UMH Properties (UMH) Misses Q3 EPS by 23c

UMH Properties (NYSE: UMH) reported Q3 EPS of ($0.31), $0.23 worse than the analyst estimate of ($0.08).

Samuel A. Landy, President and CEO, commented on the results of the third quarter of 2020.

“We are pleased to announce another solid quarter of operating results. During the quarter, we:

• Increased Rental and Related Income by 10%;
• Increased Community Net Operating Income (“NOI”) by 17%;
• Improved our Operating Expense ratio by 280 basis points to 44.7%;
• Increased Same Property NOI by 13%;
• Increased Same Property Occupancy by 706 sites from 83.7% to 86.9% or 320 basis points;
• Increased our rental home portfolio by 684 homes to approximately 8,100 total rental homes, representing an increase of 9% from yearend 2019;
• Increased rental home occupancy by 310 basis points from 92.3% at yearend 2019 to 95.4% at quarter end;
• Increased Sales of Manufactured Homes by 54%;
• Acquired two communities containing approximately 310 homesites for a total cost of approximately $7.8 million;
• Completed the financing of 28 unencumbered communities with Fannie Mae for proceeds of approximately $106 million, with a maturity of 10 years and a 30-year amortization at a fixed rate of 2.62%;
• Sold 117,000 shares of Common Stock at a weighted average price of $14.54 per share, generating gross proceeds of $1.7 million and net proceeds of $1.5 million, after offering expenses;
• Sold 134,000 shares of Series C Preferred Stock at a weighted average price of $24.96 per share and 213,000 shares of Series D Preferred Stock at a weighted average price of $24.78 per share, generating total gross proceeds of $8.6 million and total net proceeds of $8.3 million, after offering expenses;
• Reduced the weighted average interest rate on our mortgages payable from 4.1% to 3.8% year over year;
• Reduced our Net Debt to Adjusted EBITDA from 6.6x at year end to 5.8x at quarter end;
• Subsequent to quarter end, sold 583,000 shares of Series D Preferred Stock at a weighted average price of $24.78 per share through the New Preferred ATM Program, generating gross proceeds of $14.4 million and net proceeds of $14.2 million, after offering expenses; and,
• Subsequent to quarter end, redeemed all 3.8 million issued and outstanding shares of our 8.0% Series B Cumulative Redeemable Preferred Stock for $96.1 million.”

Mr. Landy further stated, “UMH continues to achieve excellent results despite the COVID-19 pandemic. Normalized FFO for the quarter increased to $0.18 per share representing an increase of 20% over the prior year period.”

“This FFO growth was driven by solid fundamental performance in our core business. Same property occupancy increased 320 basis points to 86.9%. Year over year, we added almost 700 rental homes to our same property portfolio, increasing rental home occupancy to 95.4%. Our improved occupancy paired with reduced expenses resulted in same property NOI growth of 13%. This is the fourth quarter in a row that we have reported double digit same property NOI growth.”

“Our sales results also contributed to our FFO growth. Sales for the quarter were up 54% generating a net profit of $640,000 for the quarter. We continue to experience pent up sales demand.”

“UMH also had a busy quarter on the acquisition front. During the quarter, we closed on the acquisition of two communities containing 310 homesites, with a weighted average occupancy rate of 64%, for approximately $7.8 million. These communities are located in markets where we have experienced excellent demand for both sales and rental units. We anticipate strong returns at these value-add communities as we are able to execute on our long-term business plan.”

“Most importantly, we pioneered two loan products which will allow us to reduce our cost of capital going forward. We closed on the financing of some of our free and clear communities generating proceeds of $106 million at an interest rate of 2.62%. These communities did not previously qualify for GSE financing because of their rental home percentages. The access to low cost debt on properties with significant percentages of rental homes solidifies our business plan. Subsequent to quarter end, we used a portion of this capital to redeem our $95 million of Series B 8% Preferred stock. This redemption will generate over $5 million, or approximately $0.12 per share, of additional FFO annually.

“We also entered into a line of credit utilizing our rental homes and the income derived from them as collateral. The rate on this line is WSJ prime + 25 basis points. Access to low cost debt on rental homes previously did not exist.”

“UMH continues to make strides in all aspects of our business plan. We are pleased that we covered our $0.18 dividend purely on our current operations. The successes that we have had on the financing front will further improve our FFO metrics in 2021.”

For earnings history and earnings-related data on UMH Properties (UMH) click here.

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