UMH Properties, Inc.

Good morning and welcome to UMH Properties second quarter 2024 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 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 second quarter supplemental information presentation. This supplemental information presentation along with our 10Q 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 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 Andy, Executive Vice President. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Andy.

Thank you very much, Craig. UMH is pleased to report another quarter of year-over-year earnings per share growth. Normalized FFO per share for the second quarter of 2024 was 23 cents as compared to 21 cents last year, representing an increase of approximately 10%. Sequentially, normalized FFO increased from 22 cents for the first quarter to 23 cents in the second quarter, representing a 5% per share increase. This quarter, we announced a 1 cent increase in our quarterly common stock dividend, raising it to 21.5 cents per share, from 20.5 cents per share, representing a 4.9% increase. Since 2020, we have increased our dividend four times by an aggregate annual amount of 14 cents, representing a 19% increase. Our annual dividend rate on our common stock is currently 86 cents per share. UMH has a proven business plan which should result in further occupancy revenue and earnings growth over the coming quarters and years. Our rental home program capital improvements and expansions have substantially increased the value of our communities and our portfolio driving best in class operating results. Turning to our second quarter operating results, we are proud that our communities are experiencing strong demand for home sales and rentals. This demand is the result of investing in the right locations and rapidly improving the quality and reputation of our communities. Overall, occupancy increased by 64 units to 87% during the quarter and 196 units year to date. Year over year, overall occupancy increased by 430 units or 195 basis points. These occupancy gains translated to income growth of 9% and NOI growth of 11% over the same quarter last year. Our operating expense ratio decreased from 42.6% last year to 41.9% this year. Our collection rate remains strong at over 98.5% for the second quarter. Same property occupancy improved by 49 units from the first quarter and 380 units year over year. Year to date, same property occupancy increased by 170 units to 88%. Year over year for the second quarter, same property income increased by 9% while expenses grew 6% resulting in an 11% increase in same property NOI. For the six months, same property income is up 10% with a 5% increase in expenses resulting in same property NOI growth of 13% or approximately $14 million annualized. This increase in same property NOI substantially increases the value of our communities as demonstrated by past refinancings and should be demonstrated by our future refinancing of communities with mortgages maturing in 2025. The capital generated through the refinancing will be deployed into accretive investments which should result in additional per share FFO growth. Moving on to sales, our team sold 105 homes during the quarter of which 35 were new home sales for gross home sales revenue of approximately $8.8 million. This compares to 91 home sales last year of which 43 were new home sales with gross home sales revenue of $8.2 million, representing an increase of 7%. Our gross sales margin increased from 30% same quarter last year to 38% this year. Our gross sales profit improved from $2.5 million in the second quarter of last year to $3.4 million this year. We financed approximately 66% of these home sales. Our notes portfolio continues to perform well with only a 2% repossession rate on an annual basis. As happy as we are with these sales results, they still have the potential to substantially improve. Several high-end expansions in good locations are just opening or are just about to open, which will generate a pipeline of sites where we can profitably sell homes. We continue to invest in new rental homes and now own 10,100 homes. Our rental home occupancy rate is 95% as compared to 94% last year. During the quarter, we converted 144 new homes from inventory to revenue producing rental homes. The net increase in our rental home portfolio was 111 homes because of the sale of older homes. Our rental home program increases the value of the communities by filling otherwise vacant sites with homes that generate a stable, recession-tested revenue stream. These homes improve the curb appeal, increasing our community's value, and increase the supply of affordable housing in any given market. We continue to experience 30% or less turnover per year. The time it takes from ordering a home to receiving a home from our manufacturers has 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. During the first half of the year, we replenished our inventory, which will allow us to further increase occupancy, revenue, and sales income in the second half of the year and into 2025. We currently have 315 homes on site that are ready for occupancy or are being set up in another 140 homes expected to be delivered over the next few weeks. Our annual investment in new rental homes yields approximately 10% on the invested funds. Most of the capital being raised through the ATM is being accretively deployed into our rental home program. We are on track to add approximately 300 expansion sites this year. We have made investment in these expansions, but they are not yet fully occupied and accretive to earnings. It is important to keep a pipeline of sites in development as they are additive to the long-term value and the goals of UMH, even though the capital is deployed in advance of them being accretive to earnings. We currently have $53 million invested into expansions and $26 million invested in our greenfield development joint venture that is primed to generate accretive returns in the coming quarters. Additionally, 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. UMH continues to work towards monetizing vacant land when it makes sense and is in discussions to form a joint venture with a prominent New Jersey home builder to develop approximately 131 acres of undeveloped land adjacent to one of the company's existing manufactured home communities in Vineland, New Jersey. If necessary, government approvals can be obtained The purpose of the joint venture would be to construct roads, infrastructure, and other site improvements on the property and then sell the improved lots to an affiliate of the company's joint venture partner, which would construct luxury single-family residential homes to sell. It is envisioned that the joint venture partner would fully fund the cost of required site improvements and obtaining all approvals. The company would contribute the real property to the joint venture and expects to receive approximately 20% of the gross sales price of each home. Furthermore, UMH introduced different solar providers to different home manufacturers, which resulted in the multi-section champion home being shown at the innovative housing showcase with factory installed solar shingles. UMH expects that in the near future, factory built solar homes will provide greater affordability to all future manufactured home buyers and renters. UMH is proud to have pioneered this innovation. The duplex single-section home shown at the Innovative Housing Showcase in Washington, DC was a huge success. Our understanding is HUD will be finalizing approval of the innovative duplex created by the collaboration of CAVCO and UMH shortly. In many years of operating in the manufactured housing space, UMH has never had better tailwinds. Inflationary costs are causing conventional homes that are being built to be too expensive. We have expansion sites and turnaround communities ready to go. We are one of the few housing solutions that can profitably build and sell units for under $250,000. We are well positioned to fill our existing 3,300 vacant sites and develop our vacant land. UMH is on track to continue to deliver per share earnings growth this year, and we are pleased with the results being generated by our platform. We have a business plan that is proven to deliver outstanding results and a pipeline of organic growth opportunities to continue delivering these results for the next several years. We have positioned the company with a strong balance sheet as shown by our net debt to total market capitalization of less than 30% so that we can continue to invest in new homes, capital improvements, and the expansion of our communities, which will enhance the long-term value of our portfolio and further increase our earnings per share. Additionally, we are prepared to acquire new communities when accretive investment opportunities become available. And we are proud to issue guidance for the first time this quarter. And now Anna will provide you with greater detail on our results for the quarter.