UMH Properties, Inc.

Good morning and welcome to the UMH Properties First Quarter 2022 Earnings Conference Call. All participants will be in listen mode only. 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 and then one on your touchtone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. It is now my pleasure to introduce the 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 10Qs that we filed with the SEC yesterday, we have filed and unaudited first quarter supplemental information presentation. The supplemental information presentation, along with our 10Q, are available on the company's website at UMH that week. 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 security's litigation report 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 first quarter earnings, yields, and funds with the Securities and Exchange Commission. The company disclaims any applications 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 gift financial metrics, as well as explanatory and portioning 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 Tapp, 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, Nellie. We are pleased to report another solid quarter of operating and financial results. Our normalized FFO was $0.17 per share, which was a decrease of 15% year over year. However, our 2022 earnings will be weighted towards the second half of the year as we are poised for future earnings growth through the recapitalization of our $247 million of 6.75% Series C preferred stock. We have opportunistically been accessing the capital and debt markets in anticipation of our future capital needs. We currently have over $290 million in cash and cash equivalents available for the redemption as well as for other investments in acquisitions, expansions, rental homes, and our joint venture. Our first quarter normalized FFO was substantially impacted by the carrying costs of the capital required to fund the recapitalization of the outstanding preferred. Without the Series C preferred stock dividends in the first quarter, our normalized FFO would have been 25 cents per share or an increase of 18% sequentially and 30 percent over last year given the volatility in the market and rising interest rates we are pleased that we have already raised the capital required for this redemption we also have additional capital and availability on our lines of credit to fund our growth initiatives demand for our housing remains strong in our markets our communities continue to experience waiting lists for rental homes and we are seeing healthy demand for home sales our overall occupancy rate increased from 85.2% to 86% year-over-year, and our rental occupancy rate remains above 95%. Total income for the quarter increased 6% to approximately $45.9 million. This increase was the result of a 7% increase in rental and related income and a 3% decrease in sales of manufactured homes. NOI for the quarter increased by approximately 9% as a result of our recent acquisitions and the addition of rental homes. Our operating expense ratio improved by 80 basis points year over year from 44.3 percent to 43.5 percent. Same property NOI increased 5.3 percent or approximately $1.2 million over 2021. This increase in NOI was the result of increased income of 6.6 percent and increased expenses of 8.4 percent. Same property occupancy increased 70 basis points to 86.7%, or 200 occupied sites over the last year, and we obtained site rent increases of approximately 4.9% and home rent increases of 4.7%. Our expense increase is attributable to rising personnel costs, tree removal, water and sewer increases, and real estate tax increases. We anticipate that the elevated expenses will be offset by income growth as we are able to procure inventory for rent and for sale and achieve our annual rent increases. The biggest challenge we face is obtaining rental homes to drive our occupancy and revenue gains. During the quarter, we added 52 homes to our portfolio, bringing our total portfolio to 8,800 rental homes. We currently have over 1,300 homes on order, of which 300 have been delivered and are in various stages of setup. The backlogs remain long, but we are starting to see some easing in certain markets and regions. Our rental occupancy rates remain strong at 95.3%, and our monthly rent per home increased 4.9% to $839 per month. Additional occupancy should absorb the expense increases and provide profitability once the supply backlog is resolved. Gross sales for the quarter were $4.3 million, representing a decrease of 3% over the same quarter last year. During the quarter, we sold 61 homes, of which 27 were new home sales and 34 were used home sales. While our sales volume decreased slightly, our sales profits increased or improved substantially from a loss of $237,000 last year to a profit of $4.3 million this quarter. This was driven by an increase in our gross profit from 21% last year to 30% this year. Demand for sales remains exceptionally strong, and we are offering financing for our customers at 4.99%, which is in line with conventional mortgage rates. We financed 55% of home sales during the quarter. We anticipate sales growth throughout the year as we obtain inventory from our manufacturers. We continue to make progress on the expansion front and expect to complete the development of approximately 400 expansion sites this year. These sites are well located in some of our strongest sales markets. Over the next five years, we believe 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. During the quarter, we acquired one community in western Pennsylvania containing 96 sites of which 83% are occupied for a total purchase price of approximately $5.8 million. Subsequent to quarter end, we completed the acquisition of another community in western Pennsylvania containing 132 sites of which 70% are occupied for a total purchase price of $7.4 million. This community also has 18 resident owned lots that pay HOA fees and another 38 entitled lots for future development. We currently have an acquisition pipeline of two communities containing 490 sites for a total purchase price of $25.9 million or $53,000 per site. The acquisition market remains competitive and cap rates remain very low in a rising interest rate environment. We continue to seek opportunistic acquisitions and are on track to meet our goal of acquiring $25 to $50 million of communities this year. We are pleased with the progress we have made at Sebring Square, which is the newly developed community acquired through our joint venture with Nuveen Real Estate. We have 11 homes on site with several sales under contract. The second property in Sebring is currently under construction, and we expect the property in Punta Gorda to begin construction in coming months. We have a strong pipeline of potential new development deals and believe this has the potential to become a very exciting and profitable part of our business. We are developing high quality communities that are more affordable than most housing alternatives in just about any market. Existing acquisitions in strong markets of decent quality are trading above replacement costs. Developing new communities will allow us to have the highest quality communities at the best prices. Our joint venture allows us to limit the short-term impact to FFO while building a high-quality portfolio of communities, growing a pipeline of future acquisition opportunities for UMH, and earning fees along the way. UMH is well positioned to outperform the market. We have internal and external growth opportunities through the infill of our 3,400 vacant sites, increased sales and finance profitability, development of expansions, acquisition of existing communities, greenfield development through our joint venture, and the recapitalization of our outstanding preferred stock. While earnings did not rise this quarter as a result of raising capital to redeem our Series C preferred, we are confident that throughout the remainder of the year, we will see operating and earnings growth in line with previous years. And now, Anna will provide you with greater detail on results for the quarter. Thank you, Sam.