FREEHOLD, NJ, March 05, 2020 (GLOBE NEWSWIRE) -- UMH Properties, Inc. (NYSE:UMH) reported Total Income of $146.6 million for the year ended December 31, 2019 as compared to $129.6 million for the year ended December 31, 2018, representing an increase of 13%. Total Income for the quarter ended December 31, 2019 was $37.7 million as compared to $34.2 million for the quarter ended December 31, 2018, representing an increase of 10%. Net Income (Loss) Attributable to Common Shareholders amounted to $2.6 million or $0.06 per diluted share for the year ended December 31, 2019 as compared to a loss of $56.5 million or $1.53 per diluted share for the year ended December 31, 2018. Net Loss Attributable to Common Shareholders amounted to $3.4 million or $0.08 per diluted share for the quarter ended December 31, 2019 as compared to $32.9 million or $0.87 per diluted share for the quarter ended December 31, 2018.
Funds from Operations Attributable to Common Shareholders (“FFO”) was $24.6 million or $0.61 per diluted share for the year ended December 31, 2019 as compared to $27.0 million or $0.72 per diluted share for the year ended December 31, 2018. FFO was $7.0 million or $0.17 per diluted share for the quarter ended December 31, 2019 as compared to $7.4 million or $0.19 per diluted share for the quarter ended December 31, 2018. Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), was $25.2 million or $0.63 per diluted share for the year ended December 31, 2019, as compared to $27.5 million or $0.74 per diluted share for the year ended December 31, 2018. Normalized FFO was $7.1 million or $0.17 per diluted share for the quarter ended December 31, 2019, as compared to $7.4 million or $0.19 per diluted share for the quarter ended December 31, 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 twelve months ended December 31, 2019 and 2018 is as follows (in thousands except per share amounts):
| For the Three Months Ended | ||||||||
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Total Income | $ | 37,744 | $ | 34,245 | ||||
| Total Expenses | $ | 31,856 | $ | 29,320 | ||||
| Decrease in Fair Value of Marketable Securities | $ | (563 | ) | $ | (31,913 | ) | ||
| Net Loss Attributable to Common Shareholders | $ | (3,433 | ) | $ | (32,852 | ) | ||
| Net Loss Attributable to Common Shareholders per Diluted Common Share | $ | (0.08 | ) | $ | (0.87 | ) | ||
| FFO (1) | $ | 7,006 | $ | 7,365 | ||||
| FFO (1) per Diluted Common Share | $ | 0.17 | $ | 0.19 | ||||
| Normalized FFO (1) | $ | 7,059 | $ | 7,365 | ||||
| Normalized FFO (1) per Diluted Common Share | $ | 0.17 | $ | 0.19 | ||||
| Weighted Average Shares Outstanding | 40,929 | 37,841 | ||||||
| For the Twelve Months Ended | ||||||||
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Total Income | $ | 146,591 | $ | 129,587 | ||||
| Total Expenses | $ | 126,582 | $ | 111,010 | ||||
| Increase (Decrease) in Fair Value of Marketable Securities | $ | 14,915 | $ | (51,675 | ) | |||
| Net Income (Loss) Attributable to Common Shareholders | $ | 2,566 | $ | (56,532 | ) | |||
| Net Income (Loss) Attributable to Common Shareholders per Diluted Common Share | $ | 0.06 | $ | (1.53 | ) | |||
| FFO (1) | $ | 24,573 | $ | 26,965 | ||||
| FFO (1) per Diluted Common Share | $ | 0.61 | $ | 0.72 | ||||
| Normalized FFO (1) | $ | 25,207 | $ | 27,470 | ||||
| Normalized FFO (1) per Diluted Common Share | $ | 0.63 | $ | 0.74 | ||||
| Weighted Average Shares Outstanding | 40,203 | 36,871 | ||||||
A summary of significant balance sheet information as of December 31, 2019 and 2018 is as follows (in thousands):
| December 31, 2018 | December 31, 2017 | |||||||
| Gross Real Estate Investments | $ | 1,015,281 | $ | 881,456 | ||||
| Marketable Securities at Fair Value | $ | 116,186 | $ | 99,596 | ||||
| Total Assets | $ | 1,025,453 | $ | 880,902 | ||||
| Mortgages Payable, net | $ | 373,658 | $ | 331,093 | ||||
| Loans Payable, net | $ | 83,686 | $ | 107,985 | ||||
| Total Shareholders’ Equity | $ | 546,339 | $ | 424,698 | ||||
Samuel A. Landy, President and CEO, commented on the 2019 results.
“During 2019, we continued to execute on our long-term business plan. We have generated solid operating results, achieved strong growth and strengthened our financial position. Our accomplishments during the year include:
- Increased Rental and Related Income by 13%;
- Increased Community Net Operating Income (“NOI”) by 10%;
- Increased Same Property NOI by 6%;
- Increased Same Property Occupancy by 333 sites or 160 bps over the prior year period from 82.2% to 83.8%;
- Increased home sales by 14%;
- Increased our rental home portfolio by 882 homes to approximately 7,400 total rental homes, representing an increase of 14%;
- Acquired four communities containing approximately 1,500 homesites for a total cost of approximately $56.2 million;
- Issued and sold 4 million shares of our 6.75% Series C Preferred Stock resulting in net proceeds of approximately $96.7 million;
- Raised $31.5 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% to 4.1%;
- Reduced our Net Debt to Total Market Capitalization from 37% to 29%;
- Increased our total market capitalization to $1.5 billion, representing an increase of 28%; and,
- Implemented a Preferred Stock At-The-Market Program (“ATM Program”) under which the Company may offer and sell shares of our 6.75% Series C Preferred Stock and/or 6.375% Series D Preferred Stock, having an aggregate sales price of up to $100 million. During 2019, we sold approximately 651,000 shares of our Series D Preferred for net proceeds of approximately $15.9 million, after offering expenses. We have sold additional shares of Series D Preferred under the ATM Program during 2020.”
“In 2019, we continued to generate strong operating results. We increased our same property occupancy by 160 basis points resulting in same property NOI growth of 6%. The improvements that we have made at our value-added acquisitions are driving occupancy and NOI growth creating enduring value for shareholders.”
“During the year, we acquired four communities containing approximately 1,500 developed homesites for an aggregate cost of $56.2 million. The average occupancy of these communities was 62%. These communities are located in our existing markets which exhibit favorable demographics. Our business plan will drive value at these locations. Although the acquisition market remains competitive, we hope to be under contract for the acquisition of two communities in the near future.”
“A primary factor in the success of our value-added acquisition program is the expertise we have in operating our rental home program. In 2019, we grew our total rental home portfolio by 882 units to 7,400 total homes. We continue to maintain occupancy rates of over 92%. We have been pleased with the duration of our tenants’ lengths of stay and the condition of the homes upon move out.”
“Our sales operation grew total home sales by 14%. This is the fourth consecutive year that we have reported double-digit growth in total sales. Rising wages and increased employment opportunities in our markets continue to drive strong sales demand. We remain optimistic about the future of our sales division.”
“UMH continues to build upon our previous success. The operating results exhibited by our portfolio of 122 manufactured housing communities containing 23,100 developed homesites continues to meet our expectations. In 2020, our operating results will improve based upon our 4% annual rent increases, our investment in 800-900 new rental homes and the continued improvement in our sales operation. We also anticipate calling our 8% Series B Perpetual Preferred Stock in October 2020 and are confident that we can replace this capital at a substantially lower rate, thereby generating significant savings that will help drive per share earnings growth.”
UMH Properties, Inc. will host its Fourth Quarter and Year Ended December 31, 2019 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, March 6, 2020 at 10:00 a.m. Eastern Time.
The Company’s fourth quarter and year ended December 31, 2019 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, March 6, 2020. It will be available until June 5, 2020, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10137358. 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 23,100 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 twelve months ended December 31, 2019 and 2018 are calculated as follows (in thousands except footnotes):
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| 12/31/19 | 12/31/18 | 12/31/19 | 12/31/18 | |||||||||||||
| Net Income (Loss) Attributable to Common Shareholders | $ | (3,433 | ) | $ | (32,852 | ) | $ | 2,566 | $ | (56,532 | ) | |||||
| Depreciation Expense | 9,801 | 8,281 | 36,811 | 31,691 | ||||||||||||
| Loss on Sales of Property and Equipment | 75 | 23 | 111 | 131 | ||||||||||||
| (Increase) Decrease in Fair Value of Marketable Securities (2) | 563 | 31,913 | (14,915 | ) | 51,675 | |||||||||||
| FFO Attributable to Common Shareholders | 7,006 | 7,365 | 24,573 | 26,965 | ||||||||||||
| Gain on Sales of Marketable Securities | -0- | -0- | -0- | (20 | ) | |||||||||||
| Non-Recurring Other Expense (3) | 53 | -0- | 634 | 525 | ||||||||||||
| Normalized FFO Attributable to Common Shareholders | $ | 7,059 | $ | 7,365 | $ | 25,207 | $ | 27,470 | ||||||||
The diluted weighted shares outstanding used in the calculation of FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 41.4 million and 40.2 million shares for the three and twelve months ended December 31, 2019, respectively, and 38.1 million and 37.2 million shares for the three and twelve months ended December 31, 2018, respectively. Common stock equivalents resulting from stock options in the amount of 456,000 and 294,000 shares for the three and twelve months ended December 31, 2019, respectively, and 294,000 and 342,000 shares for the three and twelve months ended December 31, 2018, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents for the three months ended December 31, 2019 and the three and twelve months ended December 31, 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 twelve months ended December 31, 2019 and 2018 (in thousands):
| 2019 | 2018 | |||||||
| Operating Activities | $ | 38,516 | $ | 40,175 | ||||
| Investing Activities | (122,350 | ) | (137,603 | ) | ||||
| Financing Activities | 90,053 | 82,314 | ||||||
- Represents change in unrealized gain (loss) in marketable securities which is included in the Consolidated Statements of Income (Loss). (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 ($0 and $375,000), emergency windstorm tree removal expenses in three communities ($53,000 and $179,000) and costs associated with acquisitions not completed ($0 and $80,000) for the three and twelve months ended December 31, 2019, respectively, and one-time payroll expenditures ($525,000) for the year ended December 31, 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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