Umh Properties, Inc. (UMH) SEC Filing 8-K Material Event for the period ending Thursday, March 7, 2019

 

 

 

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 (Loss) 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
Securities Portfolio Performance	11
Property Summary and Snapshot	12
Same Property Statistics	13
Acquisition Summary and Property Portfolio	14
Definitions	15
Press Release Dated March 7, 2019	16

 

Certain information in this Supplemental Information Package contains 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 15 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-K.

 

 

Financial Highlights

(unaudited)

 

		Three Months Ended								Twelve Months Ended
		12/31/2018				12/31/2017				12/31/2018				12/31/2017
Operating Information
Number of Communities											118				112
Number of Sites											21,510				20,029
Rental and Related Income		$	29,596,334			$	26,122,486			$	113,832,660			$	101,801,425
Community Operating Expenses		$	14,189,799			$	12,176,772			$	52,948,510			$	47,846,565
Community NOI		$	15,406,535			$	13,945,714			$	60,884,150			$	53,954,860
Expense Ratio			47.9	%			46.6	%			46.5	%			47.0	%
Sales of Manufactured Homes		$	4,648,731			$	2,574,099			$	15,754,033			$	10,846,494
Number of Homes Sold			91				53				295				222
Number of Rentals Added			297				258				905				948
Net Income (Loss) (1)		$	(27,729,875	)		$	3,530,616			$	(36,215,571	)		$	12,668,034
Net Loss Attributable to Common Shareholders (1)		$	(32,853,132	)		$	(795,765	)		$	(56,531,515	)		$	(7,679,265	)
Adjusted EBITDA		$	16,780,127			$	14,630,013			$	63,541,619			$	56,347,752
FFO Attributable to Common Shareholders (1)		$	(24,549,424	)		$	6,552,815			$	(24,709,177	)		$	19,959,411
Core FFO Attributable to Common Shareholders		$	7,363,393			$	6,552,815			$	26,966,219			$	23,461,898
Normalized FFO Attributable to Common Shareholders		$	7,363,393			$	6,323,576			$	27,471,112			$	21,714,370
Shares Outstanding and Per Share Data
Weighted Average Shares Outstanding Basic and Diluted			37,841,170				35,071,943				36,871,322				32,675,650
Net Loss Attributable to Common Shareholder per share- Basic and Diluted (1)		$	(0.87	)		$	(0.03	)		$	(1.53	)		$	(0.24	)
FFO per Share- Diluted (1)		$	(0.64	)		$	0.19			$	(0.66	)		$	0.60
Core FFO per Share- Diluted		$	0.19			$	0.19			$	0.72			$	0.71
Normalized FFO per Share- Diluted		$	0.19			$	0.18			$	0.74			$	0.66
Dividends per Common Share		$	0.18			$	0.18			$	0.72			$	0.72
Balance Sheet
Total Assets										$	878,985,924			$	823,881,326
Total Liabilities										$	454,287,884			$	402,665,862
Market Capitalization
Total Debt, Net of Unamortized Debt Issuance Costs										$	439,078,416			$	389,599,604
Equity Market Capitalization										$	453,713,702			$	528,772,213
Series B Preferred Stock										$	95,030,000			$	95,030,000
Series C Preferred Stock										$	143,750,000			$	143,750,000
Series D Preferred Stock										$	50,000,000			$	-0-
Total Market Capitalization										$	1,181,572,118			$	1,157,151,817

 

(1) Includes change in unrealized gain (loss) in marketable securities in 2018.

 

 

Consolidated Balance Sheets

 

		December 13,				December 31,
		2018				2017
ASSETS
Investment Property and Equipment
Land		$	68,154,110			$	61,239,644
Site and Land Improvements			533,547,154				463,242,075
Buildings and Improvements			25,156,183				22,963,926
Rental Homes and Accessories			254,598,641				216,992,988
Total Investment Property			881,456,088				764,438,633
Equipment and Vehicles			18,791,688				16,874,760
Total Investment Property and Equipment			900,247,776				781,313,393
Accumulated Depreciation			(197,208,363	)			(166,444,512	)
Net Investment Property and Equipment			703,039,413				614,868,881
Other Assets
Cash and Cash Equivalents			7,433,470				23,242,090
Marketable Securities at Fair Value			99,595,736				132,964,276
Inventory of Manufactured Homes			23,703,322				17,569,365
Notes and Other Receivables, net			31,493,555				25,451,053
Prepaid Expenses and Other Assets			4,279,403				3,457,083
Land Development Costs			9,441,025				6,328,578
Total Other Assets			175,946,511				209,012,445
TOTAL ASSETS		$	878,985,924			$	823,881,326
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages Payable, net of Unamortized Debt Issuance Costs		$	331,093,063			$	304,895,117
Other Liabilities
Accounts Payable			3,873,445				2,960,739
Loans Payable, net of Unamortized Debt Issuance Costs			107,985,353				84,704,487
Accrued Liabilities and Deposits			5,493,862				4,977,886
Tenant Security Deposits			5,842,161				5,127,633
Total Other Liabilities			123,194,821				97,770,745
Total Liabilities			454,287,884				402,665,862
COMMITMENTS AND CONTINGENCIES
Shareholders’ Equity:
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, 2018 and 2017			95,030,000				95,030,000
Series C- 6.75% Cumulative Redeemable Preferred Stock, par value $0.10 per share; 5,750,000 shares authorized, issued and outstanding as of  December 31, 2018 and 2017			143,750,000				143,750,000
Series D - 6.375% Cumulative Redeemable Preferred Stock, par value $0.10 per share, 2,300,000 shares authorized; 2,000,000 and -0- shares issued  and outstanding as of December 31, 2018 and 2017, respectively			50,000,000				-0-
Common Stock – $0.10 par value per share: 111,363,800 and 113,663,800 shares authorized; 38,320,414 and 35,488,068 shares issued and  outstanding as of December 31, 2018 and 2017, respectively			3,832,041				3,548,807
Excess Stock – $0.10 par value per share: 3,000,000 shares authorized; no shares issued or outstanding as of December 31, 2018 and 2017			-0-				-0-
Additional Paid-In Capital			157,449,781				168,034,868
Accumulated Other Comprehensive Income			-0-				11,519,582
Undistributed Income (Accumulated Deficit)			(25,363,782	)			(667,793	)
Total Shareholders’ Equity			424,698,040				421,215,464
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	878,985,924			$	823,881,326

 

 

Consolidated Statements of Income (Loss)

 

		(unaudited)
		Three Months Ended								Twelve Months Ended
		12/31/2018				12/31/2017				12/31/2018				12/31/2017
INCOME:
Rental and Related Income		$	29,596,334			$	26,122,486			$	113,832,660			$	101,801,425
Sales of Manufactured Homes			4,648,731				2,574,099				15,754,033				10,846,494
TOTAL INCOME			34,245,065				28,696,585				129,586,693				112,647,919
EXPENSES:
Community Operating Expenses			14,189,799				12,176,772				52,948,510				47,846,565
Cost of Sales of Manufactured Homes			3,309,286				2,005,525				11,715,987				8,471,190
Selling Expenses			860,921				633,375				3,774,425				3,095,155
General and Administrative Expenses			2,679,158				2,455,016				10,879,419				9,645,681
Depreciation Expense			8,280,690				7,297,190				31,691,209				27,557,746
TOTAL EXPENSES			29,319,854				24,567,878				111,009,550				96,616,337
OTHER INCOME (EXPENSE):
Interest Income			684,735				527,385				2,254,690				2,006,880
Dividend Income			2,763,580				2,419,860				10,367,155				8,134,898
Gain on Sales of Marketable Securities, net			-0-				229,239				20,107				1,747,528
Decrease in Fair Value of Marketable Securities			(31,912,817	)			-0-				(51,675,396	)			-0-
Other Income			75,704				112,797				410,444				705,048
Interest Expense			(4,243,270	)			(3,835,982	)			(16,038,585	)			(15,876,972	)
TOTAL OTHER INCOME (EXPENSE)			(32,632,068	)			(546,701	)			(54,661,585	)			(3,282,618	)
Income (Loss) Before Loss on Sales of Investment Property and Equipment			(27,706,857	)			3,582,006				(36,084,442	)			12,748,964
Loss on Sales of Investment Property and Equipment			(23,018	)			(51,390	)			(131,129	)			(80,930	)
NET INCOME (LOSS)			(27,729,875	)			3,530,616				(36,215,571	)			12,668,034
Less: Preferred Dividends			(5,123,257	)			(4,326,381	)			(20,315,944	)			(16,844,812	)
Less: Redemption of Preferred Stock			-0-				-0-				-0-				(3,502,487	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(32,853,132	)		$	(795,765	)		$	(56,531,515	)		$	(7,679,265	)

 

 

Consolidated Statements of Cash Flows

 

		Twelve Months Ended
		12/31/2018				12/31/2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)		$	(36,215,571	)		$	12,668,034
Non-Cash Items Included in Net Income (Loss):
Depreciation			31,691,209				27,557,746
Amortization of Financing Costs			625,445				660,910
Stock Compensation Expense			1,613,110				1,314,491
Benefit for Uncollectible Notes and Other Receivables			1,231,112				1,273,535
Gain on Sales of Marketable Securities, net			(20,107	)			(1,747,528	)
Decrease in Fair Value of Marketable Securities			51,675,396				-0-
Loss on Sales of Investment Property and Equipment			131,129				80,930
Changes in Operating Assets and Liabilities:
Inventory of Manufactured Homes			(6,133,957	)			(144,791	)
Notes and Other Receivables, net of Notes Acquired with Acquisitions			(6,438,252	)			(2,331,386	)
Prepaid Expenses and Other Assets			(127,538	)			557,116
Accounts Payable			912,706				(1,298	)
Accrued Liabilities and Deposits			515,976				161,727
Tenant Security Deposits			714,528				807,938
Net Cash Provided by Operating Activities			40,175,186				40,857,424
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Manufactured Home Communities, net of Mortgages Assumed			(55,880,468	)			(61,669,247	)
Purchase of Investment Property and Equipment			(52,970,053	)			(62,009,984	)
Proceeds from Sales of Investment Property and Equipment			2,754,508				2,299,670
Additions to Land Development Costs			(13,220,398	)			(3,881,035	)
Purchase of Marketable Securities			(18,555,424	)			(45,075,311	)
Proceeds from Sales of Marketable Securities			268,675				17,416,146
Net Cash Used in Investing Activities			(137,603,160	)			(152,919,761	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages, net of Mortgages Assumed			28,192,000				44,420,000
Net Proceeds from Short Term Borrowings			23,651,656				26,401,635
Principal Payments of Mortgages and Loans			(6,865,631	)			(34,970,645	)
Financing Costs on Debt			(748,926	)			(641,471	)
Proceeds from Issuance of Preferred Stock, net of Offering Costs			48,247,280				138,975,847
Redemption of 8.25% Series A Preferred Stock			-0-				(91,595,000	)
Proceeds from Registered Direct Placement of Common Stock, net of Offering Costs			-0-				22,518,238
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments			30,038,166				57,506,016
Proceeds from Exercise of Stock Options			1,385,000				5,435,634
Preferred Dividends Paid			(20,050,319	)			(16,665,934	)
Common Dividends Paid, net of Dividend Reinvestments			(21,535,090	)			(20,780,223	)
Net Cash Provided by Financing Activities			82,314,136				130,604,097
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(15,113,838	)			18,541,760
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – BEGINNING OF YEAR			27,891,249				9,349,489
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – END OF YEAR		$	12,777,411			$	27,891,249

 

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Net Loss Attributable to Common Shareholders to FFO, Core FFO and Normalized FFO

(unaudited)

 

		Three Months Ended								Twelve Months Ended
		12/31/2018				12/31/2017				12/31/2018				12/31/2017
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Net Income (Loss)		$	(27,729,875	)		$	3,530,616			$	(36,215,571	)		$	12,668,034
Interest Expense			4,243,270				3,835,982				16,038,585				15,876,972
Franchise Taxes			73,225				(33,775	)			352,000				245,000
Depreciation Expense			8,280,690				7,297,190				31,691,209				27,557,746
Decrease in Fair Value of Marketable Securities			31,912,817				-0-				51,675,396				-0-
Adjusted EBITDA		$	16,780,127			$	14,630,013			$	63,541,619			$	56,347,752
Reconciliation of Net Loss Attributable to Common Shareholders to Funds from Operations Attributable to Common Shareholders
Net Loss Attributable to Common Shareholders		$	(32,853,132	)		$	(795,765	)		$	(56,531,515	)		$	(7,679,265	)
Depreciation Expense			8,280,690				7,297,190				31,691,209				27,557,746
Loss on Sales of Depreciable Assets			23,018				51,390				131,129				80,930
Funds from Operations (“FFO”) Attributable to Common Shareholders			(24,549,424	)			6,552,815				(24,709,177	)			19,959,411
Adjustments:
Decrease in Fair Value of Marketable Securities			31,912,817				-0-				51,675,396				-0-
Redemption of Preferred Stock			-0-				-0-				-0-				3,502,487
Core Funds from Operations (“Core FFO”) Attributable to Common Shareholders			7,363,393				6,552,815				26,966,219				23,461,898
Adjustments:
Non- Recurring Other Expense (1)			-0-				-0-				525,000				-0-
Gain on Sales of Marketable Securities, net			-0-				(229,239	)			(20,107	)			(1,747,528	)
Normalized Funds from Operations (“Normalized FFO”) Attributable to Common Shareholders		$	7,363,393			$	6,323,576			$	27,471,112			$	21,714,370

 

(1) Consists of one-time payroll expenditures

 

 

Market Capitalization, Debt and Coverage Ratios

(unaudited)

 

		Twelve Months Ended
		12/31/2018				12/31/2017
Shares Outstanding			38,320,414				35,488,068
Market Price Per Share		$	11.84			$	14.90
Equity Market Capitalization		$	453,713,702			$	528,772,213
Total Debt			439,078,416				389,599,604
Preferred			288,780,000				238,780,000
Total Market Capitalization		$	1,181,572,118			$	1,157,151,817
Total Debt		$	439,078,416			$	389,599,604
Less: Cash and Cash Equivalents			(7,433,470	)			(23,242,090	)
Net Debt			431,644,946				366,357,514
Less: Marketable Securities at Fair Value (“Securities”)			(99,595,736	)			(132,964,276	)
Net Debt Less Securities		$	332,049,210			$	233,393,238
Interest Expense		$	16,038,585			$	15,876,972
Capitalized Interest			1,036,307				500,859
Preferred Dividends			20,315,944				16,844,812
Total Fixed Charges		$	37,390,836			$	33,222,643
Adjusted EBITDA		$	63,541,619			$	56,347,752
Debt and Coverage Ratios
Net Debt / Total Market Capitalization			36.5	%			31.7	%
Net Debt Plus Preferred / Total Market Capitalization			61.0	%			52.3	%
Net Debt Less Securities / Total Market Capitalization			28.1	%			20.2	%
Net Debt Less Securities Plus Preferred / Total Market Capitalization			52.5	%			40.8	%
Interest Coverage			3.7	x			3.4	x
Fixed Charge Coverage			1.7	x			1.7	x
Net Debt / Adjusted EBITDA			6.8	x			6.5	x
Net Debt Less Securities / Adjusted EBITDA			5.2	x			4.1	x
Net Debt Plus Preferred / Adjusted EBITDA			11.3	x			10.7	x
Net Debt Less Securities Plus Preferred / Adjusted EBITDA			9.8	x			8.4	x

 

 

Debt Analysis

(unaudited)

 

		Twelve Months Ended
		12/31/2018				12/31/2017
Debt Outstanding
Mortgages Payable:
Fixed Rate Mortgages		$	334,411,425			$	308,444,180
Variable Rate Mortgages			-0-				16,606
Total Mortgages Before Unamortized Debt Issuance Costs			334,411,425				308,460,786
Unamortized Debt Issuance Costs			(3,318,362	)			(3,565,669	)
Mortgages, Net of Unamortized Debt Issuance Costs		$	331,093,063			$	304,895,117
Loans Payable:
Unsecured Line of Credit		$	50,000,000			$	35,000,000
Other Loans Payable			58,417,479				49,765,824
Total Loans Before Unamortized Debt Issuance Costs			108,417,479				84,765,824
Unamortized Debt Issuance Costs			(432,126	)			(61,337	)
Loans, Net of Unamortized Debt Issuance Costs		$	107,985,353			$	84,704,487
Total Debt, Net of Unamortized Debt Issuance Costs		$	439,078,416			$	389,599,604
% Fixed/Floating
Fixed			77.0	%			80.1	%
Floating			23.0	%			19.9	%
Total			100.0	%			100.0	%
Weighted Average Interest Rates (1)
Mortgages Payable			4.29	%			4.24	%
Loans Payable			4.20	%			3.14	%
Total Average			4.27	%			4.01	%
Weighted Average Maturity (Years)
Mortgages Payable			6.3				6.9

 

(1) Weighted average interest rates do not include the effect of unamortized debt issuance costs.

 

 

Debt Maturity

(unaudited)

 

 

As of 12/31/2018:
Fiscal Year Ended		Mortgages				Loans				Total				% of Total
2019		$	2,364,577			$	19,767,278			$	22,131,855				5.0	%
2020			11,739,329				4,215,285				15,954,614				3.6	%
2021			2,157,664				378,318				2,535,982				0.6	%
2022			20,420,083				51,130,884	(1)			71,550,967				16.1	%
2023			61,227,235				568,692				61,795,927				14.0	%
Thereafter			236,502,537				32,357,022				268,859,559				60.7	%
Total Debt Before Unamortized Debt Issuance Cost			334,411,425				108,417,479				442,828,904				100.0	%
Unamortized Debt Issuance Cost			3,318,362				432,126				3,750,488
Total Debt, Net of Unamortized Debt Issuance Costs		$	331,093,063			$	107,985,353			$	439,078,416

 

(1) Includes $50 million balance outstanding on the Company’s Line of Credit due November 2022, with an additional one year option.

 

 

Securities Portfolio Performance

 

 

Year Ended		Securities Available for Sale				Dividend Income				Net Realized Gain on Sale of Securities				Net Realized Gain on Sale of Securities & Dividend Income
2010		$	28,757,477			$	1,762,609			$	2,027,943			$	3,790,552
2011			43,298,214				2,512,057				2,692,649				5,204,706
2012			57,325,440				3,243,592				4,092,585				7,336,177
2013			59,254,942				3,481,514				4,055,812				7,537,326
2014			63,555,961				4,065,986				1,542,589				5,608,575
2015			75,011,260				4,399,181				204,230				4,603,411
2016			108,755,172				6,636,126				2,285,301				8,921,427
2017			132,964,276				8,134,898				1,747,528				9,882,426
2018			99,595,736				10,367,155				20,107				10,387,262
						$	44,603,118			$	18,668,744			$	63,271,862

 

 

Property Summary and Snapshot

(unaudited)

 

		12/31/2018				12/31/2017				% Change
Communities			118				112				5.4	%
Developed Sites			21,510				20,029				7.4	%
Occupied			17,636				16,208				8.8	%
Occupancy %			82.0	%			81.4	%			60	bps
Total Rentals			6,512				5,607				16.1	%
Occupied Rentals			6,009				5,213				15.3	%
Rental Occupancy %			92.3	%			93.0	%			-70	bps
Monthly Rent Per Site		$	435			$	428				1.6	%
Monthly Rent Per Home Rental Including Site		$	742			$	726				2.2	%

 

State		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
							(1)								(1)																																(2)
Indiana			14				1,104				870				234				3,982				3,241				81.4	%		$	382				1,370				1,260				92.0	%		$	732
Maryland			1				77				10				67				58				57				98.3	%		$	495				-0-				-0-				N/A				N/A
Michigan			2				68				68				-0-				354				257				72.6	%		$	448				185				163				88.1	%		$	751
New Jersey			4				349				187				162				1,006				957				95.1	%		$	616				38				36				94.7	%		$	925
New York			7				617				308				309				1,161				974				83.9	%		$	526				317				299				94.3	%		$	891
Ohio			35				1,680				1,214				466				5,908				4,691				79.4	%		$	385				1,747				1,625				93.0	%		$	678
Pennsylvania			48				2,087				1,728				359				7,342				5,868				79.9	%		$	451				2,049				1,855				90.5	%		$	769
Tennessee			7				413				321				92				1,699				1,591				93.6	%		$	462				806				771				95.7	%		$	758
Total as of December 31, 2018			118				6,395				4,706				1,689				21,510				17,636				82.0	%		$	435				6,512				6,009				92.3	%		$	742

 

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

(2) Includes home and site rent charges.

 

 

Same Property Statistics

(unaudited)

 

		For Three Months Ended																For Twelve Months Ended
		12/31/2018				12/31/2017				Change				% Change				12/31/2018				12/31/2017				Change				% Change
Community Net Operating Income
Rental and Related Income		$	26,346,792			$	24,720,939			$	1,625,853				6.6	%		$	103,259,916			$	96,937,362			$	6,322,554				6.5	%
Community Operating Expenses			11,827,981				10,735,050				1,092,931				10.2	%			45,342,619				42,594,719				2,747,900				6.5	%
Community NOI		$	14,518,811			$	13,985,889			$	532,922				3.8	%		$	57,917,297			$	54,342,643			$	3,574,654				6.6	%

 

		As of
		12/31/2018				12/31/2017				Change
Total Sites			17,929				17,894				0.2	%
Occupied Sites			14,881				14,779				0.7	%
Occupancy %			83.0	%			82.6	%			40	bps
Number of Properties			101				101				N/A
Total Rentals			5,870				5,297				10.8	%
Occupied Rentals			5,435				4,946				9.9	%
Rental Occupancy			92.6	%			93.4	%			-80	bps
Monthly Rent Per Site		$	449			$	434				3.5	%
Monthly Rent Per Home Rental Including Site		$	743			$	723				2.8	%

 

Same Property includes all properties owned as of January 1, 2017, with the exception of Memphis Blues.

 

 

Acquisition Summary

 

At Acquisition:
Year of Acquisition		Number of Communities				Sites				Occupied Sites				Occupancy %				Price				Total Acres
2016			3				289				215				74	%		$	7,277,000				219
2017			11				1,997				1,333				67	%		$	63,290,000				602
2018			6				1,615				1,271				79	%		$	59,093,000				494

 

 

2018 Acquisitions

 

Community		Date of Acquisition		State		Number of Sites				Purchase Price				Number of Acres				Occupancy
Redbud Village and Camelot Estates		May 30, 2018		IN			669			$	20,500,000				231				91	%
Summit Village		August 31, 2018		IN			134				3,500,000				58				60	%
Pikewood Manor		November 30, 2018		OH			488				23,000,000				117				67	%
Meadows of Perrysburg and Perrysburg Estates		December 19, 2018		OH			324				12,093,000				88				79	%
Total 2018							1,615			$	59,093,000				494				79	%

 

 

Definitions

 

Investors and analysts following the real estate industry utilize funds from operations available to common shareholders (“FFO”), core funds from operations available to common shareholders (“Core FFO”), normalized funds from operations available to common shareholders (“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 loss 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 the change in the fair value of marketable securities and costs associated with the redemption of preferred stock. Normalized FFO reflects the same assumptions as Core FFO except that it also adjusts for gains and losses realized on marketable 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 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 change in the fair value of marketable securities and costs associated with the redemption of preferred stock.

 

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

 

Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share is calculated using diluted weighted shares outstanding of 38,135,000 and 37,214,000 shares for the three and twelve months ended December 31, 2018, respectively, and 35,478,000 and 33,146,000 the three and twelve months ended December 31, 2017, respectively. Common stock equivalents resulting from stock options in the amount of 294,000 and 342,000 shares for the three and twelve months ended December 31, 2018, respectively, and 406,000 and 470,000 shares for the three and twelve months ended December 31, 2017, are included in the diluted weighted shares outstanding. Common stock equivalents were excluded from the computation of FFO per Diluted Common Share and 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, 2017, with the exception of Memphis Blues.

 

Adjusted EBITDA is calculated as net income (loss) plus interest expense, franchise taxes, depreciation, and the change in the fair value of marketable securities.

 

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 loss 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 7, 2019

 

FOR IMMEDIATE RELEASE	March 7, 2019
	Contact: Nelli Madden
	732-577-9997

 

UMH PROPERTIES, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND
YEAR ENDED DECEMBER 31, 2018

 

FREEHOLD, NJ, March 7, 2019........ UMH Properties, Inc. (NYSE:UMH) reported Total Income of $129,587,000 for the year ended December 31, 2018 as compared to $112,648,000 for the year ended December 31, 2017, representing an increase of 15%. Total Income for the quarter ended December 31, 2018 was $34,245,000 as compared to $28,697,000 for the quarter ended December 31, 2017, representing an increase of 19%. Net Loss Attributable to Common Shareholders amounted to $56,532,000 or $1.53 per diluted share for the year ended December 31, 2018 as compared to $7,679,000 or $0.24 per diluted share for the year ended December 31, 2017. Net Loss Attributable to Common Shareholders amounted to $32,853,000 or $0.87 per diluted share for the quarter ended December 31, 2018 as compared to $796,000 or $0.03 per diluted share for the quarter ended December 31, 2017. This increase was due to the change in fair value of our marketable securities, which are now included in our operating numbers.

 

Core Funds from Operations Attributable to Common Shareholders (“Core FFO”) was $26,966,000 or $0.72 per diluted share for the year ended December 31, 2018 as compared to $23,462,000 or $0.71 per diluted share for the year ended December 31, 2017. Core FFO was $7,363,000 or $0.19 per diluted share for the quarter ended December 31, 2018 as compared to $6,553,000 or $0.19 per diluted share for the quarter ended December 31, 2017. Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), was $27,471,000 or $0.74 per diluted share for the year ended December 31, 2018, as compared to $21,714,000 or $0.66 per diluted share for the year ended December 31, 2017, representing an increase in Normalized FFO per diluted share of 12%. Normalized FFO was $7,363,000 or $0.19 per diluted share for the quarter ended December 31, 2018, as compared to $6,324,000 or $0.18 per diluted share for the quarter ended December 31, 2017, representing an increase in Normalized FFO per diluted share of 6%.

 

A summary of significant financial information for the three and twelve months ended December 31, 2018 and 2017 is as follows:

 

		For the Three Months Ended
		December 31,
		2018				2017
Total Income		$	34,245,000			$	28,697,000
Total Expenses		$	29,320,000			$	24,568,000
Gain on Sales of Marketable Securities, net		$	-0-			$	229,000
Decrease in Fair Value of Marketable Securities		$	(31,913,000	)		$	-0-
Net Loss Attributable to Common Shareholders		$	(32,853,000	)		$	(796,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(0.87	)		$	(0.03	)
Core FFO (1)		$	7,363,000			$	6,553,000
Core FFO (1) per Diluted Common Share		$	0.19			$	0.19
Normalized FFO (1)		$	7,363,000			$	6,324,000
Normalized FFO (1) per Diluted Common Share		$	0.19			$	0.18
Weighted Average Shares Outstanding			37,841,000				35,072,000

 

 

		For the Twelve Months Ended
		December 31,
		2018				2017
Total Income		$	129,587,000			$	112,648,000
Total Expenses		$	111,010,000			$	96,616,000
Gain on Sales of Marketable Securities, net		$	20,000			$	1,748,000
Decrease in Fair Value of Marketable Securities		$	(51,675,000	)		$	-0-
Net Loss Attributable to Common Shareholders		$	(56,532,000	)		$	(7,679,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(1.53	)		$	(0.24	)
Core FFO (1)		$	26,966,000			$	23,462,000
Core FFO (1) per Diluted Common Share		$	0.72			$	0.71
Normalized FFO (1)		$	27,471,000			$	21,714,000
Normalized FFO (1) per Diluted Common Share		$	0.74			$	0.66
Weighted Average Shares Outstanding			36,871,000				32,676,000

 

A summary of significant balance sheet information as of December 31, 2018 and 2017 is as follows:

 

		December 31, 2018				December 31, 2017
Gross Real Estate Investments		$	881,456,000			$	764,439,000
Marketable Securities at Fair Value		$	99,596,000			$	132,964,000
Total Assets		$	878,986,000			$	823,881,000
Mortgages Payable, net		$	331,093,000			$	304,895,000
Loans Payable, net		$	107,985,000			$	84,704,000
Total Shareholders’ Equity		$	424,698,000			$	421,215,000

 

Samuel A. Landy, President and CEO, commented on the 2018 results.

 

“During 2018, we continued to execute on our long-term business plan. We have generated solid operating results, achieved strong growth and strengthened our financial position. Our accomplishments during the year include:

 

	●	Generated a 12% increase in Normalized FFO per share;
	●	Increased Rental and Related Income by 12%;
	●	Increased Community Net Operating Income (“NOI”) by 13%;
	●	Improved our Operating Expense ratio by 50 basis points to 46.5%;
	●	Increased Same Property NOI by 7%;
	●	Increased Same Property Occupancy by 40 basis points from 82.6% to 83.0%;
	●	Increased home sales by 45%;
	●	Acquired 6 communities containing approximately 1,600 homesites for a total cost of $59.1 million, bringing our total property portfolio to 118 manufactured home communities with approximately 21,500 developed homesites;
	●	Increased our rental home portfolio by 905 homes to approximately 6,500 total rental homes, representing an increase of 16%;
	●	Expanded and extended our existing unsecured revolving credit facility, increasing the available borrowings and reducing interest costs;
	●	Issued 2,000,000 shares of a new 6.375% Series D Cumulative Redeemable Preferred Stock, for net proceeds after deducting the underwriting discount and other estimated offering expenses, of approximately $48 million; and
	●	Raised $35.1 million through our Dividend Reinvestment and Stock Purchase Plan.”

 

 

“In 2018, we acquired 6 communities containing approximately 1,600 developed homesites for an aggregate cost of approximately $59.1 million. The average occupancy of these communities is 79%. We have expanded into new markets within our existing footprint. These new communities have favorable demographics with significant upside potential through the filling of vacant sites and from expansion capabilities. The acquisition market remains competitive, but we are pleased with our ability to source deals and further grow the company through our acquisition program.”

 

“We have experienced double-digit sales growth in each of the past 3 years, increasing sales by 45% this year. Home sales have returned to profitability. The housing market is benefiting from rising wages, increased employment and reduced government regulations. We are very optimistic about the future of our sales division.”

 

“Our rental operation continues to drive our occupancy rates and improve our property operations. We have added an additional 905 homes to our rental portfolio which now contains 6,500 homes. We have maintained a healthy occupancy rate of over 92% for our rental units.”

 

“The public REIT market experienced tremendous volatility during the fourth quarter and our GAAP earnings were negatively impacted as a result. The fair market value of our REIT securities portfolio has improved substantially subsequent to quarter end.”

 

“Same Property NOI increased by 7% this year, driven by a 40-basis point increase in occupancy and a 350-basis point increase in site rent. Our same property results reflect the strength of our platform and the successes of our business plan.”

 

“UMH is well positioned for continued success in 2019. We have grown our portfolio to 118 communities containing 21,500 developed homesites. Our overall occupancy rate increased by 40 basis points during the year from 82.6% to 83.0% at yearend. We have a business plan that has proven to deliver consistent long-term results. We have developed an irreplaceable platform that will enhance shareholder value. The demand for affordable housing in our markets remains strong which should lead to future revenue and earnings growth.”

 

UMH Properties, Inc. will host its Fourth Quarter and Year Ended December 31, 2018 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, March 8, 2019 at 10:00 a.m. Eastern Time.

 

The Company’s fourth quarter and year ended December 31, 2018 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 8, 2019. It will be available until June 1, 2019, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10127590. 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 118 manufactured home communities containing approximately 21,500 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 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 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 Attributable to Common Shareholders (“Core FFO”) as FFO plus change in the fair value of marketable securities and costs associated with the redemption of preferred stock. We define Normalized Funds From Operations Attributable to Common Shareholders (“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 attributable to common shareholders for the three and twelve months ended December 31, 2018 and 2017 are calculated as follows:

 

		Three Months Ended								Twelve Months Ended
		12/31/18				12/31/17				12/31/18				12/31/17
Net Loss Attributable to Common Shareholders		$	(32,853,000	)		$	(796,000	)		$	(56,532,000	)		$	(7,679,000	)
Depreciation Expense			8,281,000				7,297,000				31,691,000				27,557,000
Loss on Sales of Depreciable Assets			22,000				52,000				132,000				81,000
FFO Attributable to Common Shareholders			(24,550,000	)			6,553,000				(24,709,000	)			19,959,000
Decrease in Fair Value of Marketable Securities (2)			31,913,000				-0-				51,675,000				-0-
Redemption of Preferred Stock			-0-				-0-				-0-				3,503,000
Core FFO Attributable to Common Shareholders			7,363,000				6,553,000				26,966,000				23,462,000
Gain on Sales of Marketable Securities, net			-0-				(229,000	)			(20,000	)			(1,748,000	)
Non-Recurring Other Expense (1)			-0-				-0-				525,000				-0-
Normalized FFO Attributable to Common Shareholders		$	7,363,000			$	6,324,000			$	27,471,000			$	21,714,000

 

	(1)	Consists of one-time payroll expenditure.
	(2)	Represents change in unrealized gain (loss) in marketable securities which is included in the Consolidated Statements of Income (Loss).

 

 

The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 38,135,000 and 37,214,000 shares for the three and twelve months ended December 31, 2018, respectively, and 35,478,000 and 33,146,000 shares for the three and twelve months ended December 31, 2017, respectively. Common stock equivalents resulting from stock options in the amount of 294,000 and 342,000 shares for the three and twelve months ended December 31, 2018, respectively, and 406,000 and 470,000 shares for the three and twelve months ended December 31, 2017, 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, 2018 and 2017:

 

		2018				2017
Operating Activities		$	40,175,000			$	40,857,000
Investing Activities			(137,603,000	)			(152,920,000	)
Financing Activities			82,314,000				130,604,000