• Normalized FFO per Diluted Share: Increased to 24 in Q3 2024 from 22 in Q3 2023, a 9% increase.
• Year-to-Date Normalized FFO: Increased from $39.2 million last year to $50.3 million this year, a 28% increase.
• Revenue from Rental and Related Income: $51.9 million in Q3 2024, up from $48.1 million in Q3 2023, an 8% increase.
• Overall Occupancy: Increased by 39 units to 87.4% during the quarter.
• Same Property NOI: Increased by 7% in Q3 2024 compared to Q3 2023.
• Gross Home Sales Revenue: Approximately $8.7 million in Q3 2024, up from $7.9 million in Q3 2023, a 10% increase.
• Gross Sales Margin: Increased by 500 basis points to 38% in Q3 2024.
• Net Debt to Total Market Capitalization: 22.2% at quarter end.
• Cash and Cash Equivalents: $66.7 million at quarter end.
• Interest Coverage Ratio: 3.3 times.
• Fixed Charge Coverage Ratio: 2.1 times.
• Weighted Average Interest Rate on Total Debt: 4.36% at quarter end.
• 2024 Guidance for Normalized FFO: Tightened to a range of 92 to 94 per diluted share.

• Warning! GuruFocus has detected 10 Warning Signs with UMH.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• UMH Properties Inc (NYSE:UMH) reported a third consecutive quarter of year-over-year normalized FFO growth, with a 9% increase in normalized FFO per diluted share compared to last year.
• The company experienced strong demand for home sales and rentals, resulting in increased occupancy and revenue.
• UMH Properties Inc (NYSE:UMH) successfully raised $107 million through the sale of 5.7 million shares, which was used to pay down debt and invest in growth opportunities.
• The company anticipates further occupancy growth with over 200 homes on order and 300 homes ready for occupancy.
• UMH Properties Inc (NYSE:UMH) has a strong balance sheet with $66.7 million in cash and full availability of its credit line, positioning it well for future growth and acquisitions.

Negative Points

• The company experienced storm-related expenses, which increased the overall expense ratio to 43.3% for the quarter.
• Community operating expenses increased by 9% due to higher payroll costs, real estate taxes, and storm cleanup expenses.
• UMH Properties Inc (NYSE:UMH) faced flat occupancy sequentially at 87.7%, which may indicate challenges in achieving optimal occupancy levels.
• The acquisition pipeline remains uncertain, with no new deals currently in the pipeline, although management is optimistic about future opportunities.
• The company is facing upward cost pressures on new rental units, with prices for single-wide units ranging from $70,000 to $75,000.

Q & A Highlights

Q: How is the acquisition pipeline today and the overall transaction environment versus a quarter or two ago? A: Samuel Landy, President and CEO, stated that while there are no new deals in the pipeline at the moment, he is optimistic that more communities will become available with less competition to buy them. The pending deals in Maryland are still progressing, with a potential closing in the first quarter of 2025.

Q: Are there synergies in owning self-storage units adjacent to your communities? A: Samuel Landy explained that self-storage units are a natural fit as they directly adjoin existing communities, often coming with the communities when acquired. They are managed by the same staff, making operations more efficient, and they fulfill a need for residents.

Q: What are you paying today for new rental units, and how much cost pressure is there from manufacturers? A: Brett Taft, Executive Vice President and COO, mentioned that prices have increased slightly, with single-wide units costing $70,000 to $75,000 fully set up, and double-wides being more expensive. UMH buys high-quality rental homes, which are more costly but result in lower turnover costs.

Q: Can you provide more details on the New Jersey joint venture with home builders? A: Samuel Landy noted that it would take at least a year for the home builder to get approvals and another year to build, so any financial benefits are at least three years away. The project involves potentially 150 homes selling for around $1 million each, with UMH potentially receiving 20% of the proceeds.

Q: What is the plan for adding 800 rental homes next year, and how does it compare to this year's additions? A: Brett Taft explained that 443 new homes have been converted to revenue-producing rental homes this year, with a net increase of 284 units after selling older homes. They have 300 homes in various stages of setup and plan to order 800 homes for 2025, continuing strong demand and inventory management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.