UMH Properties, Inc.

Good morning, and welcome to UMH Properties' second quarter 2023 earnings conference call. All participants will be in listen-only mode, and should you need any 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 also note that this event is being recorded. It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel. Thank you. Mr. Koster, you may begin.

Thank you very much, Operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited second quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.reit. We 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 second quarter 2023 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 the 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, Founder and Chairman, Samuel Landy, President and Chief Executive Officer, Anna Chiu, Executive Vice President and Chief Financial Officer, Brett Taft, Executive Vice President and Chief Operating Officer, Jim Likens, 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, Craig. We are pleased to report that normalized FFO increased sequentially from 20 cents per share in the first quarter to 21 cents per share in the second quarter of 2023. During the quarter, our share count increased by approximately 2.9 million shares from our issuances through the common ATM, raising $45.1 million in new equity, which is being rapidly invested in additional rental homes, expansion lots, community capital improvements, and financed home sales. Once these investments come online, this capital is expected to generate future FFO growth. Our past capital investments have made UMH a top performing provider of manufactured homes for sale or rent. During the first six months of the year, 534 of our 1,100 homes in inventory were rented. Additionally, we sold 174 homes. Our August 1st, 2023 rent roll is now 7.5% higher than it was on January 1st, 2023. Same property occupancy is now 87.9% as compared to 86% last year. Our same property rental home occupancy increased from 93.4% at year end to 94.1% at the end of the second quarter. Our same property monthly rent per site increased 4.7% and our same property monthly rent per home increased by 7% over the second quarter of last year. These improved operating metrics resulted in same property income growth of 9% with expense growth of 4.2%, generating same property NOI growth of 12.6%, or $3 million over the second quarter of last year. Our same property expense ratio decreased from 42% last year to 40% for the second quarter of 2023. The rapid occupancy of inventory should result in the further acceleration of our revenue growth this year. We are pleased with our high single digit percentage increase in same property NOI for the first six months of 2023 and our double digit percentage increase in same property NOI for the second quarter of 2023. In addition, total NOI growth for both the three and six months ended June 30th, 2023 have both experienced double-digit percentage increases. Subsequent to quarter end, we paid down $34.7 million of our floor plan lines, which have a weighted average interest rate of 8.8%, reducing it to approximately $4 million. This should reduce our interest expense for the third quarter and beyond and help increase FFO per share. Further, each $50 million in new equity represents approximately 3 million additional shares. The earnings generated from investing that capital typically requires time to be accretive to earnings. We are therefore very pleased with our sequential 5% increase in FFO per share to 21 cents for the second quarter. Gross sales for the quarter increased 18% to $8.2 million as compared to $7 million last year. Net income from sales for the quarter was approximately $665,000 as compared to $876,000 last year. Included in net income are higher interest expenses and elevated inventory carrying costs. During the quarter, we sold 91 total homes, of which 43 were new homes. Our average new home sales price was $141,000 and our average used home sale price was $45,000. Year to date, gross sales increased by 38% from $11.3 million to $15.5 million. Year to date, we have financed approximately 82% of our home sales. We have a total of $73 million in home loans on our balance sheet that earn us a weighted average interest rate of 6.8%. On the expansion front, we are on track to deliver 216 lots at four communities in our portfolio. These expansions are located in Maryland, Pennsylvania, Tennessee, and Indiana. These expansions are located at communities in good markets and should generate profitable sales. We continue to make progress filling our newly developed communities owned through the joint venture with Nuveen. We have gotten a message out to local developers that we will buy entitled land or newly developed communities that allow them to earn a fair profit for their work. This has resulted in numerous deals that we are evaluating and may execute at the right time. UMH continues to seek acquisitions that meet our growth criteria. Subsequent to quarter end, we entered into a contract to purchase two communities in Maryland containing 190 sites, for a total purchase price of $12.5 million. We are careful to evaluate each deal and weigh the short-term impact on earnings for the long-term yield expectations and value creation. Our typical acquisitions take three years or more to become accretive, but allow us to generate the strong long-term operating results that we are reporting today. Our growth is dependent on the ability to have vacant lots to fill. Those vacant lots are acquired through acquisitions development of expansion sites, or greenfield development projects. All of these growth initiatives provide long-term value for our shareholders and should continue to result in a growing dividend and stock price. Having 55 years of operating experience gives us great confidence in our business plan and our ability to execute. Our goal is to continue to grow UMH into a national company by maintaining a sound balance sheet and continuing to invest in our growth initiatives. Despite the headwinds in the real estate market and a challenging economic environment, UMH continues to excel. Our operating results are starting to positively impact the bottom line, even with increased interest expenses. Demand for affordable housing is at an all-time high. We are in a position to grow UMH on a national level and implement our proven business model in new markets. We have internal growth opportunities through the occupancy of our vacant sites, increase in rents, and through the development of our vacant land. We are well positioned to grow income and per share earnings through the successful implementation of our proven business plan. And now, Anna will provide you with greater detail on our results for the quarter and for the year.