FREEHOLD, NJ, Nov. 07, 2019 (GLOBE NEWSWIRE) -- UMH Properties, Inc. (NYSE:UMH) reported Total Income for the quarter ended September 30, 2019 of $37,329,000 as compared to $33,447,000 for the quarter ended September 30, 2018, representing an increase of 12%. Net Income Attributable to Common Shareholders amounted to $5,622,000 or $0.14 per diluted share for the quarter ended September 30, 2019 as compared to Net Loss of $11,473,000 or $0.31 per diluted share for the quarter ended September 30, 2018.
Funds from Operations Attributable to Common Shareholders (“FFO”), was $5,805,000 or $0.14 per diluted share for the quarter ended September 30, 2019 as compared to $7,094,000 or $0.19 per diluted share for the quarter ended September 30, 2018. Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), was $6,011,000 or $0.15 per diluted share for the quarter ended September 30, 2019, as compared to $7,094,000 or $0.19 per diluted share for the quarter ended September 30, 2018. These decreases were primarily attributable to the reduction in dividend income from our securities holdings as well as the impact of our $100 million preferred issue in April, which was not fully deployed until this quarter.
A summary of significant financial information for the three and nine months ended September 30, 2019 and 2018 is as follows:
| For the Three Months Ended | |||||||
| September 30, | |||||||
| 2019 | 2018 | ||||||
| Total Income | $ | 37,329,000 | $ | 33,447,000 | |||
| Total Expenses | $ | 32,387,000 | $ | 28,436,000 | |||
| Increase (Decrease) in Fair Value of Marketable Securities | $ | 9,234,000 | $ | (10,487,000 | ) | ||
| Net Income (Loss) Attributable to Common Shareholders | $ | 5,622,000 | $ | (11,473,000 | ) | ||
| Net Income (Loss) Attributable to Common Shareholders per Diluted Common Share | $ | 0.14 | $ | (0.31 | ) | ||
| FFO (1) | $ | 5,805,000 | $ | 7,094,000 | |||
| FFO (1) per Diluted Common Share | $ | 0.14 | $ | 0.19 | |||
| Normalized FFO (1) | $ | 6,011,000 | $ | 7,094,000 | |||
| Normalized FFO (1) per Diluted Common Share | $ | 0.15 | $ | 0.19 | |||
| Diluted Weighted Average Shares Outstanding | 40,754,000 | 37,151,000 | |||||
| For the Nine Months Ended | |||||||
| September 30, | |||||||
| 2019 | 2018 | ||||||
| Total Income | $ | 108,846,000 | $ | 95,342,000 | |||
| Total Expenses | $ | 94,726,000 | $ | 81,690,000 | |||
| Increase (Decrease) in Fair Value of Marketable Securities | $ | 15,478,000 | $ | (19,763,000 | ) | ||
| Net Income (Loss) Attributable to Common Shareholders | $ | 5,999,000 | $ | (23,678,000 | ) | ||
| Net Income (Loss) Attributable to Common Shareholders per Diluted Common Share | $ | 0.15 | $ | (0.65 | ) | ||
| FFO (1) | $ | 17,567,000 | $ | 19,603,000 | |||
| FFO (1) per Diluted Common Share | $ | 0.44 | $ | 0.53 | |||
| Normalized FFO (1) | $ | 18,149,000 | $ | 20,108,000 | |||
| Normalized FFO (1) per Diluted Common Share | $ | 0.46 | $ | 0.55 | |||
| Diluted Weighted Average Shares Outstanding | 39,830,000 | 36,543,000 | |||||
A summary of significant balance sheet information as of September 30, 2019 and December 31, 2018 is as follows:
| September 30, 2019 | December 31, 2018 | ||||
| Gross Real Estate Investments | $ | 982,611,000 | $ | 881,456,000 | |
| Marketable Securities at Fair Value | $ | 116,437,000 | $ | 99,596,000 | |
| Total Assets | $ | 1,010,152,000 | $ | 880,902,000 | |
| Mortgages Payable, net | $ | 375,484,000 | $ | 331,093,000 | |
| Loans Payable, net | $ | 76,482,000 | $ | 107,985,000 | |
| Total Shareholders’ Equity | $ | 536,634,000 | $ | 424,698,000 | |
Samuel A. Landy, President and CEO, commented on the results of the third quarter of 2019.
“Our community operating results continue to validate our business plan. We are pleased with the progress we have made at our value-add communities as well as our same store performance. The decrease in per share FFO is primarily attributable to the impact of our raising capital and a reduction in dividend income from our securities portfolio. Throughout the quarter we deployed this new capital into acquisitions, rental homes and other investments resulting in a sequential Normalized FFO increase of 7% as compared to the second quarter. The impact of these investments is not fully reflected in this quarter’s results.”
“During the quarter, we have made substantial progress on multiple fronts. We:
- Increased Rental and Related Income by 15% over the prior year period;
- Increased Community Net Operating Income (“NOI”) by 11% over the prior year period;
- Increased Same Property NOI by 6% over the prior year period;
- Increased Same Property Occupancy by 357 sites or 170 bps over the prior year period from 82.3% to 84.0%;
- Increased our rental home portfolio by 768 homes to approximately 7,300 total rental homes, representing an increase of 12% from yearend 2018;
- Acquired four communities containing approximately 1,500 homesites for a total cost of approximately $56.2 million;
- Raised $7.8 million through our Dividend Reinvestment and Stock Purchase Plan;
- Completed the financing/refinancing of four of our communities for total proceeds of approximately $44.9 million with a weighted average interest rate of 3.40%, paying off the existing $13.8 million mortgages with a weighted average rate of 5.91%;
- Reduced the weighted average interest rate on our mortgages payable from 4.3% at yearend 2018 to 4.1% at quarter end;
- Increased our total market capitalization to $1.4 billion, representing an increase of 20% over yearend 2018; and,
- Subsequent to quarter end, implemented a Preferred Stock At-The-Market Program (“ATM”) under which the Company may offer and sell shares of our 6.75% Series C Perpetual Preferred Stock (“Series C Preferred”) and/or 6.375% Series D Preferred Stock (“Series D Preferred”), having an aggregate sales price of up to $100,000,000. Through October 30, 2019, we have sold approximately 350,000 shares of our Series D Preferred for net proceeds of approximately $8.7 million, after offering expenses.”
Mr. Landy further stated, “UMH’s overall operating metrics remain strong. Same property NOI increased by 6% over the prior year period. This was driven by occupancy increases of 170 bps to 84.0% at quarter end 2019, an average increase in rental rates of 3.2% and the addition of rental homes. Year over year, we added almost 700 rental homes to our same property portfolio, increasing rental home occupancy to 93.6%.”
“UMH also had a busy quarter on the acquisition front. During the quarter, we closed on the acquisition of four communities containing 1,500 homesites, with a weighted average occupancy rate of 63%, for approximately $56 million. These communities are located in markets where we have experienced excellent demand for both sales and rental units. We anticipate strong returns at these value-add communities as we are able to execute on our long-term business plan.”
“We are satisfied with the progress that we have made at all of our communities. The value of our portfolio continues to grow as we upgrade the communities which should result in additional revenue growth through our rental and sales programs.”
UMH Properties, Inc. will host its Third Quarter 2019 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, November 8, 2019 at 10:00 a.m. Eastern Time.
The Company’s 2019 third quarter financial results being released herein will be available on the Company’s website at www.umh.reit in the “Financial Information and Filings” section.
To participate in the webcast, select the microphone icon found on the homepage www.umh.reit to access the call. Interested parties can also participate via conference call by calling toll free 877-513-1898 (domestically) or 412-902-4147 (internationally).
The replay of the conference call will be available at 12:00 p.m. Eastern Time on Friday, November 8, 2019. It will be available until February 8, 2020 and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10134882. A transcript of the call and the webcast replay will be available at the Company's website, www.umh.reit.
UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 122 manufactured home communities containing approximately 23,000 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan and Maryland. In addition, the Company owns a portfolio of REIT securities.
Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company’s 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 those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company’s annual report on Form 10-K and described from time to time in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Note:
(1) Non-GAAP Information: We assess and measure our overall operating results based upon an industry performance measure referred to as Funds from Operations Attributable to Common Shareholders (“FFO”), which management believes is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by The National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (loss) attributable to common shareholders, as defined by accounting principles generally accepted in the United States of America (“U.S. GAAP”), excluding extraordinary items, as defined under U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, and the change in the fair value of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of NAREIT FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities, and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair value of marketable securities from our FFO calculation. Prior to the adoption of the FFO White Paper – 2018 Restatement, we utilized Core Funds from Operations (Core FFO), which we defined as FFO, excluding the change in the fair value of marketable securities. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding gains and losses realized on marketable securities investments and certain one-time charges. FFO and Normalized FFO should be considered as supplemental measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded from FFO and Normalized FFO are significant components in understanding the Company’s financial performance.
FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as alternatives to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flow as a measure of liquidity.
The reconciliation of the Company’s U.S. GAAP net loss to the Company’s FFO and Normalized FFO for the three and nine months ended September 30, 2019 and 2018 are calculated as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| 9/30/19 | 9/30/18 | 9/30/19 | 9/30/18 | ||||||||||||||
| Net Income (Loss) Attributable to Common Shareholders | $ | 5,622,000 | $ | (11,473,000 | ) | $ | 5,999,000 | $ | (23,678,000 | ) | |||||||
| Depreciation Expense | 9,390,000 | 8,052,000 | 27,010,000 | 23,410,000 | |||||||||||||
| (Gain) Loss on Sales of Depreciable Assets | 27,000 | 28,000 | 36,000 | 108,000 | |||||||||||||
| (Increase) Decrease in Fair Value of Marketable Securities (2) | (9,234,000 | ) | 10,487,000 | (15,478,000 | ) | 19,763,000 | |||||||||||
| FFO Attributable to Common Shareholders | 5,805,000 | 7,094,000 | 17,567,000 | 19,603,000 | |||||||||||||
| Non-Recurring Other Expense (3) | 206,000 | -0- | 582,000 | 525,000 | |||||||||||||
| Gain on Sales of Marketable Securities, net | -0- | -0- | -0- | (20,000 | ) | ||||||||||||
| Normalized FFO Attributable to Common Shareholders | $ | 6,011,000 | $ | 7,094,000 | $ | 18,149,000 | $ | 20,108,000 | |||||||||
The diluted weighted shares outstanding used in the calculation of FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 40,754,000 and 39,830,000 shares for the three and nine months ended September 30, 2019, respectively, and 37,674,000 and 36,894,000 shares for the three and nine months ended September 30, 2018, respectively. Common stock equivalents resulting from stock options in the amount of 240,000 and 238,000 shares for the three and nine months ended September 30, 2019, respectively, and 523,000 and 352,000 shares for the three and nine months ended September 30, 2018, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents for the three and nine months ended September 30, 2018 were excluded from the computation of the Diluted Net Income (Loss) per Share as their effect would be anti-dilutive.
The following are the cash flows provided (used) by operating, investing and financing activities for the nine months ended September 30, 2019 and 2018:
| 2019 | 2018 | |||||||
| Operating Activities | $ | 25,862,000 | $ | 24,727,000 | ||||
| Investing Activities | (99,618,000 | ) | (87,369,000 | ) | ||||
| Financing Activities | 79,146,000 | 49,524,000 |
- (Increase) Decrease in Fair Value of Marketable Securities, if any, were previously recorded in Core FFO.
- Consists of utility billing dispute over a prior 10-year period ($376,000), emergency windstorm tree removal expenses in two adjacent communities ($126,000) and costs associated with acquisitions not completed ($80,000) in 2019 and one-time payroll expenditures ($525,000) in 2018.
Contact: Nelli Madden
732-577-9997
UMH PROPERTIES, INC.
Juniper Business Plaza
3499 Route 9 North, Suite 3-C
Freehold, NJ 07728
(732) 577-9997
Fax: (732) 577-9980
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