UMH PROPERTIES, INC. (UMH)·Q3 2024 Earnings Summary

Executive Summary

• UMH delivered another solid quarter: Total Income rose 8% year-over-year to $60.7M, Normalized FFO/share increased 9% YoY to $0.24 and 4% sequentially from $0.23; management tightened FY24 Normalized FFO/share guidance to $0.92–$0.94 (from $0.91–$0.95) on continued occupancy and rent gains .
• Community operations remained resilient: rental and related income rose 8% YoY to $51.9M; same-property NOI grew ~7% in Q3 and 11% YTD; expense ratio elevated to 43.3% due to storm cleanup and higher payroll/taxes, but management expects a return to high-single/low-double-digit same-property NOI growth ahead as more rentals come online .
• Strategic capital actions de-levered and preserved flexibility: ~$107M net raised via ATM common in Q3 and ~$10M preferred, fully paying down the revolver; quarter-end liquidity included $66.7M cash and full $260M revolver capacity; debt 99.5% fixed, weighted average rate 4.36%, with ~$116M 2025 mortgage maturities expected to refinance at proceeds above balances given value gains .
• Operational drivers intact into 2025: 200+ homes on order and 300 recently delivered; UMH plans to add ~800 rental homes in 2025 (10% yields on capital) and is progressing on expansions and select self-storage adjacencies; pilot program for solar shingles and potential NJ land JV offer optionality beyond core MH communities .
• Street estimates: S&P Global consensus comparisons were unavailable at time of writing due to data access limits; monitor for estimate revisions post-guide tightening and improving sequential trends (values not retrieved)*.

What Went Well and What Went Wrong

What Went Well

• Same-property operating momentum: “Same property occupancy has increased by 220 sites… to 87.7%… same property rental and related income growth of 8%… Same property NOI increased 7% for the quarter and 11% for the first nine months of the year,” highlighting durable demand and pricing power .
• Sales execution and margins: Q3 sales grew 10% YoY to $8.7M; gross sales margin rose 500 bps to 38%, with gross profit up 30% to $3.3M; 53% of home sales were financed by UMH—supportive of sales velocity and margin capture .
• Balance sheet and funding: ~$107M net from common ATM and ~$10M preferred ATM in Q3, used in part to pay down the line of credit; 99.5% fixed-rate debt, interest coverage 3.3x, fixed charge coverage 2.1x; cash $66.7M and full $260M revolver availability provide ample growth capacity .

What Went Wrong

• Expense pressure from storms and operating costs: Expense ratio rose to 43.3% in Q3, with storm-related tree removal ($140k) and R&M ($100k) plus other one-time items pushing same-property NOI below double digits for the quarter (would have approached 9.5–10.5% excluding these items) .
• Sequential occupancy plateauing in same-store pool: Same-store occupancy was flat sequentially at 87.7% as late-quarter turnover and setup timing affected flow-through; management expects continued growth as inventory is set and leased .
• Estimate visibility: Unable to benchmark Q3 vs. Street due to S&P Global access limits at this time; this constrains external “beat/miss” framing despite internally positive sequential and YoY trends (values not retrieved)*.

Financial Results

• Segment mix (Q3 2024 vs. Q3 2023): Rental & related income +8% to $51.9M and MH sales +10% to $8.7M, underpinning Total Income +8% to $60.7M .
• KPIs and portfolio stats:

• Same-Property snapshot (Q3): rental & related income +7.7%, expenses +8.1%, NOI +7.4%; same-property occupancy up 70 bps to 87.7% .

Guidance Changes

Management plans to issue full-year 2025 guidance with Q4/FY results .

Earnings Call Themes & Trends

Management Commentary

• “Normalized FFO per share for the third quarter of 2024 was $0.24… representing an increase of approximately 9%… Sequentially… increased from $0.23… representing a 4%… increase. Year-to-date… increased… 28%.” — CEO Samuel A. Landy .
• “We issued and sold approximately 5.7 million shares through our common ATM… raising net proceeds of $107 million… to fully pay down our line of credit… position[s] us to… invest and execute on potential acquisitions.” — CEO .
• “Same property occupancy has increased by 220 sites… to 87.7%.… Same property NOI increased 7% for the quarter and 11% for the first nine months of the year.” — CEO .
• “We are also updating our 2024 guidance… tightening… to $0.92–$0.94… approximately 8% annual normalized FFO growth at the midpoint.” — CFO Anna Chew and press release .
• “We are in the early stages of a pilot program… solar shingles… first 20 homes… should reduce our tenants’ electricity costs.” — Founder/Chairman Eugene Landy .

Q&A Highlights

• Storm costs and NOI trajectory: Midwest wind events lifted tree removal by ~$140k and R&M by ~$100k; excluding one-offs, same-property NOI would have approached 9.5–10.5% growth; management expects return to high single/low double digits ahead .
• Rental home capex/unit and margin: Single-wide rentals cost ~$70–$75k fully set up; UMH would sell comparable new units at ~$90–$100k+; Q3 sales gross margin up 500 bps to 38% with gross profit +30% YoY .
• 2025 deployment: ~800 rental homes targeted; ~200+ on order entering 2025; expect ~600–650 2024 conversions from inventory to revenue-producing homes .
• Refinancing and leverage: ~$116M 2025 mortgages; communities have “increased in value substantially” with anticipated refi proceeds above balances; net debt/adj. EBITDA 4.9x; interest coverage 3.3x; liquidity includes $66.7M cash and full $260M revolver .
• Strategic adjacencies and JV optionality: 246-unit self-storage acquired adjacent to communities to leverage shared management; potential NJ land JV with a homebuilder is multi-year (min ~3 years to monetization) .

Estimates Context

• We attempted to retrieve Wall Street consensus (S&P Global) for EPS/Revenue/FFO to benchmark Q3 results and outlook; data could not be fetched due to SPGI daily request limits at this time. As a result, we cannot provide definitive beat/miss versus consensus for Q3 or forward periods (values not retrieved from S&P Global)*.
• Given guidance tightening and sequential Normalized FFO/share improvement to $0.24, we expect Street models to bias higher near-term on occupancy additions and 5% rent escalators, with some offset for normalized operating expenses post-storms .

Key Takeaways for Investors

• Core operations remain strong: rental income +8%, same-property NOI +7% in Q3 (11% YTD), with resilient collections and occupancy, supporting continued per-share Normalized FFO growth into Q4 .
• One-off expense headwinds should abate: storms elevated the expense ratio to 43.3%; management sees NOI growth returning to high single/low double digits as more rentals come online and expenses normalize .
• Capital flexibility is a differentiator: Q3 equity raises fully reloaded liquidity; 99.5% fixed debt, manageable 2025 maturities, and ample cash/revolver position UMH to fund ~800 rental homes in 2025 and pursue selective acquisitions .
• 2025 growth drivers are visible: rental conversions, inventory on site, expansions and potential self-storage adjacencies should lift revenue and NOI; target ~10% returns on rental home deployments .
• Guidance signals confidence: FY24 Normalized FFO/share tightened to $0.92–$0.94, implying a steady finish to 2024; monitor for 2025 guide with Q4 results .
• Watch optionality: solar shingles pilot may bolster affordability/resident value; NJ land JV and approvals could unlock longer-dated monetization above and beyond core MH communities .
• Trading setup: absent consensus comparisons, narrative catalysts include occupancy ramp, sequential NFFO/share growth, and 2025 deployment plans; risks skew to operating costs and timing/execution on home setups and refinancings .

Footnote: *S&P Global consensus estimates could not be retrieved due to access limits at time of analysis; therefore, no vs. consensus beat/miss is presented.