UMH Properties, Inc.

Good morning, everyone, and welcome to UMH Properties' first quarter 2024 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 and one on your touch-tone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. It's 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 first quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.org. 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 first quarter 2024 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.

Thank you very much, Craig. UMH is pleased to report continued improved community operating results and growing year-over-year earnings. Normalized FFO per share for the first quarter of 2024 was 22 cents as compared to 20 cents last year, representing an increase of 10 percent. Our year-over-year growth in per share earnings can be attributed to our solid community operating results. Overall, occupancy increased 220 basis points from 84.9 percent last year to 87.1 percent this year, or an increase of 598 units. Sequentially, overall occupancy increased by 132 units. This improvement in occupancy, combined with our annual rent increases, generated an 11% increase in rental and related income and a 16% increase in community net operating income. Our community expense ratio improved from 44.3% last year to 41.9% this year. We are on track to grow revenue by $20 million or more in 2024 as compared to 2023. This growth stems from our increased occupancy from last year's rental home investments, our investment in 800 or more new rental homes this year, and our annual rent increases. Our high-quality communities, exceptional operating platforms, and strong fundamentals for affordable housing, positioning UMH to continue to excel in 2024. The strength of our operating results and our earnings growth in 2023 positioned us to raise our common stock dividend for a fourth consecutive year. We are proud to increase the dividend by one cent per quarter, or four cents per year, representing an increase of approximately 5%. This results in a total annualized dividend of 86 cents. Since 2020, we have increased our dividends four times by an aggregate amount of 14 cents, representing a 19% increase. Our rental home portfolio continues to perform well. We now own over 10,000 rental units, of which 95.1% are occupied, as compared to 93.7% occupancy last year, representing a 140 basis point increase. We continue to experience 30% or less turnover per year, and our expenses average only approximately $400 per unit per year. Our turnover costs are generally covered by the tenant's security deposit. In most cases, the homes are left in room clean condition, ready for the next tenant. Excluding tenants that moved in last year, our average renter's tenure is approximately four years. We are on track to install and rent 800 homes in 2024. Backlogs from our manufacturers have returned to pre-COVID traditional levels of four to eight weeks. This has helped to reduce our interest expense and carrying costs while allowing us to generate similar overall occupancy and revenue gains without negatively impacting earnings. Our annual investment in new rental homes yields approximately 10% on the invested funds. This investment is accretive to earnings and substantially improves our communities aesthetically and financially. Same property occupancy improved by 121 units from the fourth quarter and 545 units year over year. This represents an increase of 40 and 200 basis points respectively. Same property income increased by 10%, while expenses only grew 3%, resulting in a 16% same property NOI growth, or $16 million annualized. This increase in same property NOI substantially increases the value of our communities, as demonstrated by our recent refinancing of three communities acquired in 2012 and five communities acquired in 2013. Our total investment in these communities, including capital improvements, is $52.2 million or approximately $41,000 per site. The communities appraised for approximately $108 million or $84,000 per site, reflecting an increase in value of $55.9 million or 107%. Gross home sales were $7.4 million as compared to $7.3 million last year, representing an increase of 1%. During the quarter, we leased our sales center in Valverna, Pennsylvania to Clayton Homes. All the homes that were in inventory at the sales center were sold to Clayton Homes at the invoice price. Excluding the homes liquidated in this sales center, sales of manufactured homes amounted to $6.4 million, costs of sales amounted to $4.2 million, and the growth profit percentage was 34% for the three months ended March 31st, 2024. Last year's first quarter sales were exceptionally high due to supply constraints pushing many 2022 sales to the first quarter of 2023. Our second quarter sales to date are in line with our current sales projections for 2024. We currently have a pipeline of approximately $4 million in sales and expect to close those deals and grow our pipeline going into the summer. At quarter end, the balance of our notes receivable was $80.5 million at a weighted average interest rate of 7%. During the first quarter, we financed approximately 53% of our home sales. Over the last two years, we have developed approximately 440 sites. These expansions are in good markets in Maryland, Pennsylvania, Tennessee, and Indiana. We have made investments in these expansions, but they are not yet full and accretive to earnings. We believe these expansions provide us with premier sales lots that should allow us to generate profitable home sales, increased occupancy, and more valuable communities. This year, we should obtain approvals to develop 800 sites and plan on developing approximately 300 or more sites. UMH is well positioned to grow the company through internal and external growth opportunities. We have 3,300 vacant sites which we plan on filling throughout our rental and sales programs. We have 2,100 acres of vacant land that will allow us to expand our communities. We can profitably sell and finance homes. We can build new communities through our joint venture with Nuveen Real Estate. We can acquire communities when they are for sale at reasonable prices. Most importantly, we have a strong balance sheet which will allow us to execute on these growth opportunities. The fundamentals of manufactured housing are strong, and UMH is well positioned to continue to grow through our established long-term business plan. Manufactured housing has two natural tailwinds, increasing GDP and inflation. We can add 800 rental homes and over 200 new home sales per year, and the high quality of our communities adds value to our real estate. Our hard work grows our communities through developing expansions and by building 200 lots or more per year. This allows us to increase the size of the company when compelling acquisition opportunities arise. Our hard work has positioned the company with one of the highest quality portfolios of manufactured home communities in the country. And now, Anna will provide you with greater detail on our results for the board.