UMH Properties(US:UMH)2022-08-04 20:07Financial Data and Key Metrics Changes - The normalized FFO for Q2 2022 was $0.16 per share, down from $0.22 per share in the previous year, primarily due to capital raised for preferred stock redemption [11][32] - Rental and related income increased by 7% to $42.2 million compared to $39.3 million a year ago [35] - Community NOI increased by 5% from $22.3 million in 2021 to $23.3 million in 2022 [35] Business Line Data and Key Metrics Changes - Same-property rental and related income increased by 6.2%, while expenses rose by 8.3%, resulting in NOI growth of 4.8% [13] - Sales of manufactured homes decreased by 27% from $9.6 million in 2021 to $7 million in 2022, attributed to a lack of available inventory [35] - The average sales price for the quarter was $81,000, with gross profit percentage increasing to 31% from 27% last year [19][35] Market Data and Key Metrics Changes - The rental home occupancy rate remained strong at 94.6%, with expectations for growth as new homes are set up [15][70] - The company has a strong pipeline of pending sales, with sales traffic remaining robust despite inventory constraints [51][54] Company Strategy and Development Direction - The company continues to focus on acquiring value-add communities and implementing improvements to enhance property value and occupancy [9][10] - A significant part of the strategy includes the aggressive rental home infill approach, which has proven successful [44] - The company is also pursuing opportunities in opportunity zones to acquire and develop communities, aiming to increase the supply of affordable housing [22][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing easing supply constraints and strong demand for affordable housing [48][70] - The recent redemption of Series C preferred stock is expected to significantly enhance earnings growth [43] - The company anticipates continued growth in FFO and occupancy rates as new homes are delivered and set up [50][69] Other Important Information - The company has approximately $626 million in debt, with 91% being fixed rate [36] - The total market capitalization at quarter end was approximately $1.8 billion [37] - The company has a pipeline of over 3,000 sites for future development, indicating strong growth potential [46] Q&A Session Summary Question: How is the pacing of getting new rental homes ready for the remainder of the year? - Management indicated that supply issues are improving, and they expect to add 4,500 rental units over the next five years [48][49] Question: How has sales traffic been trending in the third quarter? - Sales traffic remains strong, with a pending sales pipeline of $4 million to $5 million [51][53] Question: What is driving the increase in same-store property rental home occupancy? - Management clarified that the decline in occupancy is due to the addition of new homes and not a softness in demand [68] Question: What are the drivers of the increase in same-property community operating expenses? - The increase is attributed to salary increases, additional employees, and rising water, sewer, and tax costs [71][72] Question: How is the buyer pool for manufactured housing communities currently? - The buyer pool remains strong, although some buyers reliant on financing have become less competitive due to rising costs [57][60]