FREEHOLD, NJ, Nov. 04, 2020 (GLOBE NEWSWIRE) — UMH Properties, Inc. (NYSE:UMH) reported Total Income for the quarter ended September 30, 2020 of $43.1 million as compared to $37.3 million for the quarter ended September 30, 2019, representing an increase of 16%. Net Loss Attributable to Common Shareholders amounted to $12.8 million or $0.31 per diluted share for the quarter ended September 30, 2020 as compared to Net Income of $5.6 million or $0.14 per diluted share for the quarter ended September 30, 2019. This decrease was due to the change in fair value of our marketable securities. During the quarter, the securities portfolio experienced an unrealized loss of $6.7 million as compared to an unrealized gain of $9.2 million in the prior year period. In addition, the Company called for redemption of all 3.8 million issued and outstanding shares of its 8.0% Series B Preferred Stock and recognized a preferred share redemption charge of $2.9 million related to the original issuance costs.
Funds from Operations Attributable to Common Shareholders (“FFO”), was $4.5 million or $0.11 per diluted share for the quarter ended September 30, 2020 as compared to $5.8 million or $0.14 per diluted share for the quarter ended September 30, 2019. This decrease in FFO is due to the redemption charge of $2.9 million on the Series B Preferred Stock. Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), was $7.4 million or $0.18 per diluted share for the quarter ended September 30, 2020, as compared to $6.0 million or $0.15 per diluted share for the quarter ended September 30, 2019.
A summary of significant financial information for the three and nine months ended September 30, 2020 and 2019 is as follows (in thousands except per share amounts):
|For the Three Months Ended|
|Increase (Decrease) in Fair Value of Marketable Securities||$||(6,739||)||$||9,234|
|Net Income (Loss) Attributable to Common Shareholders||$||(12,747||)||$||5,622|
|Net Income (Loss) Attributable to Common |
Shareholders per Diluted Common Share
|FFO (1) per Diluted Common Share||$||0.11||$||0.14|
|Normalized FFO (1)||$||7,386||$||6,011|
|Normalized FFO (1) per Diluted Common Share||$||0.18||$||0.15|
|Diluted Weighted Average Shares Outstanding||41,421||40,754|
|For the Nine Months Ended|
|Increase (Decrease) in Fair Value of Marketable Securities||$||(31,921||)||$||15,478|
|Net Income (Loss) Attributable to Common Shareholders||$||(42,350||)||$||5,999|
|Net Income (Loss) Attributable to Common |
Shareholders per Diluted Common Share
|FFO (1) per Diluted Common Share||$||0.43||$||0.44|
|Normalized FFO (1)||$||20,610||$||18,148|
|Normalized FFO (1) per Diluted Common Share||$||0.50||$||0.46|
|Diluted Weighted Average Shares Outstanding||41,275||39,830|
A summary of significant balance sheet information as of September 30, 2020 and December 31, 2019 is as follows (in thousands):
|September 30, 2020||December 31, 2019|
|Gross Real Estate Investments||$||1,079,426||$||1,015,281|
|Marketable Securities at Fair Value||$||85,161||$||116,186|
|Mortgages Payable, net||$||472,376||$||373,658|
|Loans Payable, net||$||34,583||$||83,686|
|Total Shareholders’ Equity||$||464,943||$||546,339|
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.”
UMH Properties, Inc. will host its Third Quarter 2020 Financial Results Webcast and Conference Call on Thursday, November 5, 2020 at 10:00 a.m. Eastern Time. Senior management will discuss the results, current market conditions and future outlook on the call.
The Company’s 2020 third quarter 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 Thursday, November 5, 2020. It will be available until February 1, 2021 and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10147928. 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 124 manufactured home communities containing approximately 23,400 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.
(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, and the change in the fair value of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper – 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of NAREIT FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper – 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair value of marketable securities from our FFO calculation. Prior to the adoption of the FFO White Paper – 2018 Restatement, we utilized Core Funds from Operations (Core FFO), which we defined as FFO, excluding the change in the fair value of marketable securities. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding gains and losses realized on marketable securities investments and certain one-time charges. FFO and Normalized FFO should be considered as supplemental measures of operating performance used by REITs. 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 and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded from FFO and Normalized FFO are significant components in understanding the Company’s financial performance.
FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as alternatives 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 and Normalized FFO for the three and nine months ended September 30, 2020 and 2019 are calculated as follows (in thousands except footnotes):
|Three Months Ended||Nine Months Ended|
|Net Income (Loss) Attributable to Common Shareholders||$||(12,747||)||$||5,622||$||(45,350||)||$||5,999|
|Loss on Sales of Depreciable Assets||31||27||177||36|
|(Increase) Decrease in Fair Value of Marketable Securities (2)||6,739||(9,234||)||31,921||(15,478||)|
|FFO Attributable to Common Shareholders||4,515||5,805||17,739||17,567|
|Redemption of Preferred Stock||2,871||-0-||2,871||-0-|
|Non-Recurring Other Expense (3)||-0-||206||-0-||581|
|Normalized FFO Attributable to Common Shareholders||$||7,386||$||6,011||$||20,610||$||18,148|
The diluted weighted shares outstanding used in the calculation of FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 41.8 million and 41.6 million shares for the three and nine months ended September 30, 2020, respectively, and 40.8 million and 39.8 million shares for the three and nine months ended September 30, 2019, respectively. Common stock equivalents resulting from stock options in the amount of 426,000 and 348,000 shares for the three and nine months ended September 30, 2020, respectively, and 240,000 and 238,000 shares for the three and nine months ended September 30, 2019, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents for the three and nine months ended September 30, 2020 were excluded from the computation of the Diluted Net Income (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 nine months ended September 30, 2020 and 2019 (in thousands):
(2) Represents change in unrealized gain (loss) in marketable securities which is included in the Consolidated Statements of Income (Loss). (Increase) Decrease in Fair Value of Marketable Securities, if any, were previously recorded in Core FFO.
(3) Consists of utility billing dispute over a prior 10-year period ($376,000), emergency windstorm tree removal expenses in two adjacent communities ($126,000) and costs associated with acquisitions not completed ($80,00) in 2019.
# # # #
Contact: Nelli Madden
UMH PROPERTIES, INC.
Juniper Business Plaza
3499 Route 9 North, Suite 3-C
Freehold, NJ 07728
Fax: (732) 577-9980