UMH Properties(US:UMH)2023-03-01 20:16Financial Data and Key Metrics Changes - Normalized FFO for Q4 2022 was $0.20 per share, down from $0.22 per share in the prior year [6] - Total income for the year increased by 5% to approximately $196 million, driven by a 7% increase in rental and related income [7] - Operating expense ratio increased to 44.4% from 42.8% in 2021, resulting in community NOI of approximately $94.8 million, a 4% increase over last year [7][20] Business Line Data and Key Metrics Changes - Rental and related income for Q4 2022 was $43.7 million, up from $40.7 million a year ago, representing a 7% increase [20] - Same property income increased by 6%, while same property NOI increased by 3% or $2.7 million [8] - Sales of manufactured homes decreased by 6% from $27.1 million in 2021 to $25.3 million in 2022, with an average sales price increase of 15% [12][21] Market Data and Key Metrics Changes - The company operates 135 manufactured home communities with 25,700 developed homesites, with an occupancy rate of 84.2% [17] - The rental home occupancy rate remained strong at 93.3%, with a monthly rent per home increasing by 5.9% to $873 [8] - The company has over 1,000 homes in various stages of setup, which are expected to increase monthly revenue by $900,000 once occupied [18] Company Strategy and Development Direction - The company plans to continue acquiring, expanding, developing, and renovating communities, with a focus on value-add acquisitions [5] - The launch of the Opportunity Zone Fund aims to provide capital for land development while limiting negative impacts on FFO [14] - The company is optimistic about future acquisition opportunities due to higher interest rates potentially leading to reasonable pricing [14] Management's Comments on Operating Environment and Future Outlook - Management noted that 2022 was impacted by supply chain backlogs and inflation, but they expect to fill at least 800 rental units in 2023 [30] - The company is well-positioned to address the housing shortage, with a focus on providing quality, affordable housing [29] - Management expressed confidence in achieving revenue growth that will offset expense growth, projecting NOI growth in the high single digits [32] Other Important Information - The company redeemed all 9.9 million shares of its 6.75% Series C perpetual preferred stock for a total of $247 million [22] - At year-end, the company had approximately $762 million in debt, with 80% being fixed rate [21] - The company has a total market capitalization of approximately $1.9 billion at year-end [23] Q&A Session Summary Question: Expectations on operating expenses and revenue growth - Management expects expense growth to normalize in the 6.5% to 8.5% range, allowing for income growth above that [32] Question: Insights on transaction market for acquisitions - Management noted limited deals available at expected pricing, with cap rates in the 4.5% to 6% range [33] Question: Rental occupancy trends and demand - Management indicated that seasonal fluctuations impacted rental occupancy, which is expected to improve as the peak rental season approaches [34] Question: Financing options for home sales - The company currently offers financing at rates of 7.5% for new homes and 9.99% for used homes, with about 62% of home sales financed [37] Question: Performance of Indiana and Pennsylvania markets - Management acknowledged elevated expense growth in these markets but expects normalization and improved rental revenue growth [47][49] Question: Future acquisition strategy - Management stated they have sufficient opportunities to grow revenue without immediate acquisitions, focusing on stabilizing existing assets [56]