UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 8, 2018

 

 

UMH Properties, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland		001-12690		22-1890929
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

 

Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, NJ		07728
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code:

(732) 577-9997

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ] Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

Item 2.02	Results of Operations and Financial Condition.
Item 7.01	Regulation FD Disclosure.

 

On March 8, 2018, UMH Properties, Inc. issued a press release announcing the results for the year ended and the fourth quarter ended December 31, 2017 and disclosed a supplemental information package in connection with its earnings conference call for the year ended and the fourth quarter ended December 31, 2017. A copy of the supplemental information package and press release is furnished with this report as Exhibit 99, and is incorporated herein by reference.

 

The information in this report and the exhibit attached hereto is being furnished, not filed, for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Item 2.02 and Item 7.01 of Form 8-K will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

 

Forward-Looking Statements

 

Statements contained in this report, including the document that is incorporated by reference, 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 and the Private Securities Litigation Reform Act of 1995 (the “Exchange Act”). All statements, other than statements of historical facts that address activities, events or developments where the Company uses any of the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” or similar expressions, are forward-looking statements. These forward-looking statements are not guaranteed and are based on the Company’s current intentions and on the Company’s current expectations and assumptions. These statements, intentions, expectations and assumptions involve risks and uncertainties, some of which are beyond the Company’s control that could cause actual results or events to differ materially from those that the Company anticipates or projects, such as:

 

	●	changes in the real estate market conditions and general economic conditions;
	●	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;
	●	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 timely made 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; and
	●	our ability to qualify as a real estate investment trust for federal income tax purposes.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)        Exhibits.

 

99       Supplemental information package for the year ended and the fourth quarter ended December 31, 2017 and press release dated March 8, 2018.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	UMH Properties, Inc.
Date: March 8, 2018	By:	/s/ Anna T. Chew
	Name:	Anna T. Chew
	Title:	Vice President and Chief Financial Officer

 

 

 

 

 

Table of Contents

 

	Page
Financial Highlights	3
Consolidated Balance Sheets	4
Consolidated Statements of Income (Loss)	5
Consolidated Statements of Cash Flows	6
Reconciliation of Net Income to Adjusted EBITDA and Net Loss Attributable to Common Shareholders to FFO, Core FFO and Normalized FFO	7
Market Capitalization, Debt and Coverage Ratios	8
Debt Analysis	9
Debt Maturity	10
Property Summary and Snapshot	11
Same Property Statistics	12
Acquisition Summary and Property Portfolio	13
Definitions	14
Press Release Dated March 8, 2018	15

 

Certain information in this Supplemental Information Package contain Non-GAAP financial measures. These Non-GAAP financial measures are REIT industry financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America. Please see page 14 for a definition of these Non-GAAP financial measures and page 7 for the reconciliation of certain captions in the Supplemental Information Package to the statement of operations as reported in the Company’s filings with the SEC on Form 10-Q.

 

 

Financial Highlights

(unaudited)

 

		Three Months Ended								Twelve Months Ended
			12/31/2017				12/31/2016				12/31/2017				12/31/2016
Operating Information
Number of Communities											112				101
Number of Sites											20,029				18,054
Rental and Related Income		$	26,122,486			$	23,366,346			$	101,801,425			$	90,679,557
Community Operating Expenses		$	12,176,772			$	10,644,368			$	47,846,565			$	42,638,333
Community NOI		$	13,945,714			$	12,721,978			$	53,954,860			$	48,041,224
Expense Ratio			46.6	%			45.6	%			47.0	%			47.0	%
Sales of Manufactured Homes		$	2,574,099			$	1,777,351			$	10,846,494			$	8,534,272
Number of Homes Sold			53				38				222				170
Number of Rentals Added			258				212				948				927
Net Income		$	3,530,616			$	3,376,615			$	12,668,034			$	11,534,559
Net Loss Attributable to Common Shareholders		$	(795,765	)		$	(413,132	)		$	(7,679,265	)		$	(2,568,873	)
Adjusted EBITDA		$	14,630,013			$	13,380,376			$	56,347,752			$	50,565,254
FFO		$	6,552,815			$	5,686,945			$	19,959,411			$	20,647,390
Core FFO		$	6,552,815			$	5,719,937			$	23,461,898			$	20,731,742
Normalized FFO		$	6,323,576			$	5,333,472			$	21,714,370			$	18,446,441
Shares Outstanding and Per Share Data
Weighted Average Shares Outstanding Basic and Diluted			35,071,943				28,829,801				32,675,650				27,808,895
Net Loss Attributable to Common Shareholders per Share- Basic and Diluted		$	(0.03	)		$	(0.02	)		$	(0.24	)		$	(0.10	)
FFO per Share- Diluted		$	0.19			$	0.19			$	0.60			$	0.73
Core FFO per Share- Diluted		$	0.19			$	0.20			$	0.71			$	0.74
Normalized FFO per Share- Diluted		$	0.18			$	0.18			$	0.66			$	0.66
Dividends per Common Share		$	0.18			$	0.18			$	0.72			$	0.72
Balance Sheet
Total Assets										$	823,881,326			$	680,444,818
Total Liabilities										$	402,665,862			$	363,412,851
Market Capitalization
Total Debt, Net of Unamortized Debt Issuance Costs										$	389,599,604			$	351,310,977
Equity Market Capitalization										$	528,772,213			$	442,301,606
Series A Preferred Stock										$	-0-			$	91,595,000
Series B Preferred Stock										$	95,030,000			$	95,030,000
Series C Preferred Stock										$	143,750,000			$	-0-
Total Market Capitalization										$	1,157,151,817			$	980,237,583

 

 

Consolidated Balance Sheets

 

		December 31, 2017				December 31, 2016
ASSETS
Investment Property and Equipment
Land		$	61,239,644			$	47,476,314
Site and Land Improvements			463,242,075				398,776,390
Buildings and Improvements			22,963,926				21,101,836
Rental Homes and Accessories			216,992,988				172,862,227
Total Investment Property			764,438,633				640,216,767
Equipment and Vehicles			16,874,760				14,986,196
Total Investment Property and Equipment			781,313,393				655,202,963
Accumulated Depreciation			(166,444,512	)			(140,255,603	)
Net Investment Property and Equipment			614,868,881				514,947,360
Other Assets
Cash and Cash Equivalents			23,242,090				4,216,592
Securities Available for Sale at Fair Value			132,964,276				108,755,172
Inventory of Manufactured Homes			17,569,365				17,424,574
Notes and Other Receivables, net			25,451,053				20,323,191
Prepaid Expenses and Other Assets			3,457,083				4,497,937
Land Development Costs			6,328,578				10,279,992
Total Other Assets			209,012,445				165,497,458
TOTAL ASSETS		$	823,881,326			$	680,444,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages Payable, net of Unamortized Debt Issuance Costs		$	304,895,117			$	293,025,592
Other Liabilities
Accounts Payable			2,960,739				2,962,037
Loans Payable, net of Unamortized Debt Issuance Costs			84,704,487				58,285,385
Accrued Liabilities and Deposits			4,977,886				4,820,142
Tenant Security Deposits			5,127,633				4,319,695
Total Other Liabilities			97,770,745				70,387,259
Total Liabilities			402,665,862				363,412,851
COMMITMENTS AND CONTINGENCIES
Shareholders’ Equity:
Series A - 8.25% Cumulative Redeemable Preferred Stock, par value $0.10 per share: -0- and 3,663,800 shares authorized, issued and outstanding as of December 31, 2017 and 2016, respectively			-0-				91,595,000
Series B - 8.0% Cumulative Redeemable Preferred Stock, par value $0.10 per share: 4,000,000 shares authorized; 3,801,200 shares issued and outstanding as of December 31, 2017 and 2016, respectively			95,030,000				95,030,000
Series C - 6.75% Cumulative Redeemable Preferred Stock, par value $0.10 per Share; 5,750,000 and -0- shares authorized, issued and outstanding as of December 31, 2017 and 2016, respectively.			143,750,000				-0-
Common Stock – $0.10 par value per share: 113,663,800 and 75,000,000 shares authorized; 35,488,068 and 29,388,811 shares issued and outstanding as of December 31, 2017 and 2016, respectively			3,548,807				2,938,881
Excess Stock – $0.10 par value per share: 3,000,000 shares authorized; no shares issued or outstanding as of December 31, 2017 and 2016, respectively			-0-				-0-
Additional Paid-In Capital			168,034,868				111,422,691
Accumulated Other Comprehensive Income			11,519,582				16,713,188
Accumulated Deficit			(667,793	)			(667,793	)
Total Shareholders’ Equity			421,215,464				317,031,967
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	823,881,326			$	680,444,818

 

 

Consolidated Statements of Income (Loss)

 

		(unaudited)
		Three Months Ended								Twelve Months Ended
		12/31/2017				12/31/2016				12/31/2017				12/31/2016
INCOME:
Rental and Related Income		$	26,122,486			$	23,366,346			$	101,801,425			$	90,679,557
Sales of Manufactured Homes			2,574,099				1,777,351				10,846,494				8,534,272
TOTAL INCOME			28,696,585				25,143,697				112,647,919				99,213,829
EXPENSES:
Community Operating Expenses			12,176,772				10,644,368				47,846,565				42,638,333
Cost of Sales of Manufactured Homes			2,005,525				1,187,933				8,471,190				6,466,520
Selling Expenses			633,375				581,544				3,095,155				2,852,405
General and Administrative Expenses			2,455,016				2,071,626				9,645,681				8,004,925
Acquisition Costs			-0-				27,871				-0-				79,231
Depreciation Expense			7,297,190				6,121,424				27,557,746				23,214,100
TOTAL EXPENSES			24,567,878				20,634,766				96,616,337				83,255,514
OTHER INCOME (EXPENSE):
Interest Income			527,385				377,727				2,006,880				1,584,585
Dividend Income			2,419,860				1,801,309				8,134,898				6,636,126
Gain on Sales of Securities, net			229,239				386,465				1,747,528				2,285,301
Other Income			112,797				109,077				705,048				504,759
Interest Expense			(3,835,982	)			(3,828,241	)			(15,876,972	)			(15,432,364	)
TOTAL OTHER INCOME (EXPENSE)			(546,701	)			(1,153,663	)			(3,282,618	)			(4,421,593	)
Income before Gain (Loss) on Sales of Investment Property and Equipment			3,582,006				3,355,268				12,748,964				11,536,722
Gain (Loss) on Sales of Investment Property and Equipment			(51,390	)			21,347				(80,930	)			(2,163	)
NET INCOME			3,530,616				3,376,615				12,668,034				11,534,559
Less: Preferred Dividends			(4,326,381	)			(3,789,747	)			(16,844,812	)			(14,103,432	)
Less: Redemption of Preferred Stock			-0-				-0-				(3,502,487	)			-0-
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(795,765	)		$	(413,132	)		$	(7,679,265	)		$	(2,568,873	)

 

 

Consolidated Statements of Cash Flows

 

		Twelve Months Ended
		12/31/2017				12/31/2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	12,668,034			$	11,534,559
Non-Cash Items Included in Net Income:
Depreciation			27,557,746				23,214,100
Amortization of Financing Costs			660,910				733,485
Stock Compensation Expense			1,314,491				1,064,678
Provision for Uncollectible Notes and Other Receivables			(1,273,535	)			909,397
Gain on Sales of Securities, net			(1,747,528	)			(2,285,301	)
Loss on Sales of Investment Property and Equipment			80,930				2,163
Changes in Operating Assets and Liabilities:
Inventory of Manufactured Homes			(144,791	)			(3,113,164	)
Notes and Other Receivables, net of Notes Acquired with Acquisitions			215,684				(1,204,014	)
Prepaid Expenses and Other Assets			1,040,854				(435,124	)
Accounts Payable			(1,298	)			145,747
Accrued Liabilities and Deposits			161,727				(1,878,719	)
Tenant Security Deposits			807,938				665,605
Net Cash Provided by Operating Activities			41,341,162				29,353,412
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Manufactured Home Communities, net of Mortgages Assumed			(61,669,247	)			(4,081,798	)
Purchase of Investment Property and Equipment			(62,009,984	)			(58,184,812	)
Proceeds from Sales of Investment Property and Equipment			2,299,670				1,114,503
Additions to Land Development Costs			(3,881,035	)			(3,728,869	)
Purchase of Securities Available for Sale			(45,075,311	)			(27,518,151	)
Proceeds from Sales of Securities Available for Sale			17,416,146				14,831,737
Net Cash Used in Investing Activities			(152,919,761	)			(77,567,390	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages, net of Mortgages Assumed			44,420,000				31,804,000
Net Proceeds on Short Term Borrowings			26,401,635				406,935
Principal Payments of Mortgages and Loans			(34,970,645	)			(25,072,315	)
Financing Costs on Debt			(641,471	)			(668,338	)
Proceeds from Issuance of Preferred Stock, net of offering costs			138,975,847				49,120,853
Redemption of 8.25% Series A Preferred Stock			(91,595,000	)			-0-
Proceeds from Registered Direct Placement of Common Stock, net of Offering Costs			22,518,238				-0-
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments			57,506,016				20,012,393
Proceeds from Exercise of Stock Options			5,435,634				2,485,060
Preferred Dividends Paid			(16,665,934	)			(14,563,645	)
Common Dividends Paid, net of Reinvestments			(20,780,223	)			(17,630,270	)
Net Cash Provided by Financing Activities			130,604,097				45,894,673
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			19,025,498				(2,319,305	)
CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR			4,216,592				6,535,897
CASH AND CASH EQUIVALENTS – END OF YEAR		$	23,242,090			$	4,216,592

 

 

Reconciliation of Net Income to Adjusted EBITDA and Net Loss Attributable

to Common Shareholders to FFO, Core FFO and Normalized FFO

(unaudited)

 

		Three Months Ended								Twelve Months Ended
		12/31/2017				12/31/2016				12/31/2017				12/31/2016
Reconciliation of Net Income to Adjusted EBITDA
Net Income		$	3,530,616			$	3,376,615			$	12,668,034			$	11,534,559
Interest Expense			3,835,982				3,828,241				15,876,972				15,432,364
Franchise Taxes			(33,775	)			26,225				245,000				305,000
Depreciation Expense			7,297,190				6,121,424				27,557,746				23,214,100
Acquisition Costs			-0-				27,871				-0-				79,231
Adjusted EBITDA		$	14,630,013			$	13,380,376			$	56,347,752			$	50,565,254
Reconciliation of Net Loss Attributable to Common Shareholders to Funds from Operations
Net Loss Attributable to Common Shareholders		$	(795,765	)		$	(413,132	)		$	(7,679,265	)		$	(2,568,873	)
Depreciation Expense			7,297,190				6,121,424				27,557,746				23,214,100
(Gain) Loss on Sales of Depreciable Assets			51,390				(21,347	)			80,930				2,163
Funds from Operations (“FFO”)			6,552,815				5,686,945				19,959,411				20,647,390
Adjustments:
Acquisition Costs			-0-				27,871				-0-				79,231
Cost of Early Extinguishment of Debt			-0-				5,121				-0-				5,121
Redemption of Preferred Stock			-0-				-0-				3,502,487				-0-
Core Funds from Operations (“Core FFO”)			6,552,815				5,719,937				23,461,898				20,731,742
Adjustments:
Gain on Sale of Securities, net			(229,239	)			(386,465	)			(1,747,528	)			(2,285,301	)
Normalized Funds From Operations (“Normalized FFO”)		$	6,323,576			$	5,333,472			$	21,714,370			$	18,446,441

 

 

Market Capitalization, Debt and Coverage Ratios

(unaudited)

 

		Twelve Months Ended
		12/31/2017				12/31/2016
Shares Outstanding			35,488,068				29,388,811
Market Price Per Share		$	14.90			$	15.05
Equity Market Capitalization		$	528,772,213			$	442,301,606
Total Debt			389,599,604				351,310,977
Preferred			238,780,000				186,625,000
Total Market Capitalization		$	1,157,151,817			$	980,237,583
Total Debt		$	389,599,604			$	351,310,977
Less: Cash and Cash Equivalents			(23,242,090	)			(4,216,592	)
Net Debt			366,357,514				347,094,385
Less: Securities Available for Sale at Fair Value (“Securities”)			(132,964,276	)			(108,755,172	)
Net Debt Less Securities		$	233,393,238			$	238,339,213
Interest Expense		$	15,876,972			$	15,432,364
Capitalized Interest			500,859				359,906
Preferred Dividends			16,844,812				14,103,432
Total Fixed Charges		$	33,222,643			$	29,895,702
Adjusted EBITDA		$	56,347,752			$	50,565,254
Debt and Coverage Ratios
Net Debt / Total Market Capitalization			31.7	%			35.4	%
Net Debt Plus Preferred / Total Market Capitalization			52.3	%			54.4	%
Net Debt Less Securities / Total Market Capitalization			20.2	%			24.3	%
Net Debt Less Securities Plus Preferred / Total Market Capitalization			40.8	%			43.4	%
Interest Coverage			3.4	x			3.2	x
Fixed Charge Coverage			1.7	x			1.7	x
Net Debt / Adjusted EBITDA			6.5	x			6.9	x
Net Debt Less Securities / Adjusted EBITDA			4.1	x			4.7	x
Net Debt Plus Preferred / Adjusted EBITDA			10.7	x			10.6	x
Net Debt Less Securities Plus Preferred / Adjusted EBITDA			8.4	x			8.4	x

 

 

Debt Analysis

(unaudited)

 

		Twelve Months Ended
		12/31/2017				12/31/2016
Debt Outstanding
Mortgages Payable:
Fixed Rate Mortgages (1)		$	308,444,180			$	296,209,454
Variable Rate Mortgages			16,606				354,529
Total Mortgages Before Unamortized Debt Issuance Costs			308,460,786				296,563,983
Unamortized Debt Issuance Costs			(3,565,669	)			(3,538,391	)
Mortgages, Net of Unamortized Debt Issuance Costs		$	304,895,117			$	293,025,592
Loans Payable:
Unsecured Line of Credit		$	35,000,000			$	20,000,000
Other Loans Payable			49,765,824				38,393,439
Total Loans Before Unamortized Debt Issuance Costs			84,765,824				58,393,439
Unamortized Debt Issuance Costs			(61,337	)			(108,054	)
Loans, Net of Unamortized Debt Issuance Costs		$	84,704,487			$	58,285,385
Total Debt, Net of Unamortized Debt Issuance Costs		$	389,599,604			$	351,310,977
% Fixed/Floating
Fixed			80.1	%			85.0	%
Floating			19.9	%			15.0	%
Total			100.0	%			100.0	%
Weighted Average Interest Rates (2)
Mortgages Payable			4.24	%			4.34	%
Loans Payable			3.14	%			3.06	%
Total Average			4.01	%			4.13	%

 

Notes:

(1)	Includes a variable rate mortgage with a balance of $-0-, and $10,625,352 as of December 31, 2017 and 2016, respectively, which had been effectively fixed at an interest rate of 3.89% with an interest rate swap agreement.
(2)	Weighted average interest rates do not include the effect of unamortized debt issuance costs.

 

 

Debt Maturity

(unaudited)

 

 

As of 12/31/17:
Fiscal Year Ended		Mortgages				Loans				Total				% of Total
2018		$	16,606			$	2,776,329			$	2,792,935				0.7	%
2019			2,633,664				4,506,895				7,140,559				1.8	%
2020			12,144,422				39,526,583	(1)			51,671,005				13.1	%
2021			2,194,312				420,131				2,614,443				0.7	%
2022			20,904,217				236,217				21,140,434				5.4	%
Thereafter			270,567,565				37,299,669				307,867,234				78.3	%
Total Debt Before Unamortized Debt Issuance Cost			308,460,786				84,765,824				393,226,610				100.0	%
Unamortized Debt Issuance Cost			3,565,669				61,337				3,627,006
Total Debt, Net of Unamortized Debt Issuance Costs		$	304,895,117			$	84,704,487			$	389,599,604

 

Notes:

(1) Includes $35 million balance outstanding on the Company’s Line of Credit due March 2020, with an additional one year option.

 

 

Property Summary and Snapshot

(unaudited)

 

		12/31/2017				12/31/2016				Change
Communities			112				101				10.9	%
Developed Sites			20,029				18,054				10.9	%
Occupied			16,208				14,499				11.8	%
Occupancy % (1)			81.4	%			81.0	%			40	bps
Total Rentals			5,607				4,659				20.3	%
Occupied Rentals			5,213				4,261				22.3	%
Rental Occupancy %			93.0	%			91.5	%			150	bps
Monthly Rent Per Site		$	428			$	422				1.4	%
Monthly Rent per Home Rental Including Site		$	726			$	709				2.4	%

 

Region		Number				Total Acreage				Developed Acreage				Vacant Acreage				Total Sites				Occupied Sites				Occupancy Percentage				Monthly Rent Per Site				Total Rentals				Occupied Rentals				Rental Occupancy Percentage				Monthly Rent Per Home Rental
						(2)								(2)												(1)																				(3)
Indiana			11				816				685				131				3,221				2,497				77.5	%		$	397				1,052				1,002				95.2	%		$	731
Maryland			1				77				10				67				63				58				92.1	%		$	478				-0-				-0-				N/A				N/A
Michigan			2				68				68				-0-				354				259				73.2	%		$	432				165				151				91.5	%		$	721
New Jersey			4				349				187				162				1,005				959				95.4	%		$	607				36				34				94.4	%		$	953
New York			7				617				308				309				1,144				943				82.4	%		$	508				289				268				92.7	%		$	860
Ohio			32				1,475				1,065				410				5,099				4,038				79.2	%		$	365				1,374				1,293				94.1	%		$	662
Pennsylvania			48				2,087				1,728				359				7,343				5,878				80.0	%		$	436				1,891				1,712				90.5	%		$	751
Tennessee			7				413				321				92				1,800				1,576				87.6	%		$	445				800				753				94.1	%		$	722
Total as of December 31, 2017			112				5,902				4,372				1,530				20,029				16,208				81.4	%		$	428				5,607				5,213				93.0	%		$	726

 

Notes:

(1) The 144 Sites at Memphis Blues are not included in the calculation of occupancy.

(2) Total and Vacant Acreage of 220 for the Mountain View Estates property is included in the above summary.

(3) Includes home and site rent charges.

 

 

Same Property Statistics

(unaudited)

 

		For Three Months Ended																For Twelve Months Ended
		12/31/2017				12/31/2016				Change				% Change				12/31/2017				12/31/2016				Change				% Change
Community Net Operating Income
Rental and Related Income		$	24,461,737			$	23,229,637			$	1,232,100				5.3	%		$	95,973,126			$	90,505,068			$	5,468,058				6.0	%
Community Operating Expenses			10,526,340				9,969,780				556,560				5.6	%			41,968,168				40,309,468				1,658,700				4.1	%
Community NOI		$	13,935,397			$	13,259,857			$	675,540				5.1	%		$	54,004,958			$	50,195,600			$	3,809,358				7.6	%

 

		As of
		12/31/2017				12/31/2016				Change
Other Information
Total Sites			17,605				17,609				0.0	%
Occupied Sites			14,561				14,292				1.9	%
Occupancy %			82.7	%			81.2	%			150	bps
Number of Properties			98				98				N/A
Total Rentals			5,254				4,610				14.0	%
Occupied Rentals			4,913				4,245				15.7	%
Rental Occupancy			93.5	%			92.1	%			140	bps
Monthly Rent Per Site		$	436			$	423				3.1	%
Monthly Rent Per Home Rental Including Site		$	723			$	709				2.0	%

 

Notes:

Same Property includes all properties owned as of January 1, 2016, with the exception of Memphis Blues.

 

 

Acquisition Summary

 

At Acquisition:

Year of Acquisition		Number of Communities				Sites				Occupied Sites				Occupancy %				Price				Total Acres
2015			10				2,774				1,764				64	%		$	81,217,000				717
2016			3				289				215				74	%		$	7,277,000				219
2017			11				1,997				1,333				67	%		$	63,290,000				602

 

 

2017 Acquisitions

 

Community		Date of Acquisition				State				Number of Sites				Purchase Price				Number of Acres				Occupancy
Marysville Estates and Hillcrest Estates			January 20, 2017				OH				532			$	9,588,000				149				57	%
Boardwalk and Parke Place			January 20, 2017				IN				559				24,437,000				155				77	%
Hillcrest Crossing			January 24, 2017				PA				200				2,485,000				78				40	%
Cinnamon Woods			May 31, 2017				MD				63				4,000,000				79				92	%
Pennsylvania 5 Community Portfolio			December 22, 2017				PA				643				22,780,000				141				72	%
Total 2017											1,997			$	63,290,000				602				67	%

 

 

Definitions

 

Investors and analysts following the real estate industry utilize funds from operations (“FFO”), core funds from operations (“Core FFO”), normalized funds from operations (“Normalized FFO”), community NOI, same property NOI, and earnings before interest, taxes, depreciation, amortization and acquisition costs (“Adjusted EBITDA”), variously defined, as supplemental performance measures. While the Company believes net income available to common stockholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, it considers Community NOI, Same Property NOI, Adjusted EBITDA, FFO, Core FFO and Normalized FFO, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of U.S. GAAP depreciation and amortization of real estate assets. Core FFO reflects the same assumptions as FFO except that it also adjusts for the effects of acquisitions costs and costs of early extinguishment of debt. Normalized FFO reflects the same assumptions as Core FFO except that it also adjusts for gains and losses realized on securities investments and certain one-time charges. Community NOI and Same Property NOI provides a measure of rental operations, and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses. Adjusted EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs. In addition, Community NOI, Same Property NOI, Adjusted EBITDA, FFO, Core FFO and Normalized FFO are commonly used in various ratios, pricing multiples, yields and returns and valuation of calculations used to measure financial position, performance and value.

 

As used herein, the Company calculates FFO, as defined by The National Association of Real Estate Investment Trusts (“NAREIT”), to be equal to net income (loss) applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization. FFO includes gains and losses realized on securities investments.

 

Core FFO is calculated as FFO plus acquisition costs and costs of extinguishment of debt.

 

Normalized FFO is calculated as Core FFO excluding gains and losses realized on securities investments and certain one-time charges.

 

FFO per Diluted Common Share, Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share is calculated using diluted weighted shares outstanding of 35,478,000 and 33,146,000 shares for the three and twelve months ended December 31, 2017, respectively, and 29,279,000 and 28,136,000 for the three and twelve months ended December 31, 2016, respectively. Common stock equivalents resulting from stock options in the amount of 406,000 and 470,000 shares for the three and twelve months ended December 31, 2017, respectively, and 449,000 and 327,000 shares for the three and twelve months ended December 31, 2016, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents were excluded from the computation of the Diluted Net Loss per Share as their effect would be anti-dilutive.

 

Community NOI is calculated as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses. Community NOI excludes realized gains (losses) on securities transactions.

 

Same Property NOI is calculated as Community NOI, using all properties owned as of January 1, 2016, with the exception of Memphis Blues.

 

Adjusted EBITDA is calculated as net income plus interest expense, franchise taxes, depreciation, amortization and acquisition costs.

 

Community NOI, Same Property NOI, Adjusted EBITDA, FFO, Core FFO and Normalized FFO do not represent cash generated from operating activities in accordance with U.S. GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. Community NOI, Same Property NOI, Adjusted EBITDA, FFO, Core FFO and Normalized FFO should not be considered as substitutes for net income applicable to common shareholders (calculated in accordance with U.S. GAAP) as a measure of results of operations, or cash flows (calculated in accordance with U.S. GAAP) as a measure of liquidity. Community NOI, Same Property NOI, Adjusted EBITDA, FFO, Core FFO and Normalized FFO as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.

 

 

Press Release Dated March 8, 2018

 

FOR IMMEDIATE RELEASE	March 8, 2018
	Contact: Nelli Madden
	732-577-9997

 

UMH PROPERTIES, INC. REPORTS RESULTS FOR THE YEAR ENDED AND THE FOURTH QUARTER ENDED DECEMBER 31, 2017

 

FREEHOLD, NJ, March 8, 2018........ UMH Properties, Inc. (NYSE: UMH) reported Total Income of $112,648,000 for the year ended December 31, 2017 as compared to $99,214,000 for the year ended December 31, 2016, representing an increase of 14%. Total Income for the quarter ended December 31, 2017 was $28,697,000 as compared to $25,144,000 for the quarter ended December 31, 2016, representing an increase of 14%. Net Loss Attributable to Common Shareholders amounted to $7,679,000 or $0.24 per diluted share for the year ended December 31, 2017 as compared to $2,569,000 or $0.10 per diluted share for the year ended December 31, 2016. This increase was primarily due to a non-recurring, non-cash $3.5 million preferred redemption charge and to an increase in depreciation expense, attributable to acquisitions made. Net Loss Attributable to Common Shareholders amounted to $796,000 or $0.03 per diluted share for the quarter ended December 31, 2017 as compared to $413,000 or $0.02 per diluted share for the quarter ended December 31, 2016.

 

Core Funds from Operations (“Core FFO”) was $23,462,000 or $0.71 per diluted share for the year ended December 31, 2017 as compared to $20,731,000 or $0.74 per diluted share for the year ended December 31, 2016, representing a decrease in Core FFO per diluted share of 4%. Core FFO was $6,553,000 or $0.19 per diluted share for the quarter ended December 31, 2017 as compared to $5,719,000 or $0.20 per diluted share for the quarter ended December 31, 2016, representing a decrease in Core FFO per diluted share of 5%. Normalized Funds from Operations (“Normalized FFO”), was $21,714,000 or $0.66 per diluted share for the year ended December 31, 2017, as compared to $18,446,000 or $0.66 per diluted share for the year ended December 31, 2016. Normalized FFO was $6,324,000 or $0.18 per diluted share for the quarter ended December 31, 2017, as compared to $5,333,000 or $0.18 per diluted share for the quarter ended December 31, 2016.

 

A summary of significant financial information for the three and twelve months ended December 31, 2017 and 2016 is as follows:

 

		For the Three Months Ended
		December 31,
		2017				2016
Total Income		$	28,697,000			$	25,144,000
Total Expenses		$	24,568,000			$	20,635,000
Gain on Sales of Securities, net		$	229,000			$	386,000
Net Loss Attributable to Common Shareholders		$	(796,000	)		$	(413,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(0.03	)		$	(0.02	)
Core FFO (1)		$	6,553,000			$	5,719,000
Core FFO (1) per Diluted Common Share		$	0.19			$	0.20
Normalized FFO (1)		$	6,324,000			$	5,333,000
Normalized FFO (1) per Diluted Common Share		$	0.18			$	0.18
Weighted Average Shares Outstanding			35,072,000				28,830,000

 

 

		For the Twelve Months Ended
		December 31,
		2017				2016
Total Income		$	112,648,000			$	99,214,000
Total Expenses		$	96,616,000			$	83,256,000
Gain on Sales of Securities, net		$	1,748,000			$	2,285,000
Net Loss Attributable to Common Shareholders		$	(7,679,000	)		$	(2,569,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(0.24	)		$	(0.10	)
Core FFO (1)		$	23,462,000			$	20,731,000
Core FFO (1) per Diluted Common Share		$	0.71			$	0.74
Normalized FFO (1)		$	21,714,000			$	18,446,000
Normalized FFO (1) per Diluted Common Share		$	0.66			$	0.66
Weighted Average Shares Outstanding			32,676,000				27,809,000

 

A summary of significant balance sheet information as of December 31, 2017 and 2016 is as follows:

 

		December 31, 2017				December 31, 2016
Gross Real Estate Investments		$	764,439,000			$	640,217,000
Securities Available for Sale at Fair Value		$	132,964,000			$	108,755,000
Total Assets		$	823,881,000			$	680,445,000
Mortgages Payable, net		$	304,895,000			$	293,026,000
Loans Payable, net		$	84,704,000			$	58,285,000
Total Shareholders’ Equity		$	421,215,000			$	317,032,000

 

Samuel A. Landy, President and CEO, commented on the 2017 results.

 

“We are pleased to announce a very productive 2017. We have generated solid operating results, achieved strong growth and improved our financial position. We have reached a number of milestones this year. We now own and operate 112 manufactured home communities with over 20,000 developed homesites. We have been included in the MSCI REIT index. We have reached an all-time high stock price of $17.90. Our total market capitalization is over $1 billion with an equity market capitalization of over $500 million. Our accomplishments during the year include:

 

	●	Increased Rental and Related Income by 12.3%;
	●	Increased Community Net Operating Income (“NOI”) by 12.3%;
	●	Increased Same Property NOI by 7.6%
	●	Increased Same Property Occupancy by 150 basis points from 81.2% to 82.7%;
	●	Increased home sales by 27.1%;
	●	Acquired 11 communities containing approximately 2,000 home sites for a total cost of $63.3 million, including our first community in Maryland, bringing our total property portfolio to 112 manufactured home communities with over 20,000 developed homesites;
	●	Completed Phase I of a redevelopment community, Memphis Blues, our first all rental community;
	●	Increased our rental home portfolio by 948 homes to approximately 5,600 total rental homes, representing an increase of 20.3%;
	●	Increased rental home occupancy by 150 basis points from 91.5% to 93.0%;
	●	Reduced the weighted average interest rate on our mortgage debt from 4.3% to 4.2%;
	●	Reduced the weighted average interest rate on our total debt from 4.1% to 4.0%;
	●	Issued 5,750,000 shares of a new 6.75% Series C Cumulative Redeemable Preferred Stock, for net proceeds after deducting the underwriting discount and other estimated offering expenses, of approximately $139 million;

 

 

	●	Redeemed our high coupon 8.25% Series A Preferred Stock, resulting in $1.4 million in annual preferred dividend savings;
	●	Issued 1,400,000 shares of our common stock raising net proceeds of $22.5 million, in conjunction with our inclusion in the MSCI REIT Index;
	●	Raised $60.4 million through our Dividend Reinvestment and Stock Purchase Plan;
	●	Reduced our Net Debt to Total Market Capitalization from 35.4% to 31.7% and our Net Debt Less Securities to Total Market Capitalization from 24.3% to 20.2%; and,
	●	Increased our total market capitalization to $1.2 billion, representing an increase of 18%.”

 

Mr. Landy stated, “This year, we successfully replaced all of the outstanding shares of our high coupon 8.25% Series A Preferred Stock with our new 6.75% Series C Perpetual Preferred Stock. This 150 basis point reduction will result in $1.4 million in annual preferred dividend savings going forward. Our 2017 earnings were impacted due to the expenses associated with completing this transaction, including a non-recurring, non-cash $3.5 million preferred redemption charge, and the short-term dilution associated with carrying the additional preferred stock until it was fully deployed. For the fourth quarter, our Normalized FFO was $0.18 per diluted share. We are pleased that our Normalized FFO for the quarter fully covered our $0.18 dividend.”

 

“Subsequent to yearend, UMH issued and sold 2,000,000 shares of a new 6.375% Series D Cumulative Redeemable Preferred Stock, and received net proceeds from the offering after expenses of approximately $48.1 million. We expect increased earnings as we fully deploy these proceeds.”

 

“In 2017, we increased our community portfolio by 11%. We acquired 11 communities containing approximately 2,000 developed homesites for an aggregate cost of approximately $63.3 million. The average occupancy of these communities is 67%. These communities are located within our existing footprint and provide additional growth opportunities through the filling of vacant sites and from expansion capabilities.”

 

“Home sales have been improving and increased 27% this year. With population growth, rising wages and steady job creation, housing demand should continue to increase. Our customers are seeing increased wages which is translating into rising housing demand.”

 

“Same Property NOI increased by 7.6% this year, driven by a 150 basis point increase in occupancy and a 310 basis point increase in site rent. Our 2017 accomplishments reflect consistent strong performance across our portfolio and position us for continued success in 2018.”

 

UMH Properties, Inc. will host its Fourth Quarter and Year End 2017 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, March 9, 2018 at 10:00 a.m. Eastern Time.

 

The Company’s 2017 fourth quarter and yearend financial results being released herein will be available on the Company’s website at www.umh.reit in the “Financial Information and Filings” section.

 

To participate in the webcast, select the microphone icon found on the homepage www.umh.reit to access the call. Interested parties can also participate via conference call by calling toll free 877-513-1898 (domestically) or 412-902-4147 (internationally).

 

The replay of the conference call will be available at 12:00 p.m. Eastern Time on Friday, March 9, 2018. It will be available until June 9, 2018, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10116327. A transcript of the call and the webcast replay will be available at the Company’s website, www.umh.reit.

 

 

UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 112 manufactured home communities containing approximately 20,000 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan and Maryland. In addition, the Company owns a portfolio of REIT securities.

 

Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company’s 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 those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company’s annual report on Form 10-K and described from time to time in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

 

Note:

 

	(1)	Non-GAAP Information: We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (“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 United States 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, plus certain non-cash items such as real estate asset depreciation and amortization. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Core Funds From Operations (“Core FFO”) as FFO plus acquisition costs and costs of early extinguishment of debt. We define Normalized Funds From Operations (“Normalized FFO”) as Core FFO excluding gains and losses realized on securities investments and certain non-recurring charges. 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. FFO, Core FFO and Normalized FFO, as well as Community NOI, should be considered as supplemental measures of operating performance used by REITs. FFO, Core 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, Core FFO, Normalized FFO and Community NOI and, accordingly, our FFO, Core FFO, Normalized FFO and Community NOI may not be comparable to all other REITs. The items excluded from FFO, Core FFO and Normalized FFO are significant components in understanding the Company’s financial performance.
		FFO, Core FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative 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 reconciliation of the Company’s U.S. GAAP net loss to the Company’s FFO, Core FFO and Normalized FFO for the three and twelve months ended December 31, 2017 and 2016 are calculated as follows:

 

		Three Months Ended								Twelve Months Ended
		12/31/17				12/31/16				12/31/17				12/31/16
Net Loss Attributable to Common Shareholders		$	(796,000	)		$	(413,000	)		$	(7,679,000	)		$	(2,569,000	)
Depreciation Expense			7,297,000				6,121,000				27,557,000				23,214,000
(Gain) Loss on Sales of Depreciable Assets			52,000				(22,000	)			81,000				2,000
FFO Attributable to Common Shareholders			6,553,000				5,686,000				19,959,000				20,647,000
Acquisition Costs			-0-				28,000				-0-				79,000
Cost of Early Extinguishment of Debt			-0-				5,000				-0-				5,000
Redemption of Preferred Stock			-0-				-0-				3,503,000				-0-
Core FFO Attributable to Common Shareholders			6,553,000				5,719,000				23,462,000				20,731,000
Gain on Sales of Securities, net			(229,000	)			(386,000	)			(1,748,000	)			(2,285,000	)
Normalized FFO Attributable to Common Shareholders		$	6,324,000			$	5,333,000			$	21,714,000			$	18,446,000

 

The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 35,478,000 and 33,146,000 shares for the three and twelve months ended December 31, 2017, respectively, and 29,279,000 and 28,136,000 for the three and twelve months ended December 31, 2016, respectively. Common stock equivalents resulting from stock options in the amount of 406,000 and 470,000 shares for the three and twelve months ended December 31, 2017, respectively, and 449,000 and 327,000 shares for the three and twelve months ended December 31, 2016, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents were excluded from the computation of the Diluted Net Loss per Share as their effect would be anti-dilutive.

 

 

The following are the cash flows provided (used) by operating, investing and financing activities for the twelve months ended December 31, 2017 and 2016:

 

		2017				2016
Operating Activities		$	41,341,000			$	29,353,000
Investing Activities			(152,920,000	)			(77,567,000	)
Financing Activities			130,604,000				45,895,000

 

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