UMH Properties, Inc.

Good morning, and welcome to UMH Properties' third quarter 2022 earnings conference call. All participants will be in 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-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 10Qs that we filed with the SEC yesterday, we have filed and audited the third quarter supplemental information presentation. The supplemental information presentation, along with our 10Qs, are available on the company's website at umh.org. I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be used 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 builds 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 a company's third quarter 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 gift financial metrics as well as explanatory and cautionary language are included in our 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, Executive Vice President and Chief Financial Officer. Brad Taft, Executive Vice President and Chief Operating Officer, Jim Larkins, Vice President of Capital Markets, and Daniel Landy, Executive 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 2022 earnings. Normalized FFO for the quarter was 21 cents per share, compared to 16 cents in the second quarter of this year and 23 cents per share in the same period last year. This represents an increase of 31 percent sequentially and a decrease of 9 percent year over year. The sequential increase in normalized FFO is primarily the result of the savings that we realized from the recapitalization of our $247 million, 6.75 percent Series C perpetual preferred. It is important to note that the preferred was redeemed on July 26th, so we did not receive the full benefit of the redemption in this quarter. The full impact of the preferred recapitalization increases normalized FFO by an additional two cents per share. While the preparation for this redemption negatively impacted earnings in the first half of the year, we are pleased to have opportunistically raised the capital at low rates, which will drive future earnings. Operationally, we continue to perform well in a very challenging economic environment. Demand for our product remains strong in all of our markets. Our biggest challenge this year has been the procurement and the setup of our homes. We are happy to report that we are making progress on the installation and occupancy of our rental homes. We are replenishing our inventory, which should provide a runway for earnings growth in the fourth quarter of this year and position us for another year of outperformance in 2023. For the three months ended September 30, 2022, same property rental and related income increased 5 percent and expenses increased 10 percent, resulting in NOI growth of 2 percent. Year to date, same property rental and related income increased 6 percent, expenses increased 9 percent, and NOI increased 4 percent. Our fixed operating expenses are consistent with what we experienced during the first half of the year. Personnel costs are increasing as we increase the scope of the company. Tree removal, waste removal, and travel expenses were elevated during the quarter as the result of wind storms. During the quarter, we added 142 new rental homes to our portfolio as compared to 96 last year, resulting in a 48% increase. Year to date, we have added 293 homes to our portfolio as compared to 448 last year. Although the number of additional new homes added year to date is less than the amount added during the same period last year, we are on track to have our 700 homes delivered to our communities this year. Moreover, as the supply chain continues to normalize, we anticipate being able to add an additional 800 to 900 homes next year. Our same property rental home occupancy rates remain strong at 94.5%. As we complete the infill of our communities and occupy these rental units, we can drive double-digit income growth without aggressive rent increases. Sales income from the quarter was up 16 percent and is in line with our expectations. The increase in sales is attributable to the 23 percent increase in new home sales income year over year. As with our rental program, we have strong demand for sales and anticipate growing sales as inventory becomes available. I am excited to announce that we set a new monthly sales record of $4 million in August. During the quarter, we generated sales income of $919,000. The average sales price for the quarter was $102,000 as compared to $77,000 last year. We financed 63% of our home sales. Sales for the year are down 7%, but we continue to experience a strong pipeline of sales and believe we are well positioned for a good fourth quarter. Our expansions are progressing as expected. We have approximately 400 sites under construction at eight communities. These are strong sales locations and should help us to drive additional sales, income, and growth in the future. We remain on track to deliver approximately 225 sites this year and 400 sites annually for the next several years. Year-to-date, we have closed on five communities containing 905 sites for a total purchase price of $44 million. These are value-add communities which had an average occupancy of 53 percent at acquisition and will benefit as we implement our proven business plan. Two of the communities are located in western Pennsylvania, one in Michigan, one in South Carolina, and one in Alabama. We continue to seek additional acquisition opportunities that meet our growth criteria. While these acquisitions position the company for future growth, they do require a two to three year turnaround period prior to positively contributing to our operating results. Our current acquisition pipeline contains two communities containing 579 sites for a total purchase price of $42 million. These communities are located in New Jersey and Ohio. Hurricane Ian's path went directly over our community in Sebring, Florida as a category two storm with sustained winds of over 80 miles per hour and much higher gusts. We are proud that our community and our homes withstood the storm with minimal damage. We continue to make progress in filling at this location and look forward to developing new manufactured housing communities. Additionally, through the joint venture with Nuveen Real Estate, We have two communities to be developed under contract containing 585 sites for a total purchase price of approximately $68.8 million. These communities are both located in Florida and will be delivered fully constructed and ready for homes. Construction of one of the communities has commenced and we are anticipating a late quarter four 2022 or early quarter one 2023 closing. Construction of the other community is expected to begin later this year, and we will likely close in the third quarter of 2023. Additionally, we have three land deals under contract that will be delivered entitled for 423 sites in Florida, Georgia, and Pennsylvania. We will acquire these communities entitled but unimproved and manage the development process. The aggregate purchase price for the land and entitlements is $16.6 million. Construction at these communities is expected to be approximately $16 million. The joint venture structure will result in a lower basis and higher overall return. In total, the joint venture has a pipeline of 1,008 sites for a total investment in land and improvements of $100 million. We are pleased to have been able to generate this pipeline in a relatively short period of time. Our basic business model of operating manufactured housing communities remains fundamentally sound. We have investments in value-add acquisitions and expansions where the capital has been deployed, and we are currently completing turnaround work or redevelopment. As these projects come online and become profitable, our financial results will improve. Additionally, we have 3,800 vacant sites within our existing portfolio and 2,000 vacant acres that can be developed into approximately 7,800 home sites that will allow us to drive organic earnings growth as demand dictates. We have external growth opportunities through the acquisition of existing communities, the investment in our Opportunity Zone Fund, and the investment in our joint venture with Nuveen. As always, UMH remains a conservative steward of capital. We look forward to generating additional value and income for our shareholders. We are well positioned for a strong fourth quarter and an even better 2023. And now Anna will provide you with greater detail on our results for the quarter.