UMH Properties, Inc.

Good morning and welcome to UMH Properties' fourth quarter and full year 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 a touch 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 10K that we filed with the SEC yesterday, we have filed an unaudited annual and fourth quarter supplemental information presentation. The supplemental information presentation, along with our 10-K, 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 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 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 annual 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 Lange, Chairman Samuel Lange, President and Chief Executive Officer Anna Chu, Vice President and Chief Financial Officer Brad Taft, Vice President and Chief Operating Officer Jim Likens, Vice President of Capital Markets 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, Nellie. UMH had another year highlighted by occupancy, sales, and ultimately earnings growth. The success of our business plan and the overall strength of the company are delivering strong results for our shareholders. We generated a total return of 91% in 2021. The company achieved many milestones this year. We surpassed a billion dollars in equity market capitalization. We hit an all-time high stock price of $27.50. We broke our annual sales record, and we entered a joint venture with Nuveen Real Estate. While this was a landmark year, we have laid the foundation for continued growth through the financial engineering of our capital stack, continued execution of our value-added business plan, and additional acquisition and development opportunities. I am pleased to report that normalized FFO for the fourth quarter was 22 cents per share, representing an increase of approximately 10% over last year. Normalized FFO for the year was 87 cents per share, representing an increase of 24%. Our FFO continues to trend upwards and has given management and the board the confidence to raise our dividend for two consecutive years. In January of 2021, we increased our dividend by 5.5 percent, and in January of 2022, we increased our dividend by 5.3 percent. Assuming a stable economic environment, we believe that we are well positioned for consistent dividend increases moving forward. Moving on to operations, total income for the year increased 14 percent to approximately $186 million. This increase was the result of an 11% increase in rental and related income and a 34% increase in sales of manufactured homes. Rental and related income for the year was $159 million. Our operating expense ratio improved to 42.8% from 44.1% in 2020, which resulted in community NOI of approximately $91 million or an increase of 13% over last year. This is the 11th consecutive year that we have delivered over 10% rental and related income growth and the sixth consecutive year that we have delivered sales growth of over 10%. Our platform continues to deliver industry-leading same property operating results. Same property NOI increased 13% or approximately $10.9 million over 2020. Applying a relatively conservative market cap rate of 5% to this increase in NOI results in value creation of approximately $160 million after deducting the investment in our rental home program and capital improvements. This increase in NOI was the result of increased occupancy of 170 basis points or 413 occupied sites and rent increases of approximately 4.8%. The success of our rental home program is a key component of our business plan. During the year, we added 454 homes to our portfolio, bringing our total portfolio to 8,700 rental homes. Our occupancy rates remain strong at 95.5 percent, and our monthly rent per home increased 4.3 percent to $824 per month. The main problem facing our rental home program is the backlogs that our manufacturers are experiencing. Generally, backlogs are six to 12 months, depending on the region. This is the main reason that we have only increased our rental home portfolio by 454 homes this year. We are experiencing waiting lists throughout our portfolio and have demand to fill well more than what we received from the manufacturers this year. We have over 800 homes on order and anticipate receiving 700 to 800 new homes in 2022. Gross sales for 2021 were $27.1 million, representing an increase of 34% over 2020. We sold a total of 370 homes, of which 182 were new home sales and 188 were used home sales. Sales profits improved substantially from $768,000 in 2020 to $2 million in 2021. Our average sales price was $73,000 as compared to $63,000 in the prior year period. We have several community expansions and strong sales markets coming online that should drive additional sales growth. Our future sales growth is dependent on the timely delivery of inventory from our manufacturers. We have a strong pipeline of sales and anticipate continued sales growth. On the expansion front, we have completed the development of 225 sites in 2021. These sites are well located in some of our strongest sales markets. We anticipate obtaining approvals for the development of an additional 800 sites in 2022. We will develop approximately 400 of these sites. Over the next five years, we believe that we can develop 400 or more sites per year. Our 1,800 vacant acres can be developed into 7,300 sites, giving us a meaningful runway to continue to grow the company organically for years to come. In 2021, we acquired three communities containing 543 sites, of which 59% are occupied for a total purchase price of approximately $18.3 million. We acquired one community in Alabama, one community in South Carolina, and one community in Ohio. South Carolina and Alabama are new markets for UMH, and we look forward to scaling our portfolio in these and surrounding states. The acquisition market remains competitive, but we believe we can acquire $25 to $50 million in acquisitions that meet our growth criteria annually. We currently have an acquisition pipeline of three communities containing 367 sites, for a total purchase price of $17.1 million, or $46,000 per site. It is hard to predict exactly what will be for sale and when, but UMH is well-positioned to make opportunistic acquisitions as compelling opportunities become available. We are also pleased to announce that we entered into a joint venture with Nuveen Real Estate for the acquisition and development of new manufactured housing communities. The joint venture has an initial capital commitment of $170 million. The joint venture acquired one newly developed community in Florida containing 219 sites. We have two more deals under contract that will be considered for the joint venture. We are working with developers to find land in markets that need affordable housing. We look forward to growing this joint venture with Nuveen. Over the next 12 months, we plan to redeem our $247 million 6.75% Series C Perpetual Preferred Stock and $215 million 6.375% Series D Perpetual Preferred Stock. We've been preparing for these redemptions by lining up various sources of accretive capital. In 2021, we raised $182 million through our common ATM at a price of $22.14 per share. In February of 2022, we sold $102.7 million of unsecured bonds to investors in Israel at a 4.72% interest rate. We have availability on our existing lines of credit and will be receiving $56 million in cash from the recently approved sale of Monmouth Real Estate Investment Corporation. UMH is well positioned to redeem both outstanding series of preferred stock and generate a meaningful increase in FFO. The reduction of the cost of our $462 million in preferred from a blended rate of 6.575% to 4% would result in an increase of FFO of approximately $12 million. Some of the primary reasons for raising debt overseas were to obtain an investment-grade rating and to widen and diversify our ownership base with long-term investors. During the roadshow for the offering, we had the opportunity to tell our story to dozens of new investors, many of which were new not just to UMH but to manufactured housing as well. We believe the interest level for many of these investors will go beyond the debt offering and include owning the common shares as well. UMH has a compelling business plan with ample growth opportunities, both internally and externally. We have a fantastic team of employees and a great platform that continually produces industry-leading results. We have access to various sources of capital. We've accomplished a great deal over the past few years, but we are just getting started and look forward to delivering exceptional results for years to come. And now, Anna will provide you with greater detail on our results for the quarter and for the year.