EX-99 2 ex99.htm

 

Exhibit 99

 

 

   
 

 

Table of Contents

 

  Page
   
Financial Highlights 3
   
Consolidated Balance Sheets 4
   
Consolidated Statements of Income (Loss) 5
   
Consolidated Statements of Cash Flows 6
   
Reconciliation of Net Income (Loss) to Adjusted EBITDA and Net Income (Loss) Attributable to Common Shareholders to FFO and Normalized FFO 7
   
Market Capitalization, Debt and Coverage Ratios 8
   
Debt Analysis 9
   
Debt Maturity 10
   
Securities Portfolio Performance 11
   
Property Summary and Snapshot 12
   
Same Property Statistics 13
   
Acquisition Summary and Property Portfolio 14
   
Definitions 15
   
Press Release Dated March 5, 2020 16

 

Certain information in this Supplemental Information Package contains Non-GAAP financial measures. These Non-GAAP financial measures are REIT industry financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America. Please see page 15 for a definition of these Non-GAAP financial measures and page 7 for the reconciliation of certain captions in the Supplemental Information Package to the statement of operations as reported in the Company’s filings with the SEC on Form 10-K.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information2
   

 

Financial Highlights

(dollars in thousands except per share amounts) (unaudited)

 

   Three Months Ended   Twelve Months Ended 
   12/31/2019   12/31/2018   12/31/2019   12/31/2018 
Operating Information                    
Number of Communities             122    118 
Number of Sites             23,088    21,510 
Rental and Related Income  $33,631   $29,596   $128,611   $113,833 
Community Operating Expenses (1)  $15,769   $14,190   $61,154   $52,949 
Community NOI (1)  $17,862   $15,407   $67,457   $60,884 
Expense Ratio (1)   46.9%   47.9%   47.5%   46.5%
Sales of Manufactured Homes  $4,113   $4,649   $17,980   $15,754 
Number of Homes Sold   69    91    299    295 
Number of Rentals Added   114    297    882    905 
Net Income (Loss) (2)  $3,531   $(27,729)  $27,750   $(36,216)
Net Income (Loss) Attributable to Common Shareholders (2)  $(3,433)  $(32,852)  $2,566   $(56,532)
Adjusted EBITDA  $18,460   $16,781   $67,681   $63,541 
FFO Attributable to Common Shareholders  $7,006   $7,365   $24,573   $26,965 
Normalized FFO Attributable to Common Shareholders  $7,059   $7,365   $25,207   $27,470 
                     
Shares Outstanding and Per Share Data                    
Weighted Average Shares Outstanding                    
Basic   40,929    37,841    39,909    36,871 
Diluted   41,386    37,841    40,203    36,871 
Net Income (Loss) Attributable to Common Shareholders per Share (2)                    
Basic  $(0.08)  $(0.87)  $0.07   $(1.53)
Diluted  $(0.08)  $(0.87)  $0.06   $(1.53)
FFO per Share- Diluted  $0.17   $0.19   $0.61   $0.72 
Normalized FFO per Share- Diluted  $0.17   $0.19   $0.63   $0.74 
Dividends per Common Share  $0.18   $0.18   $0.72   $0.72 
                     
Balance Sheet                    
Total Assets            $1,025,453   $880,902 
Total Liabilities            $479,114   $456,204 
                     
Market Capitalization                    
Total Debt, Net of Unamortized Debt Issuance Costs            $457,344   $439,078 
Equity Market Capitalization            $646,976   $453,714 
Series B Preferred Stock            $95,030   $95,030 
Series C Preferred Stock            $243,750   $143,750 
Series D Preferred Stock            $66,268   $50,000 
Total Market Capitalization            $1,509,368   $1,181,572 

 

(1) Excludes a utility billing dispute of $0 and $375,000 over a prior ten-year period and emergency windstorm tree removal expenses in three communities of $53,000 and $179,000 for the three and twelve months ended December 31, 2019, respectively.

(2) Includes increase (decrease) in fair value of marketable securities.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information3
   

 

Consolidated Balance Sheets

(in thousands except per share amounts)

 

   December 31, 2019   December 31, 2018 
ASSETS          
Investment Property and Equipment          
Land  $72,459   $68,154 
Site and Land Improvements   618,041    533,547 
Buildings and Improvements   27,380    25,156 
Rental Homes and Accessories   297,401    254,599 
Total Investment Property   1,015,281    881,456 
Equipment and Vehicles   21,145    18,792 
Total Investment Property and Equipment   1,036,426    900,248 
Accumulated Depreciation   (232,783)   (197,208)
Net Investment Property and Equipment   803,643    703,040 
           
Other Assets          
Cash and Cash Equivalents   12,902    7,433 
Marketable Securities at Fair Value   116,186    99,596 
Inventory of Manufactured Homes   31,967    23,703 
Notes and Other Receivables, net   37,995    31,494 
Prepaid Expenses and Other Assets   10,762    6,195 
Land Development Costs   11,998    9,441 
Total Other Assets   221,810    177,862 
           
TOTAL ASSETS  $1,025,453   $880,902 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Liabilities          
Mortgages Payable, net of Unamortized Debt Issuance Costs  $373,658   $331,093 
Other Liabilities          
Accounts Payable   4,572    3,873 
Loans Payable, net of Unamortized Debt Issuance Costs   83,686    107,985 
Accrued Liabilities and Deposits   10,575    7,411 
Tenant Security Deposits   6,623    5,842 
Total Other Liabilities   105,456    125,111 
Total Liabilities   479,114    456,204 
           
COMMITMENTS AND CONTINGENCIES          
           
Shareholders’ Equity:          
Series B - 8.0% Cumulative Redeemable Preferred Stock, par value $0.10 per share, 4,000 shares authorized; 3,801 shares issued and outstanding as of December 31, 2019 and 2018   95,030    95,030 
Series C- 6.75% Cumulative Redeemable Preferred Stock, par value $0.10 per share, 13,750 and 5,750 shares authorized, 9,750 and 5,750 issued and outstanding as of December 31, 2019 and 2018, respectively   243,750    143,750 
Series D - 6.375% Cumulative Redeemable Preferred Stock, par value $0.10 per share, 6,000 and 2,300 shares authorized; 2,651 and 2,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively   66,268    50,000 
Common Stock – $0.10 par value per share, 123,664 and 111,364 shares authorized; 41,130 and 38,320 shares issued and outstanding as of December 31, 2019 and 2018, respectively   4,113    3,832 
Excess Stock – $0.10 par value per share, 3,000 shares authorized; no shares issued or outstanding as of December 31, 2019 and 2018   -0-    -0- 
Additional Paid-In Capital   162,542    157,450 
Undistributed Income (Accumulated Deficit)   (25,364)   (25,364)
Total Shareholders’ Equity   546,339    424,698 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $1,025,453   $880,902 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information4
   

 

Consolidated Statements of Income (Loss)

(in thousands)

 

   (unaudited)         
   Three Months Ended   Twelve Months Ended 
   12/31/2019   12/31/2018   12/31/2019   12/31/2018 
INCOME:                    
Rental and Related Income  $33,631   $29,596   $128,611   $113,833 
Sales of Manufactured Homes   4,113    4,649    17,980    15,754 
TOTAL INCOME   37,744    34,245    146,591    129,587 
                     
EXPENSES:                    
Community Operating Expenses   15,822    14,190    61,708    52,949 
Cost of Sales of Manufactured Homes   2,821    3,309    12,938    11,716 
Selling Expenses   1,276    861    5,079    3,774 
General and Administrative Expenses   2,136    2,679    10,046    10,880 
Depreciation Expense   9,801    8,281    36,811    31,691 
TOTAL EXPENSES   31,856    29,320    126,582    111,010 
                     
OTHER INCOME (EXPENSE):                    
Interest Income   832    685    2,619    2,255 
Dividend Income   1,801    2,764    7,535    10,367 
Gain on Sales of Marketable Securities, net   -0-    -0-    -0-    20 
Increase (Decrease) in Fair Value of Marketable Securities   (563)   (31,913)   14,915    (51,675)
Other Income   164    76    588    410 
Interest Expense   (4,516)   (4,243)   (17,805)   (16,039)
TOTAL OTHER INCOME (EXPENSE)   (2,282)   (32,631)   7,852    (54,662)
                     
Income (Loss) before Loss on Sales of Investment Property and Equipment   3,606    (27,706)   27,861    (36,085)
Loss on Sales of Investment Property and Equipment   (75)   (23)   (111)   (131)
NET INCOME (LOSS)   3,531    (27,729)   27,750    (36,216)
                     
Less: Preferred Dividends   (6,964)   (5,123)   (25,184)   (20,316)
                     
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(3,433)  $(32,852)  $2,566   $(56,532)

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information5
   

 

Consolidated Statements of Cash Flows

(in thousands)

 

   Twelve Months Ended 
   12/31/2019   12/31/2018 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income (Loss)  $27,750   $(36,216)
Non-Cash Items Included in Net Income (Loss):          
Depreciation   36,811    31,691 
Amortization of Financing Costs   758    625 
Stock Compensation Expense   1,939    1,613 
Provision for Uncollectible Notes and Other Receivables   1,408    1,231 
Gain on Sales of Marketable Securities, net   -0-    (20)
(Increase) Decrease in Fair Value of Marketable Securities   (14,915)   51,675 
Loss on Sales of Investment Property and Equipment   111    131 
Changes in Operating Assets and Liabilities:          
Inventory of Manufactured Homes   (8,264)   (6,134)
Notes and Other Receivables, net of Notes Acquired with Acquisitions   (7,909)   (6,438)
Prepaid Expenses and Other Assets   (3,817)   (457)
Accounts Payable   699    913 
Accrued Liabilities and Deposits   3,164    846 
Tenant Security Deposits   781    715 
Net Cash Provided by Operating Activities   38,516    40,175 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of Manufactured Home Communities, net of Mortgages Assumed   (38,799)   (55,880)
Purchase of Investment Property and Equipment   (64,535)   (52,970)
Proceeds from Sales of Investment Property and Equipment   2,745    2,754 
Additions to Land Development Costs   (20,086)   (13,221)
Purchase of Marketable Securities   (1,800)   (18,555)
Proceeds from Sales/Redemption of Marketable Securities   125    269 
Net Cash Used in Investing Activities   (122,350)   (137,603)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from Mortgages, net of Mortgages Assumed   44,850    28,192 
Net (Payments) Proceeds from Short Term Borrowings   (24,373)   23,652 
Principal Payments of Mortgages and Loans   (21,624)   (6,866)
Financing Costs on Debt   (752)   (749)
Proceeds from Issuance of Preferred Stock, net of Offering Costs   96,688    48,247 
Proceeds from At-The-Market Preferred Equity Program, net of Offering Costs   15,931    -0- 
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments   23,796    30,038 
Repurchase of Common Stock   (237)   -0- 
Proceeds from Exercise of Stock Options   2,603    1,385 
Preferred Dividends Paid   (25,709)   (20,050)
Common Dividends Paid, net of Dividend Reinvestments   (21,120)   (21,535)
Net Cash Provided by Financing Activities   90,053    82,314 
           
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   6,219    (15,114)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR   12,777    27,891 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR  $18,996   $12,777 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information6
   

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Net Income (Loss) Attributable

to Common Shareholders to FFO and Normalized FFO

(in thousands except footnotes) (unaudited)

 

   Three Months Ended   Twelve Months Ended 
   12/31/2019   12/31/2018   12/31/2019   12/31/2018 
Reconciliation of Net Income (Loss) to Adjusted EBITDA                    
                     
Net Income (Loss)  $3,531   $(27,729)  $27,750   $(36,216)
Interest Expense   4,516    4,243    17,805    16,039 
Franchise Taxes   49    73    230    352 
Depreciation Expense   9,801    8,281    36,811    31,691 
(Increase) Decrease in Fair Value of Marketable Securities   563    31,913    (14,915)   51,675 
                     
Adjusted EBITDA  $18,460   $16,781   $67,681   $63,541 
                     
Reconciliation of Net Income (Loss) Attributable to Common Shareholders to Funds from Operations                    
                     
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 (1)   563    31,913    (14,915)   51,675 
                     
Funds from Operations (“FFO”)   7,006    7,365    24,573    26,965 
                     
Adjustments:                    
Gain on Sales of Marketable Securities   -0-    -0-    -0-    (20)
Non- Recurring Other Expense (2)    53    -0-    634    525 
                     
Normalized Funds from Operations (“Normalized FFO”)  $7,059   $7,365   $25,207   $27,470 

 

  (1) (Increase) Decrease in Fair Value of Marketable Securities, if any, were previously recorded in Core FFO.
  (2) 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.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information7
   

 

Market Capitalization, Debt and Coverage Ratios

(in thousands) (unaudited)

 

   Twelve Months Ended 
   12/31/2019   12/31/2018 
Shares Outstanding   41,130    38,320 
Market Price Per Share  $15.73   $11.84 
Equity Market Capitalization  $646,976   $453,714 
Total Debt   457,344    439,078 
Preferred   405,048    288,780 
Total Market Capitalization  $1,509,368   $1,181,572 
           
Total Debt  $457,344   $439,078 
Less: Cash and Cash Equivalents   (12,902)   (7,433)
Net Debt   444,442    431,645 
Less: Marketable Securities at Fair Value (“Securities”)   (116,186)   (99,596)
Net Debt Less Securities  $328,256   $332,049 
           
Interest Expense  $17,805   $16,039 
Capitalized Interest   1,498    1,036 
Preferred Dividends   25,184    20,316 
Total Fixed Charges  $44,487   $37,391 
           
Adjusted EBITDA  $67,681   $63,541 
           
Debt and Coverage Ratios          
           
Net Debt / Total Market Capitalization   29.4%   36.5%
           
Net Debt Plus Preferred / Total Market Capitalization   56.3%   61.0%
           
Net Debt Less Securities / Total Market Capitalization   21.7%   28.1%
           
Net Debt Less Securities Plus Preferred / Total Market Capitalization   48.6%   52.5%
           
Interest Coverage   3.5x   3.7x
           
Fixed Charge Coverage   1.5x   1.7x
           
Net Debt / Adjusted EBITDA   6.6x   6.8x
           
Net Debt Less Securities / Adjusted EBITDA   4.9x   5.2x
           
Net Debt Plus Preferred / Adjusted EBITDA   12.6x   11.3x
           
Net Debt Less Securities Plus Preferred / Adjusted EBITDA   10.8x   9.8x

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information8
   

 

Debt Analysis

(in thousands) (unaudited)

 

   Twelve Months Ended 
   12/31/2019   12/31/2018 
Debt Outstanding          
Mortgages Payable:          
Fixed Rate Mortgages  $377,045   $334,411 
Unamortized Debt Issuance Costs   (3,387)   (3,318)
Mortgages, Net of Unamortized Debt Issuance Costs  $373,658   $331,093 
Loans Payable:          
Unsecured Line of Credit  $15,000   $50,000 
Other Loans Payable   69,044    58,417 
Total Loans Before Unamortized Debt Issuance Costs   84,044    108,417 
Unamortized Debt Issuance Costs   (358)   (432)
Loans, Net of Unamortized Debt Issuance Costs  $83,686   $107,985 
           
Total Debt, Net of Unamortized Debt Issuance Costs  $457,344   $439,078 
           
% Fixed/Floating          
Fixed   82.2%   77.0%
Floating   17.8%   23.0%
Total   100.0%   100.0%
           
Weighted Average Interest Rates (1)          
Mortgages Payable   4.14%   4.29%
Loans Payable   3.69%   4.20%
Total Average   4.06%   4.27%
           
Weighted Average Maturity (Years)          
Mortgages Payable   6.0    6.3 

 

(1) Weighted average interest rates do not include the effect of unamortized debt issuance costs.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information9
   

 

Debt Maturity

(in thousands) (unaudited)

 

 

As of 12/31/19:                
Fiscal Year Ended  Mortgages   Loans   Total   % of Total 
2020  $-0-   $66,983   $66,983    14.5%
2021   2,119    204    2,323    0.5%
2022   19,914    15,786(1)   35,700    7.7%
2023   66,958    389    67,347    14.6%
2024   -0-    682    682    0.1%
Thereafter   288,054    -0-    288,054    62.6%
                     
Total Debt Before Unamortized Debt Issuance Cost   377,045    84,044    461,089    100.0%
                     
Unamortized Debt Issuance Cost   (3,387)   (358)   (3,745)     
                     
Total Debt, Net of Unamortized Debt Issuance Costs  $373,658   $83,686   $457,344      

 

(1) Includes $15 million balance outstanding on the Company’s Line of Credit due November 2022, with an additional one year option.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information10
   

 

Securities Portfolio Performance

(in thousands)

 

 

 

Year Ended  Securities Available for Sale   Dividend Income   Net Realized Gain on Sale of Securities   Net Realized Gain on Sale of Securities & Dividend Income 
2010  $28,757   $1,763   $2,028   $3,791 
2011   43,298    2,512    2,693    5,205 
2012   57,325    3,244    4,093    7,337 
2013   59,255    3,481    4,056    7,537 
2014   63,556    4,066    1,543    5,609 
2015   75,011    4,399    204    4,603 
2016   108,755    6,636    2,285    8,921 
2017   132,964    8,135    1,747    9,882 
2018   99,596    10,367    20    10,387 
2019   116,186    7,535    -0-    7,535 
                     
        $52,138   $18,669   $70,807 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information11
   

 

Property Summary and Snapshot

(unaudited)

 

   12/31/2019   12/31/2018   % Change 
             
Communities   122    118    3.4%
Developed Sites   23,088    21,510    7.3%
Occupied   18,936    17,636    7.4%
Occupancy %   82.0%   82.0%   0 bps 
Total Rentals   7,394    6,512    13.5%
Occupied Rentals   6,820    6,009    13.5%
Rental Occupancy %   92.3%   92.3%   0 bps 
Monthly Rent Per Site  $447   $435    2.8%
Monthly Rent Per Home Rental Including Site  $765   $742    3.1%

 

State  Number   Total Acreage   Developed Acreage   Vacant Acreage   Total Sites   Occupied Sites   Occupancy Percentage   Monthly Rent Per Site   Total Rentals   Occupied Rentals   Rental Occupancy Percentage   Monthly Rent Per Home Rental 
       (1)       (1)                               (2) 
                                                 
Indiana   14    1,104    870    234    3,991    3,311    83.0%  $394    1,530    1,409    92.1%  $760 
Maryland   1    77    10    67    62    59    95.2%  $514    -0-    -0-    N/A    N/A 
Michigan   3    153    153    -0-    740    598    80.8%  $438    252    216    85.7%  $761 
New Jersey   4    349    187    162    1,006    953    94.7%  $632    44    40    90.9%  $984 
New York   7    617    308    309    1,170    984    84.1%  $544    357    330    92.4%  $923 
Ohio   36    1,781    1,315    466    6,739    5,196    77.2%  $400    2,089    1,899    90.9%  $705 
Pennsylvania   50    2,148    1,787    361    7,630    6,208    81.4%  $464    2,306    2,139    92.8%  $786 
Tennessee   7    413    321    92    1,750    1,627    93.0%  $472    816    788    96.6%  $785 
Total as of December 31, 2019   122    6,642    4,951    1,691    23,088    18,936    82.0%  $447    7,394    6,821    92.3%  $765 

 

(1) Total and Vacant Acreage of 220 for the Mountain View Estates property is included in the above summary.

(2) Includes home and site rent charges.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information12
   

 

Same Property Statistics

(in thousands) (unaudited)

 

   For Three Months Ended   For Twelve Months Ended 
   12/31/2019   12/31/2018   Change   % Change   12/31/2019   12/31/2018   Change   % Change 
Community Net Operating Income                                        
                                         
Rental and Related Income  $30,556   $28,650   $1,906    6.7%  $119,659   $111,878   $7,781    7.0%
Community Operating Expenses(1)   13,190    12,996    194    1.5%   53,163    49,389    3,774    7.6%
                                         
Community NOI  $17,366   $15,654   $1,712    10.9%  $66,496   $62,489   $4,007    6.4%

 

   As of     
   12/31/2019   12/31/2018   Change 
             
Total Sites   19,927    19,903    0.1%
Occupied Sites   16,695    16,362    333 sites, 2.0%
Occupancy %   83.8%   82.2%   160 bps 
Number of Properties   112    112    N/A 
Total Rentals   6,921    6,244    10.8%
Occupied Rentals   6,438    5,776    11.5%
Rental Occupancy   93.0%   92.5%   50 bps 
Monthly Rent Per Site  $457   $441    3.6%
Monthly Rent Per Home Including Site  $769   $746    3.1%

 

Same Property includes all properties owned as of January 1, 2018, with the exception of Memphis Blues.

(1) Excludes a one-time settlement of a utility billing dispute of $375,000 over a prior ten-year period for the year ended December 31, 2019 and $53,000 from emergency windstorm damage cleanup for the three months and year ended December 31,2019.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information13
   

 

Acquisition Summary

(dollars in thousands)

 

At Acquisition:                 
                  
Year of Acquisition  Number of Communities  Sites  Occupied Sites  Occupancy %   Price   Total Acres
2016  3  289  215   74%  $7,277   219
2017  11  1,997  1,333   67%  $63,290   602
2018  6  1,615  1,271   79%  $59,093   494
2019  4  1,495  935   62%  $56,237   247

 

 

Community  Date of Acquisition  State  Number
of Sites
   Purchase Price  

Number

of Acres

   Occupancy 
Friendly Village  July 3, 2019  OH   824   $19,386    101    46%
Fifty-One Estates and                          
New Colony  July 30, 2019  PA   285    11,650    61    76%
Northtowne Meadows  August 27, 2019  MI   386    25,201    85    88%
Total 2019         1,495   $56,237    247    62%

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information14
   

 

Definitions

 

Investors and analysts following the real estate industry utilize funds from operations available to common shareholders (“FFO”), normalized funds from operations available to common shareholders (“Normalized FFO”), community NOI, same property NOI, and earnings before interest, taxes, depreciation, amortization and acquisition costs (“Adjusted EBITDA”), variously defined, as supplemental performance measures. While the Company believes net income (loss) available to common shareholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, it considers Community NOI, Same Property NOI, Adjusted EBITDA, FFO and Normalized FFO, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of U.S. GAAP depreciation and amortization of real estate assets. FFO also adjusts for the effects of the change in the fair value of marketable securities and costs associated with the redemption of preferred stock. Normalized FFO reflects the same assumptions as FFO except that it also adjusts for gains and losses realized on marketable securities investments and certain one-time charges. Community NOI and Same Property NOI provides a measure of rental operations and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses. Adjusted EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs. In addition, Community NOI, Same Property NOI, Adjusted EBITDA, FFO and Normalized FFO are commonly used in various ratios, pricing multiples, yields and returns and valuation of calculations used to measure financial position, performance and value.

 

As used herein, the Company calculates FFO, as defined by The National Association of Real Estate Investment Trusts (“NAREIT”), to be equal to net income (loss) applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by 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-GAAP supplemental measure of REIT operating performance.

 

Normalized FFO is calculated as FFO excluding gains and losses realized on marketable securities investments and certain one-time charges.

 

Normalized FFO per Diluted Common Share is calculated using diluted weighted shares outstanding of 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 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.

 

Community NOI is calculated as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses. Community NOI excludes realized gains (losses) on securities transactions.

 

Same Property NOI is calculated as Community NOI, using all properties owned as of January 1, 2018, with the exception of Memphis Blues.

 

Adjusted EBITDA is calculated as net income (loss) plus interest expense, franchise taxes, depreciation, and the change in the fair value of marketable securities.

 

Community NOI, Same Property NOI, Adjusted EBITDA, FFO and Normalized FFO do not represent cash generated from operating activities in accordance with U.S. GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. Community NOI, Same Property NOI, Adjusted EBITDA, FFO and Normalized FFO should not be considered as substitutes for net loss applicable to common shareholders (calculated in accordance with U.S. GAAP) as a measure of results of operations, or cash flows (calculated in accordance with U.S. GAAP) as a measure of liquidity. Community NOI, Same Property NOI, Adjusted EBITDA, FFO and Normalized FFO as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information15
   

 

Press Release Dated March 5, 2020

 

FOR IMMEDIATE RELEASE March 5, 2020
  Contact: Nelli Madden
  732-577-9997

 

UMH PROPERTIES, INC. REPORTS RESULTS FOR THE YEAR ENDED AND THE FOURTH QUARTER ENDED
DECEMBER 31, 2019

 

FREEHOLD, NJ, March 5, 2020........ 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 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information16
   

 

   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%;

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information17
   

 

  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 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. | Fourth Quarter FY 2019 Supplemental Information18
   

 

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 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information19
   

 

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 

 

  (2) 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.
  (3) 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.

 

# # # #

 

 

 UMH Properties, Inc. | Fourth Quarter FY 2019 Supplemental Information20