UMH Properties, Inc.

Good morning and welcome to the UMH Properties Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. It is now my pleasure to introduce your host, Ms. Nellie Madden, Vice President of Investor Relations, Thank you, Ms. Madden. You may begin.

Thank you very much, Operator. In addition to the 10Q that we filed with the SEC yesterday, we have filed an unaudited third quarter supplemental information presentation. This supplemental information presentation, along with our 10Q, are available on the company's website at umh.rit. I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that the expectations will be achieved. Risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's third quarter 2020 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. In addition, during today's call, we will be discussing non-GAAP financial metrics, reconciliations of these non-GAAP financial metrics, The comparable GAAP financial metrics, as well as explanatory and cautioning language, are included in our earnings release, our supplemental information, and our historical SEC filings. Having said that, I would like to introduce management with us today. Eugene Landy, Chairman Samuel Landy, President and Chief Executive Officer Anna Chu, Vice President and Chief Financial Officer Brett Taft, Vice President and Chief Operating Officer, Jim Likens, Vice President of Capital Markets, and Daniel Lange, Vice President. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Lange.

Thank you very much, Nelly. We are pleased to report our results for the third quarter ended September 30, 2020. UMH continues to achieve excellent results despite the COVID-19 pandemic. Our rent collections remain in line with our historical performance. Currently, over 98% of our third quarter rental and related charges have been collected. Demand throughout our communities remains strong as evidenced by our 320 basis point improvement in same community occupancy and our 54% sales growth as compared to the same quarter last year. We further demonstrated the success of our business plan by obtaining $106 million of GSE financing at 2.62%. This loan pioneered GSE acceptance of up to 60% rental homes in communities. Subsequent to quarter ends, this capital was used to redeem our 8% Series B preferred stock. This 500 basis point improvement will result in over $5 million in additional FFO per year, or approximately 12 cents per share. UMH is well positioned to excel in 2021. Normalized FFO for the third quarter was 18 cents per diluted share, compared to 15 cents in the prior year period. This represents an increase of 20%. We are pleased that our 18-cent dividend per quarter is now fully covered by our current operating performance. This is prior to the positive impact that the redemption of our Series B preferred will have on FFO. Our community operating results continue to improve. In accordance with our business plan, the value-add communities that we have acquired over the past few years are now starting to deliver significant revenue growth and are positively impacting our overall performance. Throughout the pandemic, we have continued our capital improvements, expansions, and rental home additions. Our communities look better and are operating more efficiently than ever before. Total income for the quarter is up 16%. Year-to-date total income is up 11%. Our operating expense ratio has decreased from 47.8% to 44.6%. The combination of income growth and expense ratio reduction resulted in overall NOI growth of 17% for the quarter and 19% for the year. Our same property occupancy rate improved 320 basis points to 86.9% from the same quarter last year. This translates to an increase of 706 revenue producing sites year over year. This occupancy growth has contributed to income growth of 8.6% for the third quarter and 7.8% year to date, generating same property NOI growth of 12.9% and 13.7% respectively. This is the fourth quarter in a row that we have delivered double-digit same-store NOI growth. The primary driver of our overall occupancy and revenue growth is the rental home program. Through the COVID-19 crisis, rental homes have proven to be as stable an income stream as homeowner occupied sites. We have increased our rental home portfolio by 684 units so far this year. We are on track to add 800 to 900 new rental units this year. now own approximately 8,100 rental homes. At quarter end, our rental home occupancy rate was 95.4%. As a result of our performance through COVID, we are more convinced than ever that rental homes in manufactured housing communities are the best way to provide quality, affordable housing. We continue to seek value-add acquisition opportunities in strong markets where we can implement our rental home program. We recently entered into a line of credit with First Bank secured by our rental homes and the income derived by them. This line allows us to tap into the equity that we have in our rental homes at a reasonable rate of prime plus 25 basis points. Our goal is to continue to increase our rental home program and reduce the cost of capital used for that purpose. Growth sales for the quarter were $6.8 million, representing an increase of 54% over the same period last year. Growth sales for the year are at $15 million, which is now up 8% over the first three quarters of 2019. Despite the COVID-19 pandemic, we continue to see increasing demand for sales throughout our portfolio. Our sales generated income of approximately $640,000 for the quarter and approximately $450,000 for the year. As we continue to grow our sales volume, we expect to generate meaningful income which will further improve FFO. To ensure that we have the lots available to generate this volume, we are working on developing additional sites at many of our best sales locations. We remain on track to complete the development of 191 sites this year. In 2021, we expect to obtain approvals on approximately 800 sites. We should develop about 400 of these approved sites in the next 18 months. During the quarter, we closed on the acquisition of two communities containing 310 sites for a total purchase price of $7.8 million, or $25,000 per site. These are value-add communities with an in-place occupancy rate of 64%. Over the next few months, we expect to complete our initial turnaround work and begin to infill the communities with rental homes. These communities are both located in markets that we already operate in, creating management efficiencies. We have been able to add to our acquisition pipeline. We have executed letters of intent on four communities in three new states that fit our growth criteria. These communities contain... approximately 580 sites of which 64% are occupied. The total purchase price for these communities is $21 million or $36,000 per site. Previous calls, we have discussed our plans to improve community operating results, acquire and expand communities, improve sales profitability, refinance our capital stack, and ultimately improve our FFO. During extremely difficult economic circumstances, We have achieved many of these goals and made substantial progress toward achieving the others. We have covered our 18-cent dividend prior to the positive impact that the redemption and refinance of our Series B preferred will have on earnings. This change in our capital stack is expected to add 12 cents of FFO per share annually. We have laid the foundation to deliver excellent FFO growth in 2021 and beyond. Now, Anna will provide you with greater detail on our results for the quarter and for the year.