UMH Properties(US:UMH)2022-02-25 18:54Financial Data and Key Metrics Changes - The company reported a total return of 91% in 2021, with an equity market capitalization surpassing $1 billion and an all-time high stock price of $27.50 [9] - Normalized FFO for Q4 was $0.22 per share, a 10% increase year-over-year, while normalized FFO for the full year was $0.87 per share, representing a 24% increase [11][26] - Total income for the year increased by 14% to approximately $186 million, driven by an 11% increase in rental and related income and a 34% increase in sales of manufactured homes [13] - The operating expense ratio improved to 42.8% from 44.1% in 2020, resulting in community NOI of approximately $91 million, a 13% increase over the previous year [13][28] Business Line Data and Key Metrics Changes - Rental and related income for Q4 was $40.7 million, an 8% increase from the previous year, while for the full year, it increased from $143.3 million in 2020 to $159 million in 2021, an 11% increase [27] - Sales of manufactured homes for the full year increased by 34% from $20.3 million in 2020 to $27.1 million in 2021, with a total of 370 homes sold [29] - The average sales price of manufactured homes rose to $73,000 from $63,000 in the prior year [29] Market Data and Key Metrics Changes - The company experienced strong demand for affordable housing, with occupancy rates remaining high at 95.5% and a waiting list for homes across the portfolio [15][41] - The company added 454 homes to its portfolio, bringing the total to 8,700 rental homes, despite facing manufacturer backlogs of six to twelve months [15][39] Company Strategy and Development Direction - The company aims to provide quality affordable housing through manufactured homes, with plans to develop 400 or more sites per year over the next five years [18][41] - A joint venture with Nuveen Real Estate was established for the acquisition and development of new manufactured housing communities, with an initial capital commitment of $170 million [20] - The company plans to redeem $247 million in Series C perpetual preferred stock and $215 million in Series D perpetual preferred stock, which is expected to increase FFO significantly [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future sales growth, citing strong demand and a robust pipeline of homes on order [49][51] - The company is well-positioned to continue growth initiatives, with access to various sources of capital and a strong financial position [39][43] - Management acknowledged the challenges posed by supply chain issues but emphasized the strong demand for affordable housing and the company's ability to meet that demand [67][81] Other Important Information - The company raised $182 million through common stock offerings and completed a bond offering in Israel, raising $102.7 million at a favorable interest rate of 4.72% [32][33] - The company maintains a strong liquidity position with $116 million in cash and cash equivalents and $50 million available on its credit facility [37] Q&A Session Summary Question: Impact of Series C preferred redemption on accretive FFO - Management indicated that every 100 basis points of improvement would yield approximately $0.04 of accretive FFO, with a 50-50 debt-equity mix expected [45][46] Question: Drivers behind home sales performance - Management noted that the fourth quarter is typically slower for sales, but demand remains strong, with a backlog of homes on order [48][49] Question: Expectations for the joint venture's impact on earnings - Management stated that the joint venture would have a minimal impact on earnings in 2022 but could be favorable in the long term as properties are filled [56][58] Question: Trends in rent collections and bad debt considerations - Management reported collections remain strong at 98% to 99%, with some challenges in New York and New Jersey being addressed [68][69] Question: Reaction to changing interest rate environment - Management confirmed that they have reduced rates to 4.99% for sales financing to remain competitive and support demand [70] Question: Discussion on dual listing and G&A increases - Management does not expect any material increase in G&A related to the dual listing [71]