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UMH PROPERTIES, INC. (UMH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered steady operational growth: Total Income rose 9% year over year to $61.9M; Normalized FFO per share increased to $0.24 (+4% YoY) while GAAP diluted EPS was $0.00 given preferred dividends and non-operating items .
  • Community NOI grew 8% YoY to $31.1M; same‑property NOI rose 8% and same‑property occupancy improved 70 bps to 87.8% .
  • Management initiated 2025 Normalized FFO guidance of $0.96–$1.04 (midpoint $1.00), targeting ~7.5% YoY growth; strategy includes 5% rent increases and ~800 new rental homes, with refinancing under way at an expected 5.5%–5.75% mortgage rate range .
  • Stock catalysts: expanding acquisition pipeline (4 communities, 457 sites, ~5.5% blended cap rate), solar shingle initiative to reduce resident utility costs, and lower leverage (net debt/market cap 20.8%) supporting accretive growth .

What Went Well and What Went Wrong

What Went Well

  • Same‑property execution: “same‑property income increased by 8% and same‑property NOI increased by $11.5M, resulting in a 10% increase” for 2024, with Q4 same‑property NOI +8% YoY and occupancy +70 bps .
  • Sales strength: third consecutive all‑time sales record; 2024 gross sales $33.5M (+8% YoY), gross margin expanded to 35% (from 32%); rental home portfolio reached ~10,300 homes at 94% occupancy .
  • Balance sheet and coverage: net debt/market cap down to 20.8%, interest coverage 3.4x, fixed charge coverage 2.2x; 99% of debt fixed, weighted average interest rate 4.38% .

Selected quotes:

  • “Normalized FFO for the quarter was $0.24 per share… We are very proud of these results” .
  • “We anticipate obtaining our 5% rent increases and adding 800 new homes to our rental home portfolio” .
  • “We are in the process of refinancing these mortgages with Fannie Mae… under 6%, probably in the 5.5% to 5.75% range” .

What Went Wrong

  • GAAP EPS muted: diluted EPS at $0.00 in Q4; net income fell YoY due to lower other income (marketable securities fair value decreased by $2.3M) and higher operating/depreciation expenses .
  • Community operating costs up: expenses increased 8% in Q4 and 7% for the year, driven by payroll, taxes, insurance and utilities; G&A rose (year‑end bonuses), implying 6–7% same‑store expense growth expected in 2025 .
  • Securities portfolio drag: net realized loss on sale of securities for 2024 of $(3.78)M and Q4 fair value decrease of $(2.3)M impacted reported “other income” .

Financial Results

Quarterly Financial Summary

MetricQ2 2024Q3 2024Q4 2024
Total Income ($USD Millions)$60.328 $60.671 $61.873
Net Income Attributable to Common ($USD Millions)$0.527 $8.181 $0.028
Diluted EPS ($USD)$0.01 $0.11 $0.00
FFO per Diluted Share ($USD)$0.23 $0.23 $0.23
Normalized FFO per Diluted Share ($USD)$0.23 $0.24 $0.24

Q4 Revenue Composition and Operating Metrics (YoY)

MetricQ4 2023Q4 2024
Rental and Related Income ($USD Millions)$49.246 $53.259
Sales of Manufactured Homes ($USD Millions)$7.738 $8.614
Total Income ($USD Millions)$56.984 $61.873
Community Operating Expenses ($USD Millions)$20.548 $22.151
Community NOI ($USD Millions)$28.698 $31.108
Expense Ratio (%)41.7% 41.6%
Same‑Property NOI ($USD Millions)$29.836 $32.176

Margins

Margin MetricQ4 2023Q4 2024
Community NOI Margin % (1 − Expense Ratio)58.3% (calc from 41.7%) 58.4% (calc from 41.6%)
Adjusted EBITDA Margin % (Adj. EBITDA excl. Non‑Recurring / Total Income)47.7% (27.174/56.984) 48.1% (29.806/61.873)
Net Income Margin % (Net Income / Total Income)19.8% (11.254/56.984) 8.0% (4.980/61.873)

KPIs

KPIQ4 2023Q4 2024
Number of Communities135 139
Total Sites25,766 26,259
Occupied Sites22,330 22,611
Occupancy %86.7% 87.3%
Total Rentals9,969 10,333
Rental Occupancy %94.0% 94.0%
Monthly Rent Per Site ($)$519 $544
Monthly Rent Per Rental incl. Site ($)$933 $990
Number of Homes Sold (units)77 93
Rentals Added, net (units)92 80

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Normalized FFO per Diluted ShareFY 2024$0.92–$0.94 (midpoint $0.93) Actual delivered $0.93 Achieved prior guidance
Normalized FFO per Diluted ShareFY 2025N/A$0.96–$1.04 (midpoint $1.00) Initiated (raised vs FY24 actual)
Rent IncreaseFY 2025~5% (communicated mid‑2024) ~5% reaffirmed Maintained
Rentals AddedFY 2025N/A~800 homes New operational target
Same‑Store Expense GrowthFY 2025N/A6–7% expected New expectation
Mortgage Refi Rate1H 2025 maturitiesN/A~5.5%–5.75% expected New expectation
Common DividendOngoingRaised to $0.215/qtr in 2024 $0.215/qtr maintained entering 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Same‑Property GrowthNOI +11%; occupancy up 130 bps NOI +7%; occupancy up 70 bps NOI +8%; occupancy +70 bps Sustained double‑digit FY growth
Sales ExecutionGross margin up to 38%; sales +7% Sales +10%; pipeline strong All‑time sales record; $33.5M, 35% margin Ongoing strength; high‑end expansions opening
Acquisition PipelineN/AOpportunistic, equity raised near highs 4 communities under contract; 457 sites; ~5.5% cap rate Building pipeline; mix of stabilized and value‑add
Tariffs/Supply ChainN/AN/ANo major issues; ~8‑week backlog Stable supply situation
Financing & LeverageCredit facility expanded to $260M Equity raised to pay down LOC Refi with Fannie Mae; under 6% expected; net debt/market cap 20.8% Lower leverage; favorable GSE debt
Technology/SustainabilityN/AN/ASolar shingles pilot; third party owns roof; tenant bills decline Emerging initiative to lower resident costs
Regulatory/MacroN/AN/APotential financing law revisions to boost conversions to ownership Watch for policy catalysts

Management Commentary

  • Strategic focus: “UMH is pleased to deliver another quarter and year of increased FFO per share, double‑digit community NOI growth and a new all‑time high sales record” .
  • 2025 plan: “We anticipate obtaining our 5% rent increases and adding 800 new homes… We are initiating 2025 guidance with Normalized FFO in a range of $0.96–$1.04” .
  • Balance sheet discipline: “99% of our total debt is fixed rate… interest coverage was 3.4x and fixed charge coverage was 2.2x” .
  • Social mission and innovation: “We have championed the duplex manufactured home… pilot a solar home where solar shingles… installed at the factory” .
  • Acquisition economics: “These 4 communities… $39.2M total… blended cap rate ~5.5%; one Maryland property ~70% occupied with value‑add upside” .

Q&A Highlights

  • 2025 guidance drivers: “The big two are home sales and acquisitions” .
  • Mortgage refinancing: Fannie Mae refi under diligence; expected rates ~5.5%–5.75%; proceeds likely exceed balances .
  • Southern region occupancy: strong demand; infrastructure constraints vs velocity; Alabama/South Carolina assets nearing fill as improvements complete .
  • Rental home cost: typical single‑wide rental ~$70k–$75k all‑in; multi‑section ~$90k; prices stable vs COVID peaks .
  • Solar shingles economics: factory install ~<$15k borne by third party; lowers resident utility bill; UMH earns small roof use fee .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to SPGI daily limit constraints at time of retrieval. As a result, beat/miss analysis versus consensus cannot be assessed for this quarter using S&P Global data [GetEstimates errors].

Key Takeaways for Investors

  • Same‑property momentum supports 2025 EPS/FFO growth: rent increases (~5%) and occupancy gains should continue driving NOI and NFFO per share toward the $1.00 midpoint guidance .
  • Operational leverage with low fixed‑rate debt and improving coverage ratios provides flexibility for internal investments and acquisitions at attractive cap rates .
  • Sales and rental expansion are key upside levers; multiple expansions opening (Holiday Village, Duck River, Cinnamon Woods) can accelerate sales volume and rental adds beyond 2024 levels .
  • Watch near‑term margin headwinds: community expenses and G&A likely grow ~6–7% in 2025; execution on cost control and scale synergies will be important .
  • Potential policy tailwinds (financing law changes) and sustainability initiatives (solar shingles) could enhance conversion to ownership and reduce resident costs, supporting demand and pricing power .
  • Funding optionality intact: ATM equity/preferred access and GSE refinancing underpin growth while maintaining conservative leverage (net debt/market cap ~21%) .
  • Near‑term trading catalyst: confirmation of refi terms, acquisition closings and early‑year sales/rental velocity against 2025 guidance should drive sentiment and revisions .