UMH Properties(US:UMH)2023-02-28 21:17Acquisitions and Property Management - In 2022, the company acquired seven manufactured home communities totaling 1,486 homesites for a total purchase price of $86.2 million[16]. - As of December 31, 2022, the company owned and operated 134 manufactured home communities with approximately 25,600 developed homesites[17]. - The company owned a total of 9,100 rental homes, representing approximately 36% of its developed homesites as of December 31, 2022[23]. - The company has quadrupled the number of developed homesites since 2010, purchasing 106 communities containing approximately 18,700 homesites[25]. - The company acquired one additional community in Georgia containing 118 developed homesites through its opportunity zone fund since January 1, 2023[141]. - The company operates 134 manufactured home communities as of December 31, 2022, with 46 having their own wastewater treatment facilities or water distribution systems[71]. Financial Performance - Rental and related income increased by 7% in 2022[188]. - Community Net Operating Income (NOI) rose by 4% year-over-year[188]. - Total income increased by 5% due to acquisitions, rental programs, and rent increases[192]. - Community operating expenses rose by 11% from $68.0 million in 2021 to $75.7 million in 2022, primarily due to new acquisitions and rising operational costs[207]. - Community NOI increased by 4% from $91.0 million in 2021 to $94.8 million in 2022, with an operating expense ratio of 44.4% in 2022 compared to 42.8% in 2021[208]. - The company paid quarterly cash dividends of $0.20 per share for the year ended December 31, 2022, increasing to $0.205 per share starting March 15, 2023[179]. Risks and Challenges - The company faces risks related to the termination of its third-party lending program, which could adversely affect profitability[45]. - The concentration of investments in the manufactured housing sector makes the company vulnerable to economic downturns in that sector[45]. - The company is subject to risks associated with its debt, including potential foreclosure due to mortgage obligations[45]. - Changes in interest rates may impact the company's cost of capital and financial results[45]. - The geographic concentration of properties in ten states exposes the company to local economic downturns affecting occupancy and rental rates[53]. - Increased competition for manufactured home community investments has resulted in higher purchase prices, impacting profitability[56]. - The company may face challenges in financing acquisitions on favorable terms, which could affect growth strategies[59]. - The company is dependent on key personnel, and the loss of any member of the management team could adversely affect operations[48]. - The company may be adversely affected by changes in federal or state tax rules that could impact its status as a REIT[45]. - The company is subject to significant regulations that may increase costs and inhibit activities, potentially affecting funds from operations and the ability to pay or refinance debt[66]. Occupancy and Rental Rates - The occupancy percentage for developed sites was 96% at 12/31/22, compared to 97% at 12/31/21[142]. - The average monthly rent per site at 12/31/22 was $537 for Allentown community and $807 for Arbor Estates[142]. - The total occupancy percentage across all developed sites was 84.6% as of December 31, 2022, compared to 86.0% at the end of 2021[160]. - The average occupancy percentage across developed sites as of December 31, 2022, was 88% compared to 90% in 2021, indicating a slight decline[154]. - The average monthly rent across various communities ranged from $105 at LaVista Estates to $751 at Gregory Courts[150][148]. Future Development and Expansion - The company has approximately 2,100 acres of additional land potentially available for future development[27]. - The Company has 2,066 undeveloped acres that may be developed into approximately 8,300 sites, with about 3,500 sites in various stages of the approval process over the next 7 years[161]. - The company plans to continue increasing real estate investments, focusing on acquiring communities in Qualified Opportunity Zones[201]. Market Conditions and Economic Factors - The COVID-19 pandemic has caused significant disruptions in financial markets and economic activity, which may adversely affect the company's financial condition in the future[108]. - Adverse macroeconomic conditions such as inflation, slower growth, and higher interest rates could materially impact the company's business and financial condition[109]. - Future terrorist attacks and military conflicts could adversely affect economic conditions and increase borrowing costs, impacting earnings[133]. - Disruptions in financial markets may affect the company's ability to obtain financing on reasonable terms, impacting its investment strategy[134]. Shareholder Considerations - The company did not repurchase any shares of its common stock during the year ended December 31, 2022[30]. - The company must distribute at least 90% of its REIT taxable income to qualify as a REIT, which may limit its ability to fund future capital needs from retained cash[83]. - The company may need to borrow funds to meet distribution requirements, which could increase interest expenses and affect financial condition[93]. - The company is subject to a 100% penalty tax on gains from the sale of properties held primarily for sale to customers, which could impact financial results[94]. - The company is subject to a 100% penalty tax on certain payments to its taxable REIT subsidiary (TRS) if economic arrangements are not comparable to those between unrelated parties, which could adversely affect cash flows[104].