgages.
• Acquisition Delays: Potential delays in acquisitions due to market conditions or competition.
• Zoning and Development: Challenges with zoning for development of vacant land and expansion sites.
• Government Program Changes: Impact of changes in government programs related to affordable housing, homebuyer tax credits, etc., on sales and rental performance.

Question and Answer

• Q: Rob Stevenson of Janney on acquisition pipeline and self-storage synergies A: Samuel Landy mentioned pending deals in Maryland with potential first quarter 2025 closing, and Brett Taft noted self-storage units adjoin communities, managed by same staff, with residents needing self-storage.
• Q: Gaurav Mehta of Alliance Global Partners on rental home additions A: Samuel Landy and Brett Taft discussed adding 800 rental homes in 2025, with 443 converted to rental in 2024, and inventory of homes on order for setup.
• Q: Rich Anderson of Wedbush on storm costs and occupancy A: Brett Taft discussed storm-related expenses being a one-time blip, and Samuel Landy provided region-by-region occupancy details, noting potential for occupancy growth in certain areas.