UMH Properties, Inc.

Good morning and welcome to UMH Properties third quarter 2023 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 your telephone keypad. To withdraw your question, please press star, then 2. Please note, 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 third 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 made 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 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 Chu, 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.

UMH is pleased to report another quarter of sequential FFO growth. Sequentially, normalized FFO increased from 21 cents in the second quarter to 22 cents in the third quarter. Community net operating income increased by 16% for the quarter. UMH provides quality housing for an average rent of $922 per month in well-located communities using three-bedroom, two-bathroom, energy-efficient, factory-built homes on lots that are generally 5,000 square feet. These competitively priced rental units are in strong demand, resulting in less than 30% turnover, 94% occupancy, and 98% collection rates. UMH has the ability to provide quality housing to households with incomes of at least $37,000 per year. Most apartment and single-family housing operators cannot provide housing for households earning less than $55,000 per year. UMH reduces housing costs, thus improving the lives of our residents. We now have 22,300 occupied lots in our communities. 9,300 of these lots contain homes that we own and rent to residents. The remaining 13,000 lots contain resident-owned homes for which we collect lot rent. UMH owns 25,800 home sites, allowing us the opportunity to grow revenue by filling the 3,500 vacant sites. We buy communities for as little as $25,000 per site and make improvements to the communities and add professional management and marketing to increase occupancy and revenue by selling and renting homes and financing home sales. Our homes and communities are strongly desired as evidenced by our installation and occupancy of 900 new rental homes and sales of 122 new homes year-to-date. Sequentially, same-property occupancy increased by 172 sites or 50 basis points, and year-over-year it increased by 546 sites or 210 basis points to 88.4%. The growth in occupancy, combined with our 5% to 6% rent increases, resulted in rental and related income growth of 10% and NOI growth of 12.9% for the quarter. Year-to-date, same property rental and related income increased 8.4% and NOI increased 10.4%. We are pleased to have achieved double-digit same property NOI growth. We believe that through the continued implementation of our business plan, we will be able to generate similar same-property operating results in the future. This growth in NOI directly correlates to an increase in property value. Year to date, gross home sales are $23.4 million as compared to $20.3 million last year, representing an increase of 15%. We have sold 264 homes of which 122 were new home sales, averaging $134,000 per home sale, and 142 were used home sales, averaging $50,000 per home sale. We were able to achieve a 31% gross profit as compared to 30% last year. We are on track to break our all-time sales record of $28.1 million and may reach our sales goal of $30 million. We anticipate further improvement in our sales division as the demand for affordable housing continues and the carrying costs of our inventory decrease. Our rental home portfolio continues to perform exceptionally well. For the first nine months, we have converted 900 units from inventory to income-producing rental units. These homes were occupied throughout the year, so the full year's impact of this increase is not yet apparent in our financial results. We now own 9,900 rental units, which 94.2% are occupied. We continue to experience 30% or less turnover per year, and our expenses are approximately $400 per unit. We anticipate adding another 800 to 900 homes next year. Backlogs from our manufacturers have returned to normal levels of two to four months, allowing us to no longer have to carry large amounts of inventory. This should help to reduce our interest expense and carrying costs while allowing us to generate similar overall occupancy and revenue gains next year. COVID caused manufacturing backlogs that increased the cost of each home, increased the amount of inventory we carried, increased many costs associated with carrying high inventory, and that is all behind us now. We are now on track to complete the construction of 216 expansion sites. These expansions are located in good markets in Maryland, Pennsylvania, Tennessee, and Indiana and should generate profitable sales. Expansions take time to become profitable, but they improve community appearance, create operating efficiencies, and increase community value while generating sales profits. Next year, we anticipate approvals to develop 800 sites and plan on developing approximately 400 sites. One of our goals is to reduce the time it takes us to make turnaround properties, expansions, and new developments profitable. On the acquisition front, we have two communities in Maryland under contract and anticipate closing in the first half of 2024. Due to climbing mortgage rates, the disparity in cost between buying and renting a home is at its most extreme since 1996. Market conditions over the next several months are expected to continue widening the gap between buying and renting, which supports the robust rental home program we have at UMH. UMH is well positioned to serve the needs of the affordable housing market with either the option of buying or renting homes. The replacement cost for the rental homes we added for $40,000 per unit 12 years ago is now $70,000 per unit. During the quarter, our share count increased by approximately 3.1 million shares, mainly from our issuances through the common ATM, which raised $44.5 million in new equity. Additionally, we raised $12.4 million of our Series D preferred stock through our preferred ATM. This capital is being rapidly invested in additional rental homes, expansion lots, community capital improvements, and financed home sales. All these uses are accretive over the long term. At any point in time, UMH has $100 million or more in capital that is invested in value-add acquisitions, inventory for sale or for rent, capital improvements, expansions, or our greenfield community development joint venture. These investments are necessary and will add to the long-term profitability of UMH. Our capital investments have made UMH a top-performing provider of manufactured homes, first sale, or rent. Non-income producing assets, such as our vacant land, do not currently add to FFO, but do grow in value through inflation, demographic, and economic growth. Mike Trout and Tiger Woods are building a golf course in Vineland, New Jersey, in very close proximity to 130 acres of vacant land UMH owns. UMH continues to execute on our long-term value-added business plans. We have successfully acquired communities, improved their physical appearance, and implemented our sales and rental programs. This business plan has allowed us to achieve higher returns through the infill of vacant sites and the correlated value creation. We have been able to generate a stable income stream derived from our 22,300 occupied home sites and 9,300 occupied rental homes. We have built a profitable sales and finance company that has the potential to grow volume and profits in the future. This year, we have installed over 1,000 homes, rented 900 new homes, and sold 122 new homes. This has resulted in improved community operating results and growing FFO. And now, Anna will provide you with greater detail on our results for the quarter.