UMH Properties, Inc.

Good day and welcome to the UMH Properties Third Quarter 2021 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 touch-tone phone. To withdraw your question, please press star, then two. Please note, 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. The supplemental information presentation, along with our 10Q, are available on the company's website at umh.reit. 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 Clarification Reform Act of 1995. 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 its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's third quarter 2021 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 to 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 Daft, Vice President and Chief Operating Officer, Jim Likens, Vice President of Capital Markets, and Daniel Landy, Vice President. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you very much, Nelly. We are pleased to report our third quarter earnings results. Normalized FFO for the third quarter was 23 cents per share as compared to 18 cents per share last year. This represents an increase of approximately 28% over the same quarter last year. For the first nine months of the year, normalized FFO was 65 cents, which is an increase of 30% over last year. This is the sixth quarter in a row that UMH has maintained or increased our normalized FFO per share. Our business plan of acquiring value-added communities, making the necessary improvements, and implementing aggressive rental, sales, and marketing programs has been extremely successful. Not only have we generated increased earnings for our shareholders, but we have also provided countless residents with high-quality affordable housing that previously was not obtainable for them. An investment in UMH is an investment in providing affordable housing. The results that we have reported quarter after quarter are starting to be recognized by the public markets. We have achieved an equity market cap of over $1 billion and growing. Our access to capital at attractive rates has never been better. This reduced cost of capital through both the equity and debt markets will allow us to drive additional FFO growth through investment internally and externally. It will also help us to redeem our outstanding $247 million of Series C 6.75% preferred stock in July of 2022 and $215 million of our Series D 6.375% preferred stock in January of 2023. Reducing our cost of capital on these preferred series could result in additional 20 to 30 cents per share, depending on the percentages and rates of equity and debt utilized for the redemption. The redemption of our preferred stock, combined with our ability to continue to grow earnings organically and increase property values, positions UMH to outperform in the coming years. Total income for the quarter increased 11% over last year to approximately $48 million. This increase was the result of an 11% increase in rental and related income and a 15% increase in sales of manufactured homes. Our operating expense ratio improved to 41.8% from 44.7% last year. our same property results remain strong. For the quarter, same property occupancy was up 190 basis points or 435 units over last year. Sequentially, same property occupancy increased by 44 units. Same property NOI increased 14.9% or $3.1 million as compared to the third quarter of 2020. Year to date, same property NOI increased 14.7%, or $8.9 million, as compared to last year. This is the eighth quarter in a row that we have achieved double-digit same property NOI growth. During the quarter, we added 96 homes to our rental portfolio, bringing our total portfolio to approximately 8,700 rental homes. At quarter end, our rental home occupancy rate was 95.1%. The rental home business has continued to meet our expectations. Demand for rental units throughout our portfolio remains robust. The availability and price of inventory remains our biggest concern. Home prices are up approximately 40% from pre-COVID levels. We are aggressively ordering inventory and have inventory being delivered throughout the portfolio. As our manufacturers open additional factories and increase production, we will be able to obtain more homes and fill sites at a pace that is in line with previous years. Growth sales for the third quarter were $7.8 million, representing an increase of 15% over last year. Year-to-date sales volume is at $21.8 million, representing an increase of 45% over last year. Year to date, our income from sales is approximately $1.5 million as compared to $445,000 last year. We are happy to report that we have broken our annual sales record that was set last year of $20.3 million in just the first three quarters of this year. This year, we have sold a total of 294 homes, of which 153 were new home sales and 141 were used home sales. Our average sales price was $74,000 as compared to 60,000 in the prior year period. We financed 61% of our home sales and our portfolio now has a principal balance of $51.8 million at a weighted average interest rate of 7.1%. Our communities are reporting strong sales demand and we anticipate continued sales growth for the remainder of the year. Our sales operations biggest concern is also the availability and pricing of our inventory. We have expansion sites coming online in markets that are experiencing strong sales demand. We anticipate completing the development of approximately 225 sites in 2021. In 2022, we plan on developing 400 to 600 additional lots. We continue to seek acquisitions that meet our growth criteria. We have offers out on several communities, and we are working on building our pipeline. The acquisition market remains competitive. Prices of stabilized and value-add communities continue to increase, which has limited our recent acquisitions but increased the value of our existing portfolio. We have decided that now is the time to build or buy new communities from developers. We have entered into contracts to purchase three all-age to-be-built communities in Florida. These communities will contain a total of 804 developed sites for a total purchase price of approximately $89.9 million. Construction of the first community is expected to be complete in the first quarter of 2022. This community will contain 219 sites. and has a purchase price of approximately $23 million, or $105,000 per site. The communities will be highly amenitized with clubhouses, pool, bocce ball, pickleball, splash pools, dog parks, and more. We are working on additional development deals and anticipate growing our pipeline soon. To help fund these acquisitions and negate the short-term impact development deals have on FFO, We are negotiating a joint venture with an institutional investor. A joint venture will allow us to do a higher volume of development deals. We have built an irreplaceable platform that has delivered exceptional results time and time again. We have purchased and developed great communities, but even more importantly, we have created a great company with great people that can continue to achieve exceptional results for decades to come. And now, Anna will provide you with greater detail on our results for the quarter.