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UMH Properties, Inc. Reports Results For The Second Quarter Ended June 30, 2018

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UMH Properties, Inc. Reports Results For The Second Quarter Ended June 30, 2018

PR Newswire

FREEHOLD, N.J., Aug. 7, 2018 /PRNewswire/ -- UMH Properties, Inc. (NYSE:UMH) reported Total Income for the quarter ended June 30, 2018 of $32,099,000 as compared to $28,818,000 for the quarter ended June 30, 2017, representing an increase of 11%.  Net Income Attributable to Common Shareholders amounted to $14,949,000 or $0.40 per diluted share for the quarter ended June 30, 2018 as compared to a net loss of $200,000 or $0.01 per diluted share for the quarter ended June 30, 2017. 

Core Funds from Operations ("Core FFO"), was $6,154,000 or $0.16 per diluted share for the quarter ended June 30, 2018 as compared to $6,527,000 or $0.20 per diluted share for the quarter ended June 30, 2017.  During the recent quarter, Core FFO included a non-recurring one-time payroll expenditure of $525,000.  Also, during the prior year period, Core FFO included realized gains on the sale of marketable securities of $1.0 million.  Normalized Funds from Operations ("Normalized FFO"), which excludes these non-recurring items, was $6,679,000 or $0.18 per diluted share for the quarter ended June 30, 2018, as compared to $5,507,000 or $0.17 per diluted share for the quarter ended June 30, 2017, representing an increase in Normalized FFO per diluted share of 6%. 

A summary of significant financial information for the three and six months ended June 30, 2018 and 2017 is as follows:




For the Three Months Ended




June 30,




2018



2017









Total Income

$

32,099,000


$

28,818,000


Total Expenses

$

27,761,000


$

24,858,000


Other Investment Income, net

$

16,624,000


$

1,020,000


Net Income (Loss) Attributable to

  Common Shareholders

$

14,949,000


$

(200,000)


Net Income (Loss) Attributable to Common

  Shareholders per Diluted Common Share

 

$

 

0.40


 

$

 

(0.01)


Core FFO (1)

$

6,154,000


$

6,527,000


Core FFO (1) per Diluted Common Share 

$

0.16


$

0.20


Normalized FFO (1)

$

6,679,000


$

5,507,000


Normalized FFO (1) per Diluted Common Share

$

0.18


$

0.17


Weighted Average Shares Outstanding


36,971,000



31,769,000

 

 




For the Six Months Ended




June 30,




2018



2017









Total Income

$

61,895,000


$

55,266,000


Total Expenses

$

53,253,000


$

47,344,000


Other Investment Income (Loss), net

$

(9,255,000)


$

1,052,000


Net Loss Attributable to Common Shareholders

$

(12,206,000)


$

(1,704,000)


Net Loss Attributable to Common

  Shareholders per Diluted Common Share

 

$

 

(0.34)


 

$

 

(0.06)


Core FFO (1)

$

12,509,000


$

11,587,000


Core FFO (1) per Diluted Common Share 

$

0.34


$

0.37


Normalized FFO (1)

$

13,014,000


$

10,535,000


Normalized FFO (1) per Diluted Common Share

$

0.36


$

0.34


Weighted Average Shares Outstanding


36,246,000



30,888,000

 

A summary of significant balance sheet information as of June 30, 2018 and December 31, 2017 is as follows:


June 30,

2018


December 31,

2017









Gross Real Estate Investments

$  806,277,000


$  764,439,000

Marketable Securities at Fair Value

$  138,063,000


$  132,964,000

Total Assets

$  862,753,000


$  823,881,000

Mortgages Payable, net

$  301,772,000


$  304,895,000

Loans Payable, net

$    84,649,000


$    84,704,000

Total Shareholders' Equity

$  462,526,000


$  421,215,000





Samuel A. Landy, President and CEO, commented on the results of the second quarter of 2018.

"We are pleased to announce another solid quarter of operating results.  During the quarter, we:

  • Increased Rental and Related Income by 11.6% over the prior year period;
  • Increased Community Net Operating Income ("NOI") by 15.6% over the prior year period;
  • Improved our Operating Expense ratio by 190 basis points over the prior year period from 46.9% to 45.0%;
  • Increased Same Property NOI by 9.2% over the prior year period;
  • Increased Same Property Occupancy by 100 basis points over the prior year period from 82.3% to 83.3%;
  • Increased home sales by 9.6% over the prior year period;
  • Increased our rental home portfolio by 389 homes to approximately 6,000 total rental homes, representing an increase of 6.9% from yearend 2017;
  • Increased rental home occupancy by 100 basis points from 93.0% at yearend 2017 to 94.0% at quarter end;
  • Acquired two communities in Indiana containing 669 home sites for a total cost of $20,500,000;
  • Reduced the weighted average interest rate on our mortgage debt from 4.3% to 4.2%;
  • Reduced the weighted average interest rate on our total debt from 4.2% to 4.1%;
  • Raised $16.4 million through our Dividend Reinvestment and Stock Purchase Plan;
  • Reduced our Net Debt to Total Market Capitalization from 32.4% to 29.9% and our Net Debt Less Securities to Total Market Capitalization from 22.8% to 18.8%;
  • Generated a $16.6 million improvement in our REIT securities portfolio, from a $14.4 million unrealized loss at the end of the first quarter to a $2.2 million unrealized gain at quarter end; and,
  • Increased our total market capitalization to $1.2 billion, representing an increase of 9.6% over the prior year period."

Mr. Landy further stated, "Our business plan of acquiring value-add communities and turning them around has resulted in exceptional same property performance.  Same property revenue increased by 6.8% driven by a 100-basis point increase in the occupancy rate and a 3.5% increase in our weighted average monthly site rent over the prior year period.  Same property expenses only increased 3.8%, resulting in an increase in same property NOI of 9.2%."

"During the quarter, we closed on the acquisition of two all-age communities located in Indiana for a total purchase price of $20.5 million. These communities contain 669 developed home sites of which 91% are currently occupied.  We continue to execute our growth strategy and currently have an acquisition pipeline totaling $81.5 million, consisting of 6 properties containing 2,100 sites."

"Sales have steadily improved, increasing 9.6% for the quarter and 17.3% for the year.  The U.S. economy is in excellent shape.  The unemployment rate is at a near record low.  Wages are rising.  Demand for housing, especially affordable housing, continues to increase.  Given these factors, we are confident that we will have another year of double-digit sales growth." 

"During the quarter, our REIT securities portfolio performed very well.  Our $14.4 million unrealized loss at the end of the first quarter is now a $2.2 million unrealized gain at quarter end, representing an improvement of $16.6 million for the quarter.  Our securities portfolio generated $2.5 million in dividend income during the quarter representing a 37.8% increase over the prior year period. At quarter end, our REIT securities portfolio represented 13% of our total undepreciated assets."

"We look forward to reporting continued progress throughout the year."

UMH Properties, Inc. will host its Second Quarter 2018 Financial Results Webcast and Conference Call.  Senior management will discuss the results, current market conditions and future outlook on Wednesday, August 8, 2018 at 10:00 a.m. Eastern Time.

The Company's 2018 second 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 Wednesday, August 8, 2018.  It will be available until November 1, 2018 and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10121263.  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 114 manufactured home communities containing approximately 20,600 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 ("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, plus certain non-cash items such as real estate asset depreciation and amortization.  NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance.  We define Core Funds From Operations ("Core FFO") as FFO plus costs of early extinguishment of debt, change in the fair value of marketable securities and costs associated with the redemption of preferred stock.  We define Normalized Funds From Operations ("Normalized FFO") as Core FFO excluding gains and losses realized on marketable securities investments and certain non-recurring charges. We define Community NOI as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses.  FFO, Core FFO and Normalized FFO, as well as Community NOI, should be considered as supplemental measures of operating performance used by REITs.  FFO, Core 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, Core FFO, Normalized FFO and Community NOI and, accordingly, our FFO, Core FFO, Normalized FFO and Community NOI may not be comparable to all other REITs.  The items excluded from FFO, Core FFO and Normalized FFO are significant components in understanding the Company's financial performance.

FFO, Core FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative 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, Core FFO and Normalized FFO for the three and six months ended June 30, 2018 and 2017 are calculated as follows:




Three Months Ended


Six Months Ended





6/30/18


6/30/17


6/30/18


6/30/17


Net Income (Loss) Attributable to Common Shareholders    


$14,949,000

$(200,000)


$(12,206,000)


$(1,704,000)


Depreciation Expense


7,764,000

6,740,000

15,359,000

13,280,000


(Gain) Loss on Sales of Depreciable Assets


65,000

(13,000)

81,000

11,000


FFO Attributable to Common Shareholders


22,778,000


6,527,000


3,234,000


11,587,000


(Increase) Decrease in Fair Value of Marketable Securities


(16,624,000)


-0-


9,275,000


-0-


Core FFO Attributable to Common Shareholders


6,154,000


6,527,000


12,509,000


11,587,000


Non-Recurring Other Expense (1)


525,000


-0-


525,000


-0-


Gain on Sales of Marketable Securities, net


-0-


(1,020,000)

(20,000)


(1,052,000)


Normalized FFO Attributable to Common Shareholders


$6,679,000


$5,507,000

$13,014,000


$10,535,000














(1)       Consists of one-time payroll expenditures.


 

The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 36,971,000 and 36,546,000 shares for the three and six months ended June 30, 2018, respectively, and 32,279,000 and 31,353,000 for the three and six months ended June 30, 2017, respectively.  Common stock equivalents resulting from stock options in the amount of 371,000 and 300,000 shares for the three and six months ended June 30, 2018, respectively, and 510,000 and 465,000 shares for the three and six months ended June 30, 2017, respectively, are included in the diluted weighted shares outstanding.  Common stock equivalents for the six months ended June 30, 2018 and for the three and six months June 30, 2017 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 six months ended June 30, 2018 and 2017:



Six Months Ended



2018


2017


Operating Activities

$14,445,000


$16,638,000


Investing Activities

(61,477,000)


(75,852,000)


Financing Activities

39,107,000


63,156,000

 

Cision View original content:http://www.prnewswire.com/news-releases/umh-properties-inc-reports-results-for-the-second-quarter-ended-june-30-2018-300693483.html

SOURCE UMH Properties, Inc.

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