UMH Properties, Inc UMH Q2 2023 Earnings Call Transcript


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This year, UMH was named Manufactured Housing Institute’s Community Operator of the Year, and was also awarded the MHI’s Retail Sales Center of the Year for the second year in a row. In 2019, UMH received MHI’s Land-Lease Community of the Year Award for the fourth consecutive time, and was also honored by the MHI’s Interior Design Award. These awards recognize UMH’s long-term commitment to innovation and advancement of the manufactured housing industry, and our dedication to providing quality affordable housing. So on those, we don’t want to go forward more than 5%. And in fact, when someone buys a new home from us, they get a long-term lease matching the loan, saying Brent won’t increase more than 5% or CPI, but we net out water sewer, taxes, garbage, the things that come up the most. So we’re proud that our operating income went up so much with just a 5% increase to our existing residents.

When it comes to manufactured home communities, investors can be worried about stability because people who live in these communities tend to have lower income on average. People also have the perception that crime rates are higher in these communities even though this is not necessarily true since many manufactured home communities are 55+ communities which tend to be quiet and clean. As UMH manages its own properties the company has a lot of control over who it lets to live in its properties. The company typically conducts sufficient background checks to ensure that people who live in its properties aren’t going to cause any trouble and most likely take care of their property and pay their rent on time.

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Additionally, we have a profitable sales and finance company that should grow in the future. Subsequent to quarter end, we paid down $34.7 million of our floor plan lines, which have a weighted average interest rate of 8.8%, reducing it to approximately $4 million. This should reduce our interest expense for the third quarter and beyond and help increase FFO per share. Further, each $50 million in new equity represents approximately 3 million additional shares. The earnings generated from investing that capital typically requires time to be accretive to earnings.

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Well, there’s communities where we do 100 rental homes in a year. And if that’s the case, that means we can do more projects, expecting ourselves to turn them around quicker, which will make more projects more attractive to us in other states. And then again, I consider that ratio, operating expense ratio, extremely important because that’s your profitability. And you can look at the supplemental and you’ll see the high percentage occupancy in most of our communities.

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The weighted average interest rate on our short-term borrowings is 7.42% as compared to 3.69% last year. In total, the weighted average interest rate on our total debt is 4.88% compared to 3.92% last year. Gross sales for the quarter increased 18% to $8.2 million as compared to $7 million last year. Net income from sales for the quarter was approximately $665,000 as compared to $876,000 last year. Included in net income are higher interest expenses and elevated inventory carrying costs. These improved operating metrics resulted in same-property income growth of 9% with expense growth of 4.2% generating same-property NOI growth of 12.6% or $3 million over the second quarter of last year.


Our business model reflects our aspiration that over 12 years, our assets may double in value, and if we assume 50% leverage, our equity could triple its value. These potential gains are not reflected in today’s financial results. Investing in real estate takes time to produce results, but we have a 55-year history of executing on this business plan.

  • UMH Properties saw a decrease in short interest in July.
  • The company owns plenty of empty land suitable to build new properties so this is where a good portion of its near-term growth could come from at a relatively low cost as compared to acquiring developed properties.
  • We are well positioned to grow income and per-share earnings through the successful implementation of our proven business plan.
  • The earnings generated from investing that capital typically requires time to be accretive to earnings.
  • Year-to-date, approximately 845 rental homes in inventory were rented, making them income producing, and 108 new homes were sold.

The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company’s second quarter 2023 earnings release and filings with the Securities and Exchange Commission.

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So all of that means that we have substantial ability to increase the operating income. This isn’t as much of a heavy lift than some of the previous acquisitions we’ve done. 49 of those sites are very high-quality multi-section homes perpendicular — or parallel to the street, I’m sorry. And then the other community, which is a neighboring community, is about 142 sites and that one will require some value-add, your typical home removal, capital improvements and rental home infill.

  • We believe that creating that customer loyalty and that word-of-mouth has incredible value.
  • This reduction in inventory has resulted in a decrease in our floor plan loan balance, resulting in a decrease in our floor plan interest expense.
  • UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 135 manufactured home communities containing approximately 25,700 developed homesites.
  • These states include New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana and Michigan.
  • Manufactured home communities provide recession resistant qualities, reliable income streams and the potential for long-term value appreciation.

In addition, total NOI growth for both the 3 and 6 months ended June 30, 2023, have both experienced double-digit percentage increases. Since this is a REIT, one very important component of this stock is its dividends. After all, REITs are expected to pass virtually all of their earnings to shareholders in shape of dividends and many people invest into REITs for dividends.

These expansions are located in Maryland, Pennsylvania, Tennessee and Indiana. These expansions are located at communities in good markets and should generate profitable sales. Year-to-date, gross sales increased by 38% from $11.3 million to $15.5 million. Year-to-date, we have financed approximately 82% of our home sales. We have a total of $73 million in home loans on our balance sheet that earn us a weighted average interest rate of 6.8%. We would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

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Sequentially, normalized FFO increased from $0.20 for the first quarter to $0.21 in the second quarter, representing a 5% per share increase. According to 4 analysts, the average rating for UMH stock is “Strong Buy.” The 12-month stock price forecast is $20.0, which is an increase of 35.23% from the latest price. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. UMH has been in business since 1968, operating as a public company since 1985.


It really takes a special kind of experience and skillset to manage manufactured home communities and the company seems to have the right skillset since it’s been around since 1968 and surviving and thriving since then. UMH continues to seek acquisitions that meet our growth criteria. Subsequent to quarter end, we entered into a contract to purchase 2 communities in Maryland containing 190 sites for a total purchase price of $12.5 million. We are careful to evaluate each deal and weigh the short-term impact on earnings versus the long-term yield expectations and value creation. Our typical acquisitions take 3 years or more to become accretive, but allow us to generate the strong long-term operating results that we are reporting today.

It’s very difficult to quantify exactly how much it can benefit from this development though so at least some caution is warranted before getting too excited. The company owns plenty of empty land suitable to build new properties so this is where a good portion of its near-term growth could come from at a relatively low cost as compared to acquiring developed properties. The company has engineered 546 sites for development this year, another 589 in 2024 and more than a thousand per year starting in 2025. As long as demand for housing stays strong, these sites should fill up soon after development.

So as those high percentage occupancy communities go from 86% to 100%, almost all of that revenue, 70% of that revenue should make it to the bottom line. We hope to get some legislative help and we hope to get some help from the investors who are socially conscious. UMH is a social investment and an important contributor to solving the affordable housing shortage. And so we have to balance how many dollars are we going to put out? How much are we going to increase expenses from the prior owner? Every acquisition out there, I believe, will be good in 7 years.

Our operating results are starting to positively impact the bottom line even with increased interest expenses. 4 brokers have issued twelve-month price targets for UMH Properties’ shares. Their UMH share price forecasts range from $19.00 to $22.00. On average, they anticipate the company’s share price to reach $20.60 in the next twelve months. This suggests a possible upside of 39.7% from the stock’s current price.

We believe that creating that customer loyalty and that word-of-mouth has incredible value. And that’s why we have waiting lists, in that way we can fill communities. And I should add, we’re becoming more confident and proving more ability to fill these homes faster than we thought we could. So if you’re talking about building a community, you consider 4 sales per month as good, 48 units per day trading forex year you consider successful. And that model will work anywhere because anywhere someone tries to build apartments or if you look at the quality of older apartments, putting brand-new homes in a community and renting them out is better housing at a better price. So we’re in an extremely good position for — and just along that exact same line, what you’re seeing now is the green shoots.

We have to find more acquisitions with vacancies and get more lots built for the future. So if you look at the acquisitions we did the last 3 years, because our business plan is it takes time, those will become more accretive next year. We are an industry leader with a platform that delivers best-in-class results. We look forward to generating increased earnings per share and a growing stock price while, at the same time, providing quality affordable housing for our residents. Subsequent to quarter end, we issued and sold approximately 2.1 million shares of common stock through our common ATM program, generating gross proceeds of $34.8 million and net proceeds of $34.3 million after offering expenses. Last year the company raised its rents across the board by anywhere from 6% to 10% and its occupancy rates didn’t drop which means its price hikes were well-received for the most part.