UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20222023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________

 

Commission File Number 001-12690

 

UMH PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

 

Maryland 22-1890929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)

 

Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, NJ07728
(Address of Principal Executive 0ffices) (Zip Code)

 

Registrant’s telephone number, including area code (732) 577-9997

 

 

 

(Former name, former address and former fiscal year, if changed since last report.)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of exchange on which registered
Common Stock, $.10$0.10 par value UMH New York Stock Exchange
6.375% Series D Cumulative Redeemable Preferred Stock, $.10$0.10 par value UMH PRDPD New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No

 

Indicate the number of shares outstanding of each of the issuer’s classclasses of common stock, as of the latest practicable date:

 

Class Outstanding Common Shares as of August 1, 20222023
Common Stock, $.10$0.10 par value per share 54,694,97865,269,251

 

 

UMH PROPERTIES, INC. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTER ENDED JUNE 30, 20222023

 

Table of Contents

 

PART I - FINANCIAL INFORMATION 
Item 1.Financial1.Financial Statements
Consolidated Balance Sheets3
Consolidated Statements of Income (Loss)5
Consolidated Statements of Shareholders’ Equity6
Consolidated Statements of Cash Flows8
Notes To Consolidated Financial Statements9
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations2426
Item 3.Quantitative and Qualitative Disclosures About Market Risk3635
Item 4.Controls and Procedures3635
PART II - OTHER INFORMATION 
Item 1.Legal Proceedings3736
Item 1A.Risk Factors3736
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds3736
Item 3.Defaults Upon Senior Securities3736
Item 4.Mine Safety Disclosures3736
Item 5.Other Information3736
Item 6.Exhibits3836
SIGNATURES3937

2

UMH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 20222023 AND DECEMBER 31, 20212022

(in thousands except per share amounts)

 

 June 30, 2022 December 31, 2021  June 30, 2023 December 31, 2022 
 (Unaudited)    (Unaudited)   
- ASSETS -             
        
Investment Property and Equipment                
Land $79,326  $74,963  $89,604  $86,619 
Site and Land Improvements  739,241   716,211   862,276   846,218 
Buildings and Improvements  32,627   30,450   35,869   35,933 
Rental Homes and Accessories  395,988   383,467   478,595   422,818 
Total Investment Property  1,247,182   1,205,091   1,466,344   1,391,588 
Equipment and Vehicles  25,377   24,437   27,743   26,721 
Total Investment Property and Equipment  1,272,559   1,229,528   1,494,087   1,418,309 
Accumulated Depreciation  (338,825)  (316,073)  (389,012)  (363,098)
Net Investment Property and Equipment  933,734   913,455   1,105,075   1,055,211 
                
Other Assets                
Cash and Cash Equivalents  275,807   116,175   41,484   29,785 
Marketable Securities at Fair Value  46,932   113,748   36,701   42,178 
Inventory of Manufactured Homes  45,992   23,659   61,054   88,468 
Notes and Other Receivables, net  59,660   55,359   75,491   67,271 
Prepaid Expenses and Other Assets  19,045   17,135   15,033   20,011 
Land Development Costs  31,085   22,352   35,837   23,250 
Investment in Joint Venture  11,010   8,937   23,194   18,422 
Total Other Assets  489,531   357,365   288,794   289,385 
                
TOTAL ASSETS $1,423,265  $1,270,820  $1,393,869  $1,344,596 

 

See Accompanying Notes to Consolidated Financial Statements

 

3

UMH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – CONTINUED

AS OF JUNE 30, 20222023 AND DECEMBER 31, 20212022

(in thousands except per share amounts)

 June 30, 2022 December 31, 2021  June 30, 2023 December 31, 2022 
 (Unaudited)    (Unaudited)   
- LIABILITIES AND SHAREHOLDERS’ EQUITY -             
        
LIABILITIES:                
Mortgages Payable, net of unamortized debt issuance costs $468,811  $452,567  $444,797  $508,938 
                
Other Liabilities:                
Accounts Payable  4,572   4,274   6,704   6,387 
Loans Payable, net of unamortized debt issuance costs  58,375   46,757   182,434   153,531 
Series A Bonds, net of unamortized debt issuance costs  98,811   0   99,631   99,207 
Series C Preferred Stock Called for Redemption  247,100   0 
Accrued Liabilities and Deposits  15,548   17,162   13,318   16,852 
Tenant Security Deposits  8,153   7,920   9,118   8,485 
Total Other Liabilities  432,559   76,113   311,205   284,462 
Total Liabilities  901,370   528,680   756,002   793,400 
                
Commitments and Contingencies          -     
                
Shareholders’ Equity:                
Series C – 6.75% Cumulative Redeemable Preferred
Stock, $0.10
par value per share, 13,750 shares authorized; 9,884 shares issued and outstanding as of December 31, 2021
  0   247,100 
Series D – 6.375% Cumulative Redeemable Preferred
Stock, $0.10 par value per share, 9,300 shares authorized; 8,609 shares issued and outstanding as of June 30, 2022 and December 31, 2021
  215,219   215,219 
Common Stock - $0.10 par value per share; 144,164 shares authorized; 54,665 and 51,651 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively  5,467   5,165 
Excess Stock - $0.10 par value per share; 3,000 shares authorized; 0 shares issued or outstanding as of
June 30, 2022 and December 31, 2021
  0   0 
Series D – 6.375% Cumulative Redeemable Preferred Stock, $0.10 par value per share, 13,700 and 9,300 shares authorized as of June 30, 2023 and December 31, 2022, respectively; 10,601 and 9,015 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively  265,032   225,379 
Common Stock - $0.10 par value per share, 153,714 and 154,048 shares authorized as of June 30, 2023 and December 31, 2022, respectively; 63,072 and 57,595 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively  6,307   5,760 
Excess Stock - $0.10 par value per share, 3,000 shares authorized; no shares issued or outstanding as of June 30, 2023 and December 31, 2022  0   0 
Additional Paid-In Capital  326,573   300,020   389,736   343,189 
Undistributed Income (Accumulated Deficit)  (25,364)  (25,364)  (25,364)  (25,364)
Total UMH Properties, Inc. Shareholders’ Equity  635,711   548,964 
Non-Controlling Interest in Consolidated Subsidiaries  2,156   2,232 
Total Shareholders’ Equity  521,895   742,140   637,867   551,196 
                
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,423,265  $1,270,820  $1,393,869  $1,344,596 

 

See Accompanying Notes to Consolidated Financial Statements

4

 

UMH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 20222023 AND 20212022

(in thousands)thousands except per share amounts)

 

 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021  June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 
 THREE MONTHS ENDED SIX MONTHS ENDED  THREE MONTHS ENDED SIX MONTHS ENDED 
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021  June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 
                  
INCOME:                                
Rental and Related Income $42,229  $39,341  $83,806  $78,054  $47,063  $42,229  $92,368  $83,806 
Sales of Manufactured Homes  6,994   9,618   11,285   14,037   8,227   6,994   15,529   11,285 
Total Income  49,223   48,959   95,091   92,091   55,290   49,223   107,897   95,091 
                                
EXPENSES:                                
Community Operating Expenses  18,923   17,045   36,994   34,182   20,034   18,923   40,122   36,994 
Cost of Sales of Manufactured Homes  4,837   7,017   7,820   10,488   5,740   4,837   10,725   7,820 
Selling Expenses  1,214   1,362   2,369   2,493   1,665   1,214   3,477   2,369 
General and Administrative Expenses  4,300   3,339   8,198   6,780   5,181   4,300   10,163   8,198 
Depreciation Expense  11,984   11,184   23,701   22,192   13,751   11,984   27,124   23,701 
Total Expenses  41,258   39,947   79,082   76,135   46,371   41,258   91,611   79,082 
                                
OTHER INCOME (EXPENSE):                                
Interest Income  1,068   792   1,978   1,609   1,217   1,068   2,355   1,978 
Dividend Income  721   1,287   1,501   2,589   531   721   1,237   1,501 
Gain (Loss) on Sales of Marketable Securities, net  0   436   30,721   (294)  (1)  0   (43)  30,721 
Increase (Decrease) in Fair Value of Marketable
Securities
  (10,044)  9,291   (41,794)  19,510 
Decrease in Fair Value of Marketable Securities  (2,548)  (10,044)  (4,943)  (41,794)
Other Income  196   152   416   299   288   196   616   416 
Loss on Investment in Joint Venture  (136)  0   (257)  0   (175)  (136)  (480)  (257)
Interest Expense  (6,414)  (4,972)  (11,901)  (9,770)  (8,639)  (6,414)  (16,969)  (11,901)
Total Other Income (Expense)  (14,609)  6,986   (19,336)  13,943   (9,327)  (14,609)  (18,227)  (19,336)
                                
Income (Loss) before Gain (Loss) on Sales of Investment Property and Equipment  (6,644)  15,998   (3,327)  29,899 
Loss before Gain (Loss) on Sales of Investment Property and Equipment  (408)  (6,644)  (1,941)  (3,327)
Gain (Loss) on Sales of Investment Property and
Equipment
  (44)  5   (86)  (18)  5   (44)  37   (86)
Net Income (Loss)  (6,688)  16,003   (3,413)  29,881 
Less: Preferred Dividends  (7,600)  (7,600)  (15,200)  (14,639)
Less: Redemption of Preferred Stock  (8,190)  0   (8,190)  0 
Net Income (Loss) Attributable to Common Shareholders $(22,478) $8,403  $(26,803) $15,242 
Net Loss  (403)  (6,688)  (1,904)  (3,413)
Preferred Dividends  (4,051)  (7,600)  (7,887)  (15,200)
Loss Attributable to Non-Controlling Interest  36   0   76   0 
Redemption of Preferred Stock  0   (8,190)  0   (8,190)
Net Loss Attributable to Common Shareholders $(4,418) $(22,478) $(9,715) $(26,803)
                                
Net Income (Loss) Attributable to Common Shareholders Per Share – Basic and Diluted $(0.41) $0.18  $(0.50) $0.34 
Net Loss Attributable to Common Shareholders Per Share – Basic and Diluted $(0.07) $(0.41) $(0.16) $(0.50)
                                
Weighted Average Common Shares Outstanding:                                
Basic  54,215   45,476   53,224   44,056 
Diluted  54,215   46,628   53,224   45,008 
Basic and Diluted  61,236   54,215   60,186   53,224 

 

See Accompanying Notes to Consolidated Financial Statements

 

5

UMH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 20222023 AND 20212022

(in thousands)

 Number Amount Series C  Number  Amount  Series C  Series D 
 Common Stock  

Preferred

  Common Stock Preferred  

 

Preferred

 
 Issued and Outstanding Stock  Issued and Outstanding Stock Stock 
 Number  Amount  Series C  Series D 
         
Balance December 31, 2022  57,595  $5,760  $0  $225,379 
                
Common Stock Issued with the DRIP  164   15   0   0 
Common Stock Issued through Restricted Stock Awards  140   14   0   0 
Common Stock Issued through Stock Options  14   1   0   0 
Common Stock Issued in connection with At-The-Market Offerings, net  2,071   208   0   0 
Preferred Stock Issued in connection with At-The-Market Offerings, net  0   0   0   21,858 
Distributions  0   0   0   0 
Stock Compensation Expense  0   0   0   0 
Net Loss  0   0   0   0 
                
Balance March 31, 2023  59,984   5,998   0   247,237 
                
Common Stock Issued with the DRIP  151   15   0   0 
Common Stock Issued through Restricted Stock Awards  8   1   0   0 
Common Stock Issued through Stock Options  42   4   0   0 
Common Stock Issued in connection with At-The-Market Offerings, net  2,887   289   0   0 
Preferred Stock Issued in connection with At-The-Market Offerings, net  0   0   0   17,795 
Distributions  0   0   0   0 
Stock Compensation Expense  0   0   0   0 
Net Loss  0   0   0   0 
                
Balance June 30, 2023  63,072  $6,307  $0  $265,032 
 Number  Amount  Series C                 
                       
Balance December 31, 2021  51,651  $5,165  $247,100   51,651  $5,165  $247,100  $215,219 
                            
Common Stock Issued with the DRIP  72   7   0   72   7   0   0 
Common Stock Issued through Restricted Stock Awards  114   11   0   114   11   0   0 
Common Stock Issued through Stock Options  78   8   0   78   8   0   0 
Common Stock Issued in connection with At-The-Market Offerings, net  1,585   159   0   1,585   159   0   0 
Distributions  0   0   0   0   0   0   0 
Stock Compensation Expense  0   0   0   0   0   0   0 
Net Income  0   0   0   0   0   0   0 
                            
Balance March 31, 2022  53,500   5,350   247,100   53,500   5,350   247,100   215,219 
                            
Common Stock Issued with the DRIP  78   8   0   78   8   0   0 
Common Stock Issued through Restricted Stock Awards  4   0   0   4   0   0   0 
Common Stock Issued through Stock Options  226   23   0   226   23   0   0 
Common Stock Issued in connection with At-The-Market Offerings, net  857   86   0   857   86   0   0 
Preferred Stock Called for Redemption  0   0   (247,100)  0   0   (247,100)  0 
Distributions  0   0   0   0   0   0   0 
Stock Compensation Expense  0   0   0   0   0   0   0 
Net Loss  0   0   0   0   0   0   0 
                            
Balance June 30, 2022  54,665  $5,467  $0   54,665  $5,467  $0  $215,219 
            
Balance December 31, 2020  41,920  $4,192  $247,100 
            
Common Stock Issued with the DRIP  239   24   0 
Common Stock Issued through Restricted Stock Awards  297   30   0 
Common Stock Issued through Stock Options  215   21   0 
Common Stock Issued in connection with At-The-Market Offerings, net  352   35   0 
Preferred Stock Issued in connection with At-The-Market Offerings, net  0   0   0 
Distributions  0   0   0 
Stock Compensation Expense  0   0   0 
Net Income  0   0   0 
            
Balance March 31, 2021  43,023   4,302   247,100 
            
Common Stock Issued with the DRIP  70   7   0 
Common Stock Issued through Stock Options  400   40   0 
Common Stock Issued in connection with At-The-Market Offerings, net  3,894   390   0 
Preferred Stock Issued in connection with At-The-Market Offerings, net  0   0   0 
Distributions  0   0   0 
Stock Compensation Expense  0   0   0 
Net Income  0   0   0 
            
Balance June 30, 2021  47,387  $4,739  $247,100 

 

See Accompanying Notes to Consolidated Financial Statements

6

UMH PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 20222023 AND 20212022

(in thousands)

 

 

 

Preferred

Stock

 

 

Additional

Paid-In

 

Undistributed

Income

(Accumulated

  Total
Shareholders’
  Capital  Deficit)  Subsidiary  Equity 
 

 

Additional

Paid-In

 

Undistributed

Income

(Accumulated

 

Non-Controlling

Interest in

Consolidated

 

 

Total Shareholders’

 
 Capital  Deficit)  Subsidiary  Equity 
         
Balance December 31, 2022 $343,189  $(25,364) $2,232  $551,196 
                
Common Stock Issued with the DRIP  2,502   0   0   2,517 
Common Stock Issued through Restricted Stock Awards  (14)  0   0   0 
Common Stock Issued through Stock Options  136   0   0   137 
Common Stock Issued in connection with At-The-Market Offerings, net  34,080   0   0   34,288 
Preferred Stock Issued in connection with At-The-Market Offerings, net  (2,567)  0   0   19,291 
Distributions  (17,523)  1,461   0   (16,062)
Stock Compensation Expense  1,528   0   0   1,528 
Net Loss  0   (1,461)  (40)  (1,501)
                
Balance March 31, 2023  361,331   (25,364)  2,192   591,394 
                
Common Stock Issued with the DRIP  2,020   0   0   2,035 
Common Stock Issued through Restricted Stock Awards  (1)  0   0   0 
Common Stock Issued through Stock Options  409   0   0   413 
Common Stock Issued in connection with At-The-Market Offerings, net  43,870   0   0   44,159 
Preferred Stock Issued in connection with At-The-Market Offerings, net  (2,486)  0   0   15,309 
Distributions  (16,878)  367   0   (16,511)
Stock Compensation Expense  1,471   0   0   1,471 
Net Loss  0   (367)  (36)  (403)
                
Balance June 30, 2023 $389,736  $(25,364) $2,156  $637,867 
 Series D  Capital  Deficit)  Equity                 
                         
Balance December 31, 2021 $215,219  $300,020  $(25,364) $742,140  $300,020  $(25,364) $0  $742,140 
                                
Common Stock Issued with the DRIP  0   1,667   0   1,674   1,667   0   0   1,674 
Common Stock Issued through Restricted Stock Awards  0   (11)  0   0   (11)  0   0   0 
Common Stock Issued through Stock Options  0   985   0   993   985   0   0   993 
Common Stock Issued in connection with At-The-Market Offerings, net  0   38,210   0   38,369   38,210   0   0   38,369 
Distributions  0   (14,731)  (3,275)  (18,006)  (14,731)  (3,275)  0   (18,006)
Stock Compensation Expense  0   1,169   0   1,169   1,169   0   0   1,169 
Net Income  0   0   3,275   3,275   0   3,275   0   3,275 
                                
Balance March 31, 2022  215,219   327,309   (25,364)  769,614   327,309   (25,364)  0   769,614 
                                
Common Stock Issued with the DRIP  0   1,332   0   1,340   1,332   0   0   1,340 
Common Stock Issued through Restricted Stock Awards  0   0   0   0   0   0   0   0 
Common Stock Issued through Stock Options  0   2,197   0   2,220   2,197   0   0   2,220 
Common Stock Issued in connection with At-The-Market Offerings, net  0   19,781   0   19,867   19,781   0   0   19,867 
Preferred Stock Called for Redemption  0   8,185   (8,185)  (247,100)  8,185   (8,185)  0   (247,100)
Distributions  0   (33,363)  14,873   (18,490)  (33,363)  14,873   0   (18,490)
Stock Compensation Expense  0   1,132   0   1,132   1,132   0   0   1,132 
Net Loss  0   0   (6,688)  (6,688)  0   (6,688)  0   (6,688)
Net Income (loss)  0   (6,688)  0   (6,688)
                                
Balance June 30, 2022 $215,219  $326,573  $(25,364) $521,895  $326,573  $(25,364) $0  $521,895 
                
Balance December 31, 2020 $160,854  $115,026  $(25,364) $501,808 
                
Common Stock Issued with the DRIP  0   3,838   0   3,862 
Common Stock Issued through Restricted Stock Awards  0   (30)  0   0 
Common Stock Issued through Stock Options  0   2,567   0   2,588 
Common Stock Issued in connection with At-The-Market Offerings, net  0   6,550   0   6,585 
Preferred Stock Issued in connection with At-The-Market Offerings, net  31,591   (727)  0   30,864 
Distributions  0   (1,209)  (13,878)  (15,087)
Stock Compensation Expense  0   750   0   750 
Net Income  0   0   13,878   13,878 
                
Balance March 31, 2021  192,445   126,765   (25,364)  545,248 
                
Common Stock Issued with the DRIP  0   1,469   0   1,476 
Common Stock Issued through Stock Options  0   4,683   0   4,723 
Common Stock Issued in connection with At-The-Market Offerings, net  0   77,727   0   78,117 
Preferred Stock Issued in connection with At-The-Market Offerings, net  22,774   (425)  0   22,349 
Distributions  0   (226)  (16,003)  (16,229)
Stock Compensation Expense  0   774   0   774 
Net Income  0   0   16,003   16,003 
Net Income (Loss)  0   0   16,003   16,003 
                
Balance June 30, 2021 $215,219  $210,767  $(25,364) $652,461 

 

See Accompanying Notes to Consolidated Financial Statements

7

UMH PROPERTIES, INC. AND SUBSIDIARIESCONSOLIDATEDSUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

FOR THE SIX MONTHS ENDED

JUNE 30, 20222023 AND 20212022

(in thousands)

 

 June 30, 2022 June 30, 2021  June 30, 2023 June 30, 2022 
 SIX MONTHS ENDED  SIX MONTHS ENDED 
 June 30, 2022 June 30, 2021  June 30, 2023 June 30, 2022 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income (Loss) $(3,413) $29,881 
Non-Cash items included in Net Income (Loss):        
Net Loss $(1,904) $(3,413)
Non-Cash items included in Net Loss:        
Depreciation  23,701   22,192   27,124   23,701 
Amortization of Financing Costs  939   450   1,056   939 
Stock Compensation Expense  2,301   1,524   2,999   2,301 
Provision for Uncollectible Notes and Other Receivables  611   631   797   611 
(Gain) Loss on Sales of Marketable Securities, net  (30,721)  294   43   (30,721)
(Increase) Decrease in Fair Value of Marketable Securities  41,794   (19,510)
Loss on Sales of Investment Property and Equipment  86   18 
Decrease in Fair Value of Marketable Securities  4,943   41,794 
(Gain) Loss on Sales of Investment Property and Equipment  (37)  86 
Changes in Operating Assets and Liabilities:                
Inventory of Manufactured Homes  (22,333)  1,997   27,414   (22,333)
Notes and Other Receivables, net of notes acquired with acquisitions  (4,912)  (5,422)  (9,017)  (4,912)
Prepaid Expenses and Other Assets  (1,555)  589   1,591   (1,555)
Accounts Payable  298   1,224   317   298 
Accrued Liabilities and Deposits  (1,614)  (1,079)  (3,534)  (1,614)
Tenant Security Deposits  233   414   633   233 
Net Cash Provided by Operating Activities  5,415   33,203   52,425   5,415 
                
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of Manufactured Home Communities  (17,306)  (18,926)  (3,679)  (17,306)
Purchase of Investment Property and Equipment  (28,646)  (29,908)  (74,604)  (28,646)
Proceeds from Sales of Investment Property and Equipment  1,887   1,253   1,332   1,887 
Additions to Land Development Costs  (8,733)  (8,951)  (12,587)  (8,733)
Purchase of Marketable Securities  (10)  (9)  (11)  (10)
Proceeds from Sales of Marketable Securities  55,752   6,968   502   55,752 
Investment in Joint Venture  (2,073)  0   (4,772)  (2,073)
Net Cash Provided by (Used in) Investing Activities  871   (49,573)  (93,819)  871 
                
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from Mortgages  25,643   0   0   25,643 
Net Proceeds (Payments) from Short-Term Borrowings  11,493   (23,615)
Principal Payments of Mortgages  (8,787)  (5,597)
Net Proceeds from Short-Term Borrowings  29,527   11,493 
Principal Payments of Mortgages and Loans  (64,583)  (8,787)
Proceeds from Bonds Issuance  102,670   0   0   102,670 
Financing Costs on Debt  (5,285)  0   (814)  (5,285)
Proceeds from At-The-Market Preferred Equity Program, net of offering costs  0   53,213   34,600   0 
Proceeds from At-The-Market Common Equity Program, net of offering costs  58,236   84,702   78,447   58,236 
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments  1,498   3,553 
Proceeds from Issuance of Common Stock in the DRIP,
net of dividend reinvestments
  3,197   1,498 
Proceeds from Exercise of Stock Options  3,213   7,311   550   3,213 
Preferred Dividends Paid  (15,200)  (14,639)  (7,887)  (15,200)
Common Dividends Paid, net of Dividend Reinvestments  (19,780)  (14,892)
Common Dividends Paid, net of dividend reinvestments  (23,331)  (19,780)
Net Cash Provided by Financing Activities  153,701   90,036   49,706   153,701 
                
Net Increase in Cash, Cash Equivalents and Restricted Cash  159,987   73,666   8,312   159,987 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period  125,026   28,593   40,876   125,026 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 $285,013  $102,259  $49,188  $285,013 

See Accompanying Notes to Consolidated Financial Statements

 

8

 

UMH PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 20222023 (UNAUDITED)

 

NOTE 1 – ORGANIZATION AND ACCOUNTING POLICIES

 

UMH Properties, Inc., a Maryland corporation, and its subsidiaries (“we”, “our”, “us” or “the Company”) operates as a real estate investment trust (“REIT”) deriving its income primarily from real estate rental operations. The Company owns and operates 130135 manufactured home communities (including two communities acquired through its qualified opportunity zone fund (See Note 6)) containing approximately 24,40025,700 developed homesites as of June 30, 2022.2023. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Maryland, Alabama, South Carolina and South Carolina.Georgia. The Company also has an ownership interest in and operates one communitytwo communities in Florida through its joint venture with Nuveen Real Estate. The Company, through its wholly-owned taxable subsidiary, UMH Sales and Finance, Inc. (“S&F”), sells and finances manufactured homes to residents and prospective residents in our communities. The Company also holds a 77% percentage controlling interest in an opportunity zone fund which it created to acquire, develop and redevelop manufactured housing communities located in areas designated as Qualified Opportunity Zones by the Treasury Department to encourage long-term investment in economically distressed areas. Inherent in the operations of manufactured home communities are site vacancies. S&F was established to fill these vacancies and enhance the value of the communities. The Company also owns a portfolio of REIT securities which the Company generally limits to no more than approximately 15% of its undepreciated assets. The consolidated financial statements of the Company include S&F, and all of its other wholly-owned subsidiaries.subsidiaries and its qualified opportunity zone fund. All intercompany transactions and balances have been eliminated in consolidation.

 

The Company has elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code (the “Code”) and intends to maintain its qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Company will not be taxed under federal and certain state income tax laws at the corporate level on taxable income that it distributes to its shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. The Company is subject to franchise taxes in some of the states in which the Company owns property.

 

The interim consolidated financial statements furnished herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 20222023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021.2022.

9

 

Use of Estimates

 

In preparing the consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as contingent assets and liabilities as of the dates of the consolidated balance sheets and revenue and expenses for the years then ended. These estimates and assumptions include the allowance for doubtful accounts, valuation of inventory, depreciation, valuation of securities, accounting for land development, reserves and accruals, and stock compensation expense. Actual results could differ from these estimates and assumptions.

9

 

Reclassifications

 

Certain amounts in the financial statements for the prior periods have been reclassified to conform to the statement presentation for the current periods.

 

Investment in Joint Venture

 

The Company accounts for its investment in its joint venture with Nuveen Real Estate under the equity method of accounting in accordance with ASC 323, Investments – Equity Method and Joint Ventures. The Company has the ability to exercise significant influence, but not control, over the operating and financial decisions of the joint venture. Under the equity method of accounting, the cost of an investment is adjusted for the Company’s share of the equity in net income or loss from the date of acquisition, reduced by distributions received and increased by contributions made. The income or loss is allocated in accordance with the provisions of the operating agreement. The carrying value of the investment in the joint venture is reviewed for other than temporary impairment whenever events or changes in circumstances indicate a possible impairment. Financial condition, operational performance, and other economic trends are among the factors that are considered in evaluation of the existence of impairment indicators (See Note 5).

 

Leases

 

We account for our leases under ASC 842, “Leases.” Our primary source of revenue is generated from lease agreements for our sites and homes, where we are the lessor. These leases are generally for one-year or month-to-month terms and renewable by mutual agreement from us and the resident, or in some cases, as provided by jurisdictional statute.

 

We are the lessee in other arrangements, primarily for our corporate office and a ground lease at one community. As of June 30, 2023 and December 31, 2022, the right-of-use assets and corresponding lease liabilities of $3.4 million and $3.6 million, respectively, are included in prepaid expenses and other assets and accrued liabilities and deposits on the consolidated balance sheets.

 

10

 

Future minimum lease payments under these leases over the remaining lease terms are as follows (in thousands):

 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTSPAYMENT

        
2022 $207 
2023  391  $230 
2024  391   460 
2025  391   460 
2026  391   460 
2027  257 
Thereafter  19,123   18,614 
        
Total Lease Payments $20,894  $20,481 

 

The weighted average remaining lease term for these leases is 164.8161 years. The right of use assets and lease liabilities werewas calculated using an interest rate of 5%.

 

Restricted Cash

 

The Company’s restricted cash consists of amounts primarily held in deposit for tax, insurance and repair escrows held by lenders in accordance with certain debt agreements. Restricted cash is included in prepaid expenses and other assets on the consolidated balance sheets.

 

The following table reconcilespresents beginning of period and end of period balances of cash, cash equivalents and restricted cash for the periods shown (in thousands):

SCHEDULE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

         
 6/30/22 12/31/21 6/30/21 12/31/20  6/30/23 12/31/22 6/30/22 12/31/21 
                  
Cash and Cash Equivalents $275,807  $116,175  $90,096  $15,336  $41,484  $29,785  $275,807  $116,175 
Restricted Cash  9,206   8,851   12,163   13,257   7,704   11,091   9,206   8,851 
Cash, Cash Equivalents And Restricted Cash $285,013  $125,026  $102,259  $28,593  $49,188  $40,876  $285,013  $125,026 

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)” (ASC 606). For transactions in the scope of ASC 606, we recognize revenue when control of goods or services transfers to the customer, in the amount that we expect to receive for the transfer of goods or provision of services.

 

Rental and related income is generated from lease agreements for our sites and homes. The lease component of these agreements is accounted for under ASC 842 “Leases.” The non-lease components of our lease agreements consist primarily of utility reimbursements, which are accounted for with the site lease as a single lease under ASC 842.

 

11

 

Revenue from sales of manufactured homes is recognized in accordance with the core principle of ASC 606, at the time of closing when control of the home transfers to the customer. After closing of the sale transaction, we generally have no remaining performance obligation.

 

Interest income is primarily from notes receivables for the previous sales of manufactured homes. Interest income on these receivables is accrued based on the unpaid principal balances of the underlying loans on a level yield basis over the life of the loans.

 

Dividend income and gain (loss) on sales of marketable securities are from our investments in marketable securities and are presented separately but are not in the scope of ASC 606.

 

Other income primarily consists of brokerage commissions for arranging for the sale of a home by a third party and other miscellaneous income. This income is recognized when the transactions are completed and our performance obligations have been fulfilled.

 

Notes Receivables

 

On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. As of June 30, 20222023 and 2021,December 31, 2022, the Company had notes receivable of $56.171.4 million and $48.263.0 million, net of the fair value adjustment of $1.11.5 million and $1.01.3 million, respectively. Notes receivablereceivables are presented as a component of notes and other receivables, net on our consolidated balance sheets. These receivables represent balances owed to us for previously completed performance obligations for sales of manufactured homes.

 

Other Recent Accounting Pronouncements

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

 

NOTE 2 – NET INCOME (LOSS) PER SHARE

 

Basic Net Income (Loss) per Share is calculated by dividing Net Income (Loss) by the weighted average shares outstanding for the period. Diluted Net Income (Loss) per Share is calculated by dividing Net Income (Loss) less Income (Loss) Attributable to Non-Controlling Interest by the weighted average number of common shares outstanding, and when dilutive, the potential net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. In periods with a net loss, the diluted loss per share equals the basic loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive.

12

For the three and six months ended June 30, 2022,2023, common stock equivalents resulting from employee stock options to purchaseof 3.5524,000 million shares of common stockand 658,000 shares, respectively, were excluded from the computation of Diluted Net Income (Loss)Loss per Share as their effect would be anti-dilutive. For the three and six months ended June 30, 2021,2022, common stock equivalents resulting from employee stock options to purchaseof 955,000 shares and 2.81.0 million shares, of common stock amounted to 1.2 million and 952,000 shares, respectively, which were included inexcluded from the computation of Diluted Net Income (Loss)Loss per Share.Share as their effect would be anti-dilutive.

12

 

NOTE 3 – INVESTMENT PROPERTY AND EQUIPMENT

 

Acquisitions

 

On March 31, 2022,January 19, 2023, the Company acquired Center Manor,Mighty Oak, a newly developed manufactured home community located in Monaca, Pennsylvania,Albany, Georgia, for approximately $5.83.7 million.million, through its qualified opportunity zone fund (See Note 6). This community contains a total of 96118 newly developed homesites that are situated on approximately 1826 total acres. At the date of acquisition, the average occupancy for this community was approximately 83%.

On May 3, 2022, the Company acquired Mandell Trails, located in Butler, Pennsylvania, for approximately $7.4 million. This community contains a total of 132 developed homesites that are situated on approximately 65 total acres. At the date of acquisition, the average occupancy for this community was approximately 70%.

On May 25, 2022, the Company acquired La Vista Estates, located in Dothan, Alabama, for approximately $3.9 million. This community contains a total of 139 developed homesites that are situated on approximately 36 total acres. At the date of acquisition, the average occupancy for this community was approximately 6%.

 

The Company has evaluated these acquisitionsthis acquisition and has determined that theyit should be accounted for as acquisitionsan acquisition of assets. As such, we have allocated the total cash consideration, including transaction costs of approximately $253,00029,000 for the six months ended June 30, 2022,2023, to the individual assets acquired on a relative fair value basis. The following table summarizes our purchase price allocation for the assets acquired for the six months ended June 30, 20222023 (in thousands):

 SCHEDULE OF ESTIMATED FAIR VALUE OF ASSETS ACQUIRED

    
 At Acquisition Date  At Acquisition Date 
Assets Acquired:        
Land $3,431  $234 
Depreciable Property  13,875   3,445 
Total Assets Acquired $17,306  $3,679 

 

See Note 1314 for the Unaudited Pro Forma Financial Information relating to these acquisitions.this acquisition.

The Company’s business plan includes the purchase of value-add communities, redevelopment, development and expansion of communities. The Company capitalizes payroll for those individuals responsible for and who spend their time on the execution and supervision of development activities and capital projects. Salaries and benefits capitalized to land development were approximately $1.6 million for the six months ended June 30, 2022.

13

 

NOTE 4 – MARKETABLE SECURITIES

 

The Company’s marketable securities consist primarily of marketable common and preferred stock of other REITs with a fair value of $46.936.7 million as of June 30, 2022,2023, which represents 2.72.1% of undepreciated assets. The Company generally limitsdoes not intend to increase its investmentinvestments in marketablethis REIT securities to no more than approximately 15% of its undepreciated assets.portfolio. The REIT securities portfolio provides the Company with additional liquidity and additional income and serves as a proxy for real estate when more favorable risk adjusted returns are not available.

 

As of December 31, 2021, the Company’s securities portfolio included 2.7 million shares of common stock of Monmouth Real Estate Investment Corporation (“MREIC”), representing 2.7% of the total MREIC shares outstanding. The Company’s Chairman of the Board was also the Chairman of MREIC and there were three other Company Directors who were also directors and shareholders of MREIC. In February 2022, MREIC was acquired by a third party pursuant to an all-cash merger approved by the shareholders of MREIC, which resulted in the Company and MREIC’s other shareholders receiving a cash payment of $21.00 per share in cancellation of their MREIC common shares. The merger consideration received by the Company on February 28, 2022 for its 2.7 million shares of MREIC common stock totaled approximately $55.7 million. These shares had been acquired by the Company at a cost of approximately $25 million, which resulted in a gain of approximately $30.7 million.

As of June 30, 2022,2023, the Company had total net unrealized losses of $56.141.1 million in its REIT securities portfolio. For the three and six months ended June 30, 2022,2023, the Company recorded a decrease of $10.02.5 million and $41.84.9 million, respectively, in the fair value of these marketable securities, as the gain on the MREIC common stock became realized as a result of the MREIC merger.securities. The Company held fourteenten securities that had unrealized losses as of June 30, 2022.2023.

13

 

NOTE 5- INVESTMENT IN JOINT VENTURE

 

OnIn December 8, 2021, the Company and Teachers Insurance and Annuity Association of America, through Nuveen Real Estate a part of Nuveen Global Investments LLC(its asset management division) (“Nuveen” or “Nuveen Real Estate”), established a joint venture for the purpose of acquiring manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The terms of the joint venture are set forth in a Limited Liability Company Agreement dated as of December 8, 2021 (the “LLC Agreement”) entered into between a wholly owned subsidiary of the Company and an affiliate of Nuveen. The LLC Agreement provides for the parties to initially fund up to $70million of equity capital for acquisitions during a 24-month commitment period, with Nuveen having the option, subject to certain conditions, to elect to increase the parties’ total commitments by up to an additional $100million and to extend the commitment period for up to an additional four years. CommittedThe LLC Agreement calls for committed capital to be funded 60% by Nuveen and 40% by the Company on a parity basis. The Company serves as managing member of the joint venture and is responsible for day-to-day operations of the joint venture and management of its properties, subject to obtaining approval of Nuveen Real Estate for major decisions (including investments, dispositions, financings, major capital expenditures and annual budgets). The Company receives property management and other fees from the joint venture. In addition, once each member of the joint venture has recouped its invested capital and received a 7.5% net unlevered internal rate of return. The remaining 80% available for distribution will be allocated pro rata in accordance with each member’s respective percentage interest. The Company will be entitled to receive a promote percentage on the remaining 20% available for distribution.

The Company and Nuveen are continuing to seek opportunities to acquire additional manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The Company and Nuveen have informally agreed that any future acquisitions would be made by one or more new joint venture entities to be formed for that purpose and that the existing joint venture entity formed in December 2021 will not consummate additional acquisitions but will maintain its existing property portfolio, consisting of the Sebring Square and Rum Runner communities. While the terms and conditions of such new joint venture entities have not been fully negotiated, it is expected that invested capital would continue to be funded 60% by Nuveen and 40% by the Company on a parity basis and that other terms would be similar to those of the existing joint venture, except that the amounts of the parties’ respective capital commitments will be determined on a property-by-property basis. References in this report to the Company’s joint venture with Nuveen are intended to refer to our ongoing relationship with Nuveen.

 

OnUnder the terms of the LLC Agreement, after December 22,8, 2024 or, if later, the second anniversary of the joint venture’s acquisition and placing in service of a manufactured housing or recreational vehicle community, Nuveen will have a right to initiate the sale of one or more of the communities owned by the joint venture. If Nuveen elects to initiate such a sale process, the Company may exercise a right of first refusal to acquire Nuveen’s interest in the community or communities to be sold for a purchase price corresponding to the greater of the appraised value of such communities or the amount required to provide a 7.5% net unlevered internal rate of return on Nuveen’s investment. In addition, the Company will have the right to buy out Nuveen’s interest in the joint venture at any time after December 8, 2031 at a purchase price corresponding to the greater of the appraised value of the portfolio or the amount required to provide a 7.5% net unlevered internal rate of return on Nuveen’s investment.

The LLC Agreement between the Company and Nuveen provides that until the capital contributions to the joint venture are fully funded or the joint venture is terminated, the joint venture will be the exclusive vehicle for the Company to acquire any manufactured housing communities and/or recreational vehicle communities that meet the joint venture’s investment guidelines. These guidelines call for the joint venture to acquire manufactured housing and recreational vehicle communities that have been developed within the previous two years and are less than 20% occupied, are located in certain geographic markets, are projected to meet certain cash flow and internal rate of return targets, and satisfy certain other criteria. The Company has agreed to offer Nuveen the opportunity to have the joint venture acquire any manufactured housing community or recreational vehicle community that meets these investment guidelines. If Nuveen determines not to pursue or approve any such acquisition, the Company would be permitted to acquire the property outside the joint venture. Since formation of the joint venture, Nuveen has provided the Company with written waivers of the exclusivity provision of the LLC Agreement with regard to two property acquisitions that may have fit the investment guidelines of the joint venture, which permitted the Company to acquire them outside of the Nuveen joint venture. Except for investment opportunities that are offered to and declined by Nuveen, the Company is prohibited from developing, owning, operating or managing manufactured housing communities or recreational vehicle communities within a 10-mile radius of any community owned by the joint venture. However, this restriction does not apply with respect to investments by the Company in existing communities operated by the Company.

14

The LLC Agreement provides that Nuveen will have the right to remove and replace the Company as managing member of the joint venture and manager of the joint venture’s properties if the Company breaches certain obligations or certain events occur. Upon such removal, Nuveen may elect to buy out the Company’s interest in the joint venture at 98% of the value of the Company’s interest in the joint venture. If Nuveen does not exercise such buy-out right, the Company may, at specified times, elect to initiate a sale of the communities owned by the joint venture, subject to a right of first refusal on the part of Nuveen. The LLC Agreement contains restrictions on a party’s right to transfer its interest in the joint venture without the approval of the other party.

The LLC Agreement requires the Company to offer Nuveen the opportunity to have the joint venture acquire a manufactured housing community or recreational vehicle community that meets the investment guidelines. If Nuveen decides not to acquire the community through the joint venture, however, the Company is free to purchase the community on its own outside of the joint venture.

In December 2021, the Company, through its joint venture with Nuveen Real Estate, closed on the acquisition of Sebring Square, a newly developed all-age, manufactured home community located in Sebring, Florida, for a total purchase price of $22.2 million. This community contains 219 developed homesites. It ishomesites situated on approximately 39 acres. On December 23, 2022, the joint venture closed on the acquisition of Rum Runner, a newly developed all-age, manufactured home community also located in Sebring, Florida for a total purchase price of $15.1 million. This community contains 144 developed homesites. situated on approximately 20 acres. The Company manages this communitythese communities on behalf of the joint venture.

 

14

References in this report to the Company’s joint venture with Nuveen are intended to refer to our ongoing relationship with Nuveen.

 

The Company accounts for this joint venture with Nuveen Real Estate under the equity method of accounting in accordance with ASC 323, “Investments – Equity Method and Joint Ventures”.

15

NOTE 6 - OPPORTUNITY ZONE FUND

In July 2022, the Company invested $8.0 million, representing a portion of the capital gain the Company recognized from its investment in Monmouth Real Estate Investment Corp. (“MREIC”), which was acquired by merger in February 2022, in UMH OZ Fund, LLC (“OZ Fund”), a new entity formed by the Company. The OZ Fund was created to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The OZ Fund was designed to allow the Company and other investors in the OZ Fund to defer the tax on recently realized capital gains reinvested in the OZ Fund until December 31, 2026 and to potentially obtain certain other tax benefits. UMH manages the OZ Fund and will receive certain management fees as well as a 15% carried interest in distributions by the OZ Fund to the other investors (subject to first returning investor capital with a 5% preferred return). UMH will have a right of first offer to purchase the communities from the OZ Fund at the time of sale at their then-current appraised value. On August 10, 2022, the Company, through the OZ Fund, acquired Garden View, located in Orangeburg, South Carolina, for approximately $5.2 million. On January 19, 2023, the Company, through the OZ Fund, acquired Mighty Oak, located in Albany, Georgia, for approximately $3.7 million (See Note 3). As of June 30, 2023, the Company’s investment in the OZ Fund represented 77% of the total capital contributed to the OZ Fund and is consolidated in the Company’s Consolidated Financial Statements. Other investors in the OZ Fund include certain officers, directors and employees of the Company.

 

NOTE 67LOANS AND MORTGAGES PAYABLE AND OTHER LONG-TERM INDEBTEDNESS

 

Unsecured Line of Credit

 

On November 29, 2018,7, 2022, the Company entered into a First Amendment tothe Second Amended and Restated Credit Agreement (the “Amendment”) to expand and extend its existing unsecured revolving credit facility (the “Facility”). The expanded Facility is syndicated with two banks, led by BMO Capital Markets Corp. (“BMO”),and JPMorgan, as sole lead arrangerjoint arrangers and solejoint book runner,runners, with Bank of Montreal as administrative agent and includes JPMorgan Chase Bank, N.A. (“J.P. Morgan”) as the sole syndication agent. The Amendment providedSecond Amended Credit Agreement provides for an increase from $5075 million in available borrowings to $75100 million in available borrowings with a $50400 million accordion feature, bringing the total potential availability up to $125500 million, subject to certain conditions including obtaining commitments from additional lenders. The AmendmentSecond Amended Credit Agreement also extendedextends the maturity date of the Facility from March 27, 2020 to November 29, 2022 to November 7, 2026, with a further one-year extension available at the Company’s option, subject to certain conditions including payment of an extension fee. Availability under the amended Facility is limited to 60% of the value of the unencumbered communities which the Company has placed in the Facility’s unencumbered asset pool (“Borrowing Base”). The Amendment increased the value of the Borrowing Base communities by reducing theis based on a capitalization rate of 6.5% applied to the Net Operating Income (“NOI”) generated by the communities in the Borrowing Base from 7.5%Base. Interest rates on borrowings are based on the Company’s overall leverage ratio and are equal to 7.0%the Secured Overnight Financing Rate (“SOFR”) plus 1.50% to 2.20%, or BMO’s prime lending rate plus 0.50% to 1.20%.

On February 5, 2021,24, 2023, the Company entered into a Second Amendmentamended its unsecured line of credit to Amended and Restated Credit Agreement with BMOexpand available borrowings from $100 million to further reduce the capitalization rate from 7.0% to 6.5%.$180 million. As of June 30, 2022,2023, the amount outstanding under the Facility was $25100 million and the interest rate was 2.627.04%.

16

Loans Payable

 

The following is a summary of our loans payable as of June 30, 20222023 and December 31, 20212022 (in thousands):

 

SCHEDULE OF LOANS PAYABLE

 6/30/2022 12/31/2021  6/30/2023 12/31/2022 
 Amount Rate Amount Rate  Amount Rate Amount Rate 
                  
Margin Loan $0   N/A  $0   N/A 
Unsecured line of credit $25,000   2.62% $25,000   1.60%  100,000   7.04%  75,000   5.88%
Floorplan inventory financing  22,438   4.85%  10,945   4.38%  38,763   8.80%  64,126   7.70%
FirstBank rental home financing  5,000   3.50%  5,000   3.50%  24,990   6.15%  5,100   6.50%
OceanFirst notes receivable financing  6,000   4.00%  6,000   3.25%  20,000   8.25%  10,000   7.50%
Total Loans Payable  58,438   3.69%  46,945   2.66%  183,753   7.42%  154,226   6.76%
Unamortized debt issuance costs  (63)      (188)      (1,319)      (695)    
Loans Payable, net of unamortized debt issuance costs $58,375   3.70% $46,757   2.67% $182,434   7.48% $153,531   6.79%

 

15

On March 9, 2023, the Company entered into a $30 million revolving line of credit with Triad Financial Services (“Triad”) secured by rental homes and rental home leases, with an interest rate of prime plus 0.25%, with a minimum of 5%.

On May 12, 2023, the Company entered into a $25 million term loan with FirstBank. The term loan has a 5-year term with a fixed interest rate of 6.15%. The term loan is secured by rental homes, and their leases, in various communities throughout our portfolio. Additionally, the Company entered into a new $25 million line of credit secured by rental homes and their leases. This new line of credit also has a 5-year term and has a variable rate tied to Prime.

On July 19, 2023, the Company expanded and extended its revolving line of credit with OceanFirst Bank (See Note 13).

 

Series A Bonds

 

On February 6, 2022, the Company issued $102.7 million of its new 4.72% Series A Bonds due 2027, or the 2027 Bonds, in an offering to investors in Israel. The Company received $98.7 million, net of offering expenses. The 2027 Bonds are unsecured obligations of the Company denominated in Israeli shekels (NIS) and were issued pursuant to a Deed of Trust dated January 31, 2022 between the Company and Reznik Paz Nevo Trusts Ltd., an Israeli trust company, as trustee. The 2027 Bonds pay interest at a rate of 4.72% per year. Interest on the 2027 Bonds is payable semi-annually on August 31, 2022, and on February 28 and August 31 of the years 2023-2026 (inclusive) and on the final maturity date of February 28, 2027. The principal and interest will be linked to the U.S. Dollar. In the event of a future downgrade by two or more notches in the rating of the 2027 Bonds or a failure by the Company to comply with certain covenants in the Deed of Trust, the interest rate on the 2027 Bonds will be subject to increase. However, any such increases, in the aggregate, would not exceed 1.25% per annum. As of June 30, 2022,2023, the Company is in compliance with these covenants.

17

 

Under the Deed of Trust, the Company has the right to redeem the 2027 Bonds, in whole or in part, at any time on or after 60 days from February 9, 2022, the date on which the 2027 Bonds were listed for trading on the Tel Aviv Stock Exchange (the “TASE”). Any such voluntary early redemption by the Company will require payment of the applicable early redemption amount calculated in accordance with the Deed of Trust. The Company does not currently intend to redeem the 2027 Bonds. Upon the occurrence of an event of default or certain other events, including a delisting of the 2027 Bonds by the TASE, the Company may be required to affecteffect an early repayment or redemption of all or a portion of the 2027 Bonds at their par value plus accrued and unpaid interest. The Deed of Trust permits the Company, subject to certain conditions, to issue additional 2027 Bonds without obtaining approval of the holders of the 2027 Bonds.

 

The 2027 Bonds are general unsecured obligations of the Company and rank equal in right of payment with all of the Company’s existing and future unsecured indebtedness. The Deed of Trust includes certain customary covenants, including financial covenants requiring the Company to maintain certain ratios of debt to net operating income, to shareholdersshareholders’ equity and to earnings, and customary events of default. The 2027 Bonds were offered solely to investors outside the United States and were not offered to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act of 1933).

 

16

Mortgages Payable

 

The following is a summary of our mortgages payable as of June 30, 20222023 and December 31, 20212022 (in thousands):

SCHEDULE OF MORTGAGES PAYABLE

  6/30/2022  12/31/2021 
  Amount  Rate  Amount  Rate 
             
Fixed rate mortgages $473,559   3.77% $456,702   3.75%
Unamortized debt issuance costs  (4,748)      (4,135)    
Mortgages Payable, net of unamortized debt issuance costs $468,811   3.81% $452,567   3.79%

In August 2020, the Company financed 28 of its previously unencumbered communities, containing approximately 4,100 sites, under a Federal National Mortgage Association (“Fannie Mae”) credit facility through Wells Fargo Bank, N.A. for total proceeds of approximately $106 million. On March 15, 2022, the Company completed the addition of approximately 1,100 homes to this credit facility for total proceeds of approximately $25.6 million. This addition is coterminous with the remaining term of the existing facility, which matures in 2030. Interest is at a fixed rate of 4.25%.

  6/30/2023  12/31/2022 
  Amount  Rate  Amount  Rate 
             
Fixed rate mortgages $449,126   3.88% $513,709   3.93%
Unamortized debt issuance costs  (4,329)      (4,771)    
Mortgages Payable, net of unamortized debt issuance costs $444,797   3.92% $508,938   3.97%

 

As of June 30, 20222023 and December 31, 2021,2022, the weighted average loan maturity of mortgages payable was 4.95.2 years and 5.25.1 years, respectively.

18

 

NOTE 78 - SHAREHOLDERS’ EQUITY

 

Common Stock

 

On February 8, 2022,January 11, 2023, the Board of Directors approved a 2.5% increase in the Company’s quarterly common stock was approved for listing ondividend, raising it to $0.205 per share from $0.20 per share, representing a 2.5% increase. Over the TASE. Trading ofpast three years the common stock onCompany has increased the TASE began on February 9, 2022. The Company’s common stock continues to be listed on the NYSE.dividend by 14%.

 

On June 15, 2022,2023, the Company paid total cash dividends of $10.912.5 million or $0.200.205 per share to common shareholders of record as of the close of business on May 16, 2022,15, 2023, of which $605,000701,000 was reinvested in the Dividend Reinvestment and Stock Purchase Plan (“DRIP”). On July 1, 2022,3, 2023, the Company declared a dividend of $0.200.205 per share to be paid September 15, 20222023 to common shareholders of record as of the close of business on August 15, 20222023.

 

During the six months ended June 30, 2022,2023, the Company received, including dividends reinvested of $1.51.4 million, a total of $3.04.6 million from its DRIP. There were 150,000315,000 shares issued under the DRIP during this period.

 

On January 12, 2022,11, 2023, the Board of Directors reaffirmed our Common Stock Repurchase Program (the “Repurchase Program”) that authorizes us to repurchase up to $25 million in the aggregate of the Company’s common stock. Purchases under the Repurchase Program may be made using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program does not require the Company to acquire any particular amount of common stock and may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. For the three and six months ended June 30, 2022,2023, the Company did not repurchase any shares of its Common Stock.common stock.

17

 

Common Stock At-The-Market Sales Programs

 

On August 16, 2021,March 7, 2022, the Company entered into an Equity Distribution Agreement (the “2021“2022 Common ATM Program”) with BMO Capital Markets Corp., J.P. Morgan Securities LLC, B. Riley Securities, Inc., Compass Point Research & Trading, LLC and Janney Montgomery Scott LLC, as distribution agents (the “Distribution Agents”) under which the Company was permitted to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $100 million from time to time through the Distribution Agents. Sales of the shares of Common Stock under the 2021 Common ATM Program were made in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE or on any other existing trading market for the Common Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. In January 2022, 300,000 shares of Common Stock were issued and sold under the 2021 Common ATM Program at a weighted average price of $26.82 per share, generating gross proceeds of $8.0 million and net proceeds of $7.9 million, after offering expenses. Following the sales of Common Stock during 2021 and January 2022 under the 2021 Common ATM Program, no additional shares remained available for sale under the 2021 Common ATM Program.

On March 7, 2022, the Company entered into a new Equity Distribution Agreement (the “2022 Common ATM Program”) with the Distribution Agents under which the Company may offer and sell shares of the Company’s Common Stock,common stock, $0.10 par value per share (the “Common Stock”), having an aggregate sales price of up to $150 million from time to time through the Distribution Agents, as agents or principals. Sales of the shares of Common Stock under the 2022 Common ATM Program are made in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the New York Stock Exchange (the “NYSE”) or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. The Distribution Agents are not required to sell any specific number or dollar amount of securities, but will use commercially reasonable efforts consistent with their normal trading and sales practices, on mutually agreed terms between the Distribution Agents and the Company. For the six months ended June 30, 2023, 2.1 million shares of Common Stock were issued and sold at a weighted average price of $16.77 per share, generating gross proceeds of $35.6 million and net proceeds of $35.1 million, after offering expenses.

19

On April 4, 2023, the Company entered into a new equity distribution agreement (the “2023 Common ATM Program”) with the Distribution Agents and terminated the 2022 Common ATM Program. Under the 2023 Common ATM Program, the Company may offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million from time to time through the Distribution Agents, as agents or principals. Sales of the shares of Common Stock under the Distribution Agreement, if any, will be in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. The Distribution Agents are not required to sell any specific number or dollar amount of securities, but will use commercially reasonable efforts consistent with their normal trading and sales practices, on mutually agreed terms between the Distribution Agents and the Company. The Company began selling shares under the 20222023 Common ATM Program on March 8, 2022April 4, 2023 and through June 30, 2022,2023, 2.12.8 million shares of Common Stock were issued and sold at a weighted average price of $23.9415.62 per share, generating gross proceeds of $51.344.3 million and net proceeds of $50.343.3 million, after offering expenses.

Under both the 2022 Common ATM Program and the 2023 Common ATM Program, for the six months ended June 30, 2023, a total of 5 million shares of Common Stock were issued and sold at a weighted average price of $16.12 per share, generating gross proceeds of $79.9 million and net proceeds of $78.4 million, after offering expenses.

As of June 30, 2022,2023, $98.7105.7 million of common stock remained eligible for sale under the 20222023 Common ATM Program.

18

6.75% Series C Cumulative Redeemable Preferred Stock

On June 15, 2022, the Company paid $4.2 million in dividends or $0.421875 per share for the period from March 1, 2021 through May 31, 2022 to holders of record as of the close of business on May 16, 2022 of our 6.75% Series C Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share (“Series C Preferred Stock”). Dividends on our Series C Preferred Stock are cumulative and payable quarterly at an annual rate of $1.6875 per share.

On June 16, 2022, the Company issued a notice of redemption for its Series C Preferred Stock, pursuant to which all 9.9 million issued and outstanding shares of Series C Preferred Stock were redeemed on July 26, 2022 (the “Redemption Date”) at a redemption price equal to the $25.00 per share liquidation preference of the Series C Preferred Stock plus accrued and unpaid dividends to, but not including, the Redemption Date in an amount of $0.2578 per share, for a total payment of $25.2578 per share (the “Redemption Price”). As a result of our redemption notice, the Company recognized a preferred share redemption charge of approximately $8.2 million for the six months ended June 30, 2022, related to the original issuance costs. As of June 30, 2022, as a result of the redemption notice, the Series C Preferred Stock was reclassified out of Shareholders’ Equity and recorded as a liability on the Company’s Consolidated Balance Sheet. See Note 12 for additional detail.

 

6.375% Series D Cumulative Redeemable Preferred Stock

 

On June 15, 2022,2023, the Company paid $3.44.1 million in dividends or $0.3984375 per share for the period from March 1, 20222023 through May 31, 20222023 to holders of record as of the close of business on May 16, 202215, 2023 of our 6.375% Series D Cumulative Redeemable Preferred Stock, $0.10 par value per share, Liquidation Preference $25.00 per share (“Series D Preferred Stock”). Dividends on our Series D Preferred Stock are cumulative and payable quarterly at an annual rate of $1.59375 per share.

 

On July 1, 2022,3, 2023, the Company declared a dividend of $0.3984375 per share for the period from June 1, 20222023 through August 31, 20222023 to be paid on September 15, 2022 2023to Series D Preferred shareholders of record as of the close of business on August 15, 20222023.

Preferred Stock At-The-Market Sales Program

On July 22, 2020, the Company entered into a Preferred Stock At-The-Market Sales Program (the “2020 Preferred ATM Program”) with B. Riley Securities, Inc., as distribution agent (“B. Riley”), under which the Company may offer and sell shares of the Company’s Series C Preferred Stock and/or Series D Preferred Stock, having an aggregate sales price of up to $100 million. Sales of shares under the 2020 Preferred ATM Program are made in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the Series C Preferred Stock or Series D Preferred Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. Shares of Series C Preferred Stock and/or Series D Preferred Stock sold under the 2020 Preferred ATM Program are offered and sold pursuant to the Company’s 2020 Registration Statement and pursuant to the Company’s prospectus dated June 1, 2020 included in the 2020 Registration Statement and the related prospectus supplement dated July 22, 2020. The 2020 Preferred ATM Program replaced the Company’s previous at-the-market sales program for its Series C Preferred Stock and/or Series D Preferred Stock. On July 26, 2022, the Company redeemed all of its issued and outstanding shares of its Series C Preferred Stock and therefore, in light of the redemption, the Company does not intend to issue any new shares of Series C Preferred Stock. Accordingly any future sales under the 2020 Preferred ATM Program would solely be shares of Series D Preferred Stock. During the six months ended June 30, 2023, the Company issued and sold 126,000 shares of Series D Preferred Stock under the 2020 Preferred ATM Program at a weighted average price of $22.25 per share, generating total gross and net proceeds, of $2.8 million.

20

On January 10, 2023, the Company entered into a new At Market Issuance Sales Agreement (the “2023 Preferred ATM Program”) with B. Riley and terminated the use of the 2020 Preferred ATM Program. Under the 2023 Preferred ATM Program, the Company may offer and sell shares of the Company’s Series D Preferred Stock, having an aggregate sales price of up to $100 million from time to time through B. Riley, as agent or principal. Sales of the shares of Series D Preferred Stock in the 2023 Preferred ATM Program will be in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE or on any other existing trading market for the Series D Preferred Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. B. Riley is not required to sell any specific number or dollar amount of securities, but will use its commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between B. Riley and the Company. Since January 10, 2023, the Company issued and sold 1.5 million shares of its Series D Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $22.22 per share, generating gross proceeds of $32.4 million and net proceeds of $31.8 million, after offering expenses.

Under both the 2020 Preferred ATM Program and the 2023 Preferred ATM Program, for the six months ended June 30, 2023, a total of 1.6 million shares of Series D Preferred Stock were issued and sold at a weighted average price of $22.22 per share, generating gross proceeds of $35.2 million and net proceeds of $34.6 million, after offering expenses.

As of June 30, 2023, $67.6 million in shares of Series D Preferred Stock remained eligible for sale under the 2023 Preferred ATM Program.

 

NOTE 89STOCK BASED COMPENSATION

 

The Company accounts for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation costscost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $1.5 and $3.0 million have been recognized for the three and six months ended June 30, 2023, respectively, and $1.1 and $2.3 million have been recognized for the three and six months ended June 30, 2022, respectively, and $774,000 and $1.5 million have been recognized for the three and six months ended June 30, 2021, respectively.

 

19

On January 12, 2022,11, 2023, the Company awarded a total of 25,000 shares of restricted stock to five employees.employees under the Company’s Amended and Restated 2013 Incentive Award Plan (the “A&R 2013 Plan”). The grant date fair value of these restricted stock grants was $613,000413,000. These grants vest ratably over 5 years.

 

21

On January 12, 2022,11, 2023, the Company awarded a total of 5,5087,488 shares of common stock to nine members of our Board of Directors. The grant date fair value of these awards was $135,000124,000.

 

On March 23, 2022,21, 2023, the Company awarded a total of 5,5988,622 shares of common stock to nine members of our Board of Directors. The grant date fair value of these awards was $135,000124,000.

 

On March 25, 2022,21, 2023, the Company awarded a total of 78,00098,500 shares of restricted stock to two employees.employees, pursuant to their employment agreements. The grant date fair value of these restricted stock grants was $1.91.4 million. These grants vest ratably over 5 years.

 

On March 28, 2022,21, 2023, the Company granted options to purchase 470,8001.4 million shares of common stock to forty-five participants in the Company’s Amended and Restated 2013 Incentive Award Plan.sixty-nine participants. The grant date fair value of these options amounted to $2.14.2 million. These grants vest ratably over five years. Compensation costs for grants issued to a participant who is of retirement age are recognized at the time of the grant.

 

On June 15, 2022,14, 2023, the Company awarded a total of 3,9337,641 shares of common stock to nine members of our Board of Directors. The grant date fair value of these awards was $68,000124,000.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the six months ended June 30, 2022:2023:

 

SCHEDULE OF FAIR VALUE OF OPTION GRANT OF WEIGHTED-AVERAGE ASSUMPTIONS

  20222023 
    
Dividend yield  3.513.94%
Expected volatility  24.7927.14%
Risk-free interest rate  2.483.59%
Expected lives  10 
Estimated forfeitures  0 

 

During the six months ended June 30, 2022, fourteen2023, ten participants exercised options to purchase a total of 304,16056,000 shares of common stock at a weighted-average exercise price of $10.569.83 per share for total proceeds of $3.2550,000 million.. The aggregate intrinsic value of options exercised was $3.2361,000. During the six months ended June 30, 2023, options to purchase 20,000 million.shares expired.

 

As of June 30, 2022,2023, there were options outstanding to purchase 3.54.8 million shares, with an aggregate intrinsic value of $12.35.8 million. There were

1.8 million

On May 31, 2023, the shareholders approved the UMH Properties, Inc. 2023 Equity Incentive Award Plan (the “2023 Plan”), authorizing the grant of options, restricted stock or other stock-based awards to participants. The maximum number of shares available for grant under the Amended and Restated2023 Plan will be 2,200,000 shares. The maximum number of shares underlying awards that may be granted in any one year to a participant is 300,000 shares. Option awards are exercisable after one year of continued employment or service to the Company from the date of grant. The option price shall not be below the fair market value at date of grant.

The 2023 Plan replaces the Company’s existing A&R 2013 Incentive AwardPlan, which by its terms terminated with respect to new awards on June 13, 2023. Outstanding grants under the A&R 2013 Plan will continue to be subject to the terms of the A&R 2013 Plan. No future awards will be granted under the A&R 2013 Plan, except for those shares previously reserved for outstanding performance-based grants under the A&R 2013 Plan.

 

2022

 

NOTE 910 - FAIR VALUE MEASUREMENTS

 

In accordance with ASC 820-10, “Fair Value Measurements and Disclosures,” the Company measures certain financial assets and liabilities at fair value on a recurring basis, including marketable securities. The fair value of these financial assets and liabilities was determined using the following inputs at June 30, 20222023 and December 31, 20212022 (in thousands):

 

FINANCIAL ASSETS AND LIABILITIES RECOGNIZED AT FAIR VALUE ON A RECURRING BASIS

 Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using 
   Quoted Prices       Quoted Prices    
   In Active Significant     In Active Significant  
   Markets for Other Significant    Markets for Other Significant 
   Identical Observable Unobservable    Identical Observable Unobservable 
   Assets Inputs Inputs    Assets Inputs Inputs 
 Total (Level 1) (Level 2) (Level 3)  Total (Level 1) (Level 2) (Level 3) 
As of June 30, 2022:                
As of June 30, 2023:                
Marketable Securities - Preferred stock $912  $912  $0  $0  $535  $535  $0  $0 
Marketable Securities - Common stock  46,020   46,020   0   0   36,166   36,166   0   0 
Total $46,932  $46,932  $0  $0  $36,701  $36,701  $0  $0 
                                
As of December 31, 2021:                
As of December 31, 2022:                
Marketable Securities - Preferred stock $1,740  $1,740  $0  $0  $1,043  $1,043  $0  $0 
Marketable Securities - Common stock  112,008   112,008   0   0   41,135   41,135   0   0 
Total $113,748  $113,748  $0  $0  $42,178  $42,178  $0  $0 

 

In addition to the Company’s investment in marketable securities at fair value, the Company is required to disclose certain information about fair values of its other financial instruments, as defined in ASC 825-10, Financial Instruments. Estimates of fair value are made at a specific point in time, based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. All of the Company’s marketable securities have quoted market prices. However, for a portion of the Company’s other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties, future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only and, therefore, cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates.

23

 

The fair value of cash and cash equivalents and notes receivable approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable rate loans payable approximate their current carrying amounts since such amounts payable are at approximately a weighted-average current market rate of interest. As of June 30, 2022,2023, the estimated fair value of fixed rate mortgages payable amounted to $460.9434.0 million and the carrying value of fixed rate mortgages payable amounted to $473.6449.1 million.

21

 

NOTE 1011CONTINGENCIES, COMMITMENTS AND OTHER MATTERS

 

From time to time, the Company may be subject to claims and litigation in the ordinary course of business. Management does not believe that any such claims or litigation will have a material adverse effect on the financial position or results of operations.

 

The Company hashad an agreement with 21st Mortgage Corporation (“21st Mortgage”) under which 21st Mortgage can provideprovided financing for home purchasers in the Company’s communities. The Company doesdid not receive referral fees or other cash compensation under the agreement. If 21st Mortgage makesmade loans to purchasers and those purchasers defaultdefaulted on their loans and 21st Mortgage repossessesrepossessed the homes securing such loans, the Company has agreed to purchase from 21st Mortgage each such repossessed home for a price equal to 80% to 95% of the amount under each such loan, subject to certain adjustments. This agreement may be terminated by either party with 30 days written notice. As of June 30, 2022,2023, the total loan balance under this agreement was approximately $1.12.5 million. Additionally, 21st Mortgage previously made loans to purchasers in certain communities we acquired. In conjunction with these acquisitions, the Company has agreed to purchase from 21st Mortgage each repossessed home, if those purchasers default on their loans. The purchase price ranges from 55% to 100% of the amount under each such loan, subject to certain adjustments. As of June 30, 2022,2023, the total loan balance owed to 21st Mortgage with respect to homes in these acquired communities was approximately $1.3622,000 million. Although this agreement. This program was terminated on June 22, 2023 and is still active, this program is notno longer being utilized by the Company’s new customers as a source of financing. The Company’s repurchase obligations for the outstanding loans that were originated by 21st Mortgage remain in effect.

The Company entered into a Manufactured Home Retailer Agreement (the “MHRA”) with 21st Mortgage on January 24, 2023, under which 21st Mortgage provides financing for home purchasers in the Company’s communities. 21st Mortgage has no recourse against the Company under the MHRA except in instances where the Customer defaults before two scheduled monthly payments are paid by the purchaser and the default is based on any dispute between S&F surrounding the terms or execution of the purchase and sale of the home. Upon such a default, S&F is to take assignment of the loan from 21st Mortgage for the unpaid principal balance plus accrued interest. As of June 30, 2023, no loans have been originated under the MHRA.

 

S&F entered into a Chattel Loan Origination, Sale and Servicing Agreement (“COP Program”) with Triad Financial Services, effective January 1, 2016. Neither the Company, nor S&F, receive referral fees or other cash compensation under the agreement. Customer loan applications are initially submitted to Triad for consideration by Triad’s portfolio of outside lenders. If a loan application does not meet the criteria for outside financing, the application is then considered for financing under the COP Program. If the loan is approved under the COP Program, then it is originated by Triad, assigned to S&F and then assigned by S&F to the Company. Included in notesNotes and other receivablesOther Receivables is approximately $51.067.3 million of loans that the Company acquired under the COP Program as of June 30, 2022.2023.

 

The Company and one of its subsidiaries are parties to a Limited Liability Company Agreement dated as of December 8, 2021 with an affiliate of Nuveen, Real Estate, which governs the joint venture formed between the Company and Nuveen Real Estate.Nuveen. The LLC Agreement provides for the parties to initially fund up to $70 million of equity capital for acquisitions during a 24-month commitment period, with Nuveen having the option, subject to certain conditions, to elect to increase the parties’ total commitments by up to an additional $100 million and to extend the commitment period for up to an additional four years. The Company is required to fund 40% of the committed capital and Nuveen is required to fund 60%. All such funding will be on a parity basis. The Company and Nuveen are continuing to seek opportunities to acquire additional manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The Company and Nuveen have informally agreed that any future acquisitions would be made by one or more new joint venture entities to be formed for that purpose and that the existing joint venture entity formed in December 2021 will not consummate additional acquisitions but will maintain its existing property portfolio. While the terms and conditions of such new joint venture entities have not been fully negotiated, it is expected that invested capital would continue to be funded 60% by Nuveen and 40% by the Company on a parity basis and that other terms would be similar to those of the existing joint venture, except that the amounts of the parties’ respective capital commitments will be determined on a property-by-property basis (See Note 5).

2224

 

NOTE 1112 - SUPPLEMENTAL CASH FLOW INFORMATION

 

Cash paid for interest during the six months ended June 30, 20222023 and 20212022 was $11.718.5 million and $10.111.7 million, respectively. Interest cost capitalized to land development was $712,0002.7 million and $693,000712,000 for the six months ended June 30, 20222023 and 2021,2022, respectively.

 

During the six months ended June 30, 20222023 and 2021,2022, the Company had Dividend Reinvestments of $1.51.4 million and $1.81.5 million, respectively, which required no cash transfers.

 

NOTE 12–13– SUBSEQUENT EVENTS

 

Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were issued.

Since July 1, 2023, the Company issued and sold an additional 2.1 million shares of its Common Stock under the 2023 Common ATM Program at a weighted average price of $16.23 per share, generating gross proceeds of $34.8 million and net proceeds of $34.3 million, after offering expenses. As of August 1, 2023, $70.9 million of Common Stock remained eligible for sale under the 2023 Common ATM Program.

Since July 1, 2023, the Company issued and sold an additional 351,000 shares of its Series D Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $21.55 per share, generating gross proceeds of $7.6 million and net proceeds of $7.5 million, after offering expenses. As of August 1, 2023, $60.0 million of Series D Preferred Stock remained eligible for sale under the 2023 Preferred ATM Program.

Since July 1, 2023, the Company has paid down approximately $35 million on its floorplan inventory financing revolving lines of credit.

 

On July 14, 2022,19, 2023, the Company acquired Hidden Creek, located in Erie, Michigan, for approximatelyexpanded its revolving line of credit with OceanFirst Bank from $21.120 million to $35 million. This community containsInterest is at prime with a totalfloor of 3514.75 developed homesites that are situated on approximately 88 total acres. At%. This line is secured by the Company’s eligible notes receivable. The amendment also extended the maturity date of acquisition, the average occupancy for this community was approximatelyto 63June 1, 2025%.

 

On July 26, 2022, pursuant to its June 16, 2022 notice of redemption,2023, the Company redeemed all 9.9 million issued and outstanding shares of its 6.75% Series C Preferred Stock at a redemption price ofentered into an agreement to purchase two manufactured home communities, located in Maryland, for approximately $25.00 per share liquidation preference plus accrued and unpaid dividends to, but not including, the July 26, 2022 redemption date in an amount of $0.2578 per share, for a total payment of $25.2578 per share, or $249.612.5 million.

 

In conjunction with the Series C Preferred Stock redemption, on July 22, 2022, the Company drew down $50 million on its credit facility.

In July 2022, the Company invested $8 million in UMH OZ Fund, LLC (“OZ Fund”), a new entity recently formed by the Company. The OZ Fund will acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department. The OZ Fund was designed to allow the Company and any other investors in the OZ Fund to defer the tax on recently realized capital gains reinvested in the OZ Fund until December 31, 2026 and to potentially obtain certain other tax benefits.  UMH will manage the OZ Fund and will receive certain management fees.

NOTE 1314PROFORMA FINANCIAL INFORMATION (UNAUDITED)

 

The following unaudited pro forma condensed financial information reflects the acquisitions during 20212022 and through July 2022.2023. This information has been prepared utilizing the historical financial statements of the Company and the effect of additional revenue and expenses from the properties acquired during this period assuming that the acquisitions had occurred as of the first day of the applicable period, after giving effect to certain adjustments including: (a) rental and related income; (b) community operating expenses; (c) interest expense resulting from the assumed increase in mortgages and loans payable related to the new acquisitions; and (d) depreciation expense related to the new acquisitions. The unaudited pro forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions reflected herein been consummated on the dates indicated or that will be achieved in the future (in thousands).

SUMMARY OF PRO FORMA FINANCIAL INFORMATION

 6/30/22 6/30/21 6/30/22 6/30/21  6/30/23 6/30/22 6/30/23 6/30/22 
 Three Months Ended Six months Ended  Three Months Ended Six Months Ended 
 6/30/22 6/30/21 6/30/22 6/30/21  6/30/23 6/30/22 6/30/23 6/30/22 
                  
Rental and Related Income $42,507  $39,972  $84,554  $79,408  $47,063  $43,246  $92,368  $85,961 
Community Operating Expenses  19,045   17,345   37,321   34,844   20,034   19,388   40,123   38,040 
Net Income (Loss) Attributable to Common Shareholders  (22,573)  8,283   (27,007)  14,983 
Net Income (Loss) Attributable to Common Shareholders Per Share – Basic and Diluted $(0.42) $0.18  $(0.51) $0.34 
Net Loss Attributable to Common Shareholders  (4,418)  (23,274)  (9,730)  (29,511)
Net Loss Attributable to Common Shareholders Per Share – Basic and Diluted $(0.07) $(0.43) $(0.16) $(0.55)

2325

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and footnotes thereto included elsewhere herein and in the Company’s annual report on Form 10-K for the year ended December 31, 2021.2022.

 

The Company is a Maryland corporation that operates as a self-administered, self-managed Real Estate Investment Trust (“REIT”) with headquarters in Freehold, New Jersey. The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured home spaces on an annual or month-to-month basis to residents. The Company also leases manufactured homes to residents and, through its wholly-owned taxable REIT subsidiary, UMH Sales and Finance, Inc. (“S&F”), sells and finances the sale of manufactured homes to residents and prospective residents of our communities and for placement on customers’ privately-owned land. During 2022, the Company also formed an opportunity zone fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The Company currently holds a 77% percentage interest in the opportunity zone fund.

 

As of June 30, 2022,2023, the Company owned and operated 130135 manufactured home communities (including two communities acquired through the Company’s opportunity zone fund) containing approximately 24,40025,700 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Maryland, Alabama, South Carolina and South Carolina.Georgia. The Company also has an ownership interest in and operates one communitytwo communities in Florida through its joint venture with Nuveen Real Estate.

 

The Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of manufactured homes, the sale and finance of manufactured homes and the brokering of home sales, self-storage leases, oil and revenue undergas leases, cable service agreements as well asand from appreciation in the values of the manufactured home communities and vacant land owned by the Company. In addition, the Company receives property management and other fees from its joint venture with Nuveen Real Estate.Estate and from its opportunity zone fund. Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources. The Company also invests in equity securities of other REITs which the Company generally limits to no more than approximately 15% of its undepreciated assets.REITs. As of June 30, 2022,2023, the securities portfolio represented 2.7%2.1% of undepreciated assets. The Company does not intend to increase its investment in this REIT securities portfolio.

24

 

The Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained through the issuance of common stock, preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

26

 

The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. This has resulted in increased occupancy rates and improved operating results. For the three and six months ended June 30, 2022,2023, rental and related income increased 7%11% and 10%, respectively, from the prior year period and Community Net Operating Income (“NOI”), as defined below, increased 5%16% and 7%12%, respectively. Same property NOI, which includes communities owned and operated as of January 1, 2021,2022, increased 5%13% and 9% for the three and six months ended June 30, 20222023, respectively, over the prior year period primarily duedriven by a 190 basis point increase in occupancy, to a87.9%, and rental rate increase of 5%4.7%. We have been positioning ourselves for future growth and will continue to seek opportunistic investments. In addition, on behalf of our recently-formed joint venture with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. We will also seek additional opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones.

 

Sales of manufactured homes decreased 20%increased 38% during the six months ended June 30, 20222023 from the prior year. Demand for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that should result in increased demand.

 

The macro-economic environment and current housing fundamentals continue to favor home rentals. Rental homes in a manufactured home community allow the resident to obtain the efficiencies of factory-built housing and the amenities of community living for less than the cost of other forms of affordable housing. We continue to see strong demand for rental homes. We have added an additional 151534 rental homes during the first six months of 2022.2023. This brought the total number of rental homes to approximately 8,9009,600 rental homes, or 36.3%37.4% of total sites. Occupied rental homes represented approximately 40.2%40.9% of total occupied sites at quarter end. Occupancy in rental homes continues to be strong and was at 94.6%93.9% as of June 30, 2022.2023. We compare favorably with other types of rental housing, including apartments, and we will continue to allocate capital to rental home purchases, as demand dictates. We anticipate adding approximately 700 - 800800- 900 rental homes in 2022.2023.

25

 

The following is a summary of the communitiescommunity acquired through our opportunity zone fund during the six months ended June 30, 20222023 (dollars in thousands):

 

Community 

Date of Acquisition

  State  

Number of

Sites

  

Purchase Price

  

Number of

Acres

  

Occupancy at

Acquisition

 
                   
Center Manor March 31, 2022  PA   96  $5,800   18   83%
                       
Mandell Trails May 3, 2022  PA   132   7,375   65   70%
                       
La Vista Estates May 25, 2022  AL   139   3,878   36   6%
                       
Total as of June 30, 2022        367  $17,053   119   49%
Community Date of Acquisition  State  

Number of

Sites

  

Purchase

Price

  

Number

of

Acres

  

Occupancy

at

Acquisition

 
                   
Mighty Oak  January 19, 2023   GA   118  $3,650   26   -0-%

 

See PART I, Item 1 – Business in the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022 for a more complete discussion of the economic and industry-wide factors relevant to the Company and the opportunities and challenges, and risks on which the Company is focused.

Significant Accounting Policies and Estimates

 

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

 

On a regular basis, management evaluates our assumptions, judgments and estimates. Management believes there have been no material changes to the items that we disclosed as our significant accounting policies and estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.

27

 

Supplemental Measures

 

In addition to the results reported in accordance with GAAP, management’s discussion and analysis of financial condition and results of operations include certain non-GAAP financial measures that in management’s view of the business we believe are meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-GAAP financial measures as determined and presented by us may not be comparable to related or similarly titled measures reported by other companies and include Community Net Operating Income (“Community NOI”), Funds from Operations Attributable to Common Shareholders (“FFO”) and Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”).

 

26

We define Community NOI as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses. We believe that Community NOI is helpful to investors and analysts as a direct measure of the actual operating results of our manufactured home communities, rather than our Company overall. Community NOI should not be considered a substitute for the reported results prepared in accordance with GAAP. Community NOI should not be considered as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions.

 

The Company’s Community NOI for the three and six months ended June 30, 20222023 and 20212022 is calculated as follows (in thousands):

 

 Three Months Ended Six Months Ended  Three Months Ended Six Months Ended 
 6/30/22 6/30/21 6/30/22 6/30/21  6/30/23 6/30/22 6/30/23 6/30/22 
                  
Rental and Related Income $42,229  $39,341  $83,806  $78,054  $47,063  $42,229  $92,368  $83,806 
Less: Community Operating Expenses  18,923   17,045   36,994   34,182   20,034   18,923   40,122   36,994 
Community NOI $23,306  $22,296  $46,812  $43,872  $27,029  $23,306  $52,246  $46,812 

 

We assess and measure our overall operating results based upon FFO, an industry performance measure referred to as Funds from Operations Attributable to Common Shareholders (“FFO”), which management believes is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by Thethe National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (loss) attributable to common shareholders, as defined by accounting principles generally accepted in the U.S. of America (“U.S. GAAP”), excluding extraordinary items, as defined under U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, the change in the fair value of marketable securities, and the gain or loss on the sale of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of NAREIT FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities, and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the gains and losses realized on marketable securities investments and the change in the fair value of marketable securities from our FFO calculation. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding amortization and certain one-time charges. FFO and Normalized FFO should be considered as supplemental measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded from FFO and Normalized FFO are significant components in understanding the Company’s financial performance.

2728

 

FFO and Normalized FFO (i) do not represent cash flow from operations as defined by U.S. GAAP; (ii) should not be considered as alternativesan alternative to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flow as a measure of liquidity.

 

The Company’s FFO and Normalized FFO attributable to common shareholders for the three and six months ended June 30, 20222023 and 20212022 are calculated as follows (in thousands):

 

  Three Months Ended  Six Months Ended 
  6/30/22  6/30/21  6/30/22  6/30/21 
             
Net Income (Loss) Attributable to Common Shareholders $(22,478) $8,403  $(26,803) $15,242 
Depreciation Expense  11,984   11,184   23,701   22,192 
Depreciation Expense from Unconsolidated Joint Venture  86   0   167   0 
(Gain) Loss on Sales of Depreciable Assets  44   (5)  86   18 
(Increase) Decrease in Fair Value of Marketable Securities  10,044   (9,291)  41,794   (19,510)
(Gain) Loss on Sales of Marketable Securities, net  0   (436)  (30,721)  294 
FFO Attributable to Common Shareholders  (320)  9,855   8,224   18,236 
                 
Adjustments:                
Redemption of Preferred Stock  8,190   0   8,190   0 
Non- Recurring Other Expense (1)  825   426   1,256   746 
Normalized FFO Attributable to Common Shareholders $8,695  $10,281  $17,670  $18,982 
  Three Months Ended  Six Months Ended 
  6/30/23  6/30/22  6/30/23  6/30/22 
             
Net Loss Attributable to Common Shareholders $(4,418) $(22,478) $(9,715) $(26,803)
Depreciation Expense  13,751   11,984   27,124   23,701 
Depreciation Expense from Unconsolidated Joint Venture  166   86   325   167 
(Gain) Loss on Sales of Investment Property and Equipment  (5)  44   (37)  86 
                
Decrease in Fair Value of Marketable Securities  2,548   10,044   4,943   41,794 
(Gain) Loss on Sales of Marketable Securities, net  1   -0-   43   (30,721)
                 
FFO Attributable to Common Shareholders  12,043   (320)  22,683   8,224 
                 
Adjustments:                
Redemption of Preferred Stock (1)  -0-   10,988   -0-   12,020 
Amortization of Financing Costs (1)  538   533   1,056   939 
Non- Recurring Other Expense (2)  468   825   1,030   1,256 
Normalized FFO Attributable to Common Shareholders (1) $13,049  $12,026  $24,769  $22,439 

 

(1)ForNormalized FFO as previously reported for the three and six months ended June 30, 2022, consistswere $8,695 and $17,670, respectively. During 2022, the Company incurred the carrying cost of excess cash for the redemption of preferred stock. Additionally, due to the change in sources of capital, amortization expense is expected to become more significant and is therefore included as an adjustment to Normalized FFO for the three and six months ended June 30, 2023 and 2022. After making these adjustments for the three and six months ended June 30, 2022, Normalized FFO were $12,026 and $22,439, respectively.
(2)Consists of special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which are being expensed over the vesting period ($431 and $862, respectively) and non-recurring expenses for the joint venture with Nuveen ($3 and $50, respectively), one-time legal fees ($30 and $50, respectively), fees related to the establishment of the OZ Fund ($4 and $37, respectively), and costs associated with an acquisition that was not completed ($0 and $31, respectively) for the three and six months ended June 30, 2023. Consists of special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which are being expensed over the vesting period ($431 and $862, respectively) and non-recurring expenses for the joint venture with Nuveen ($52), early extinguishment of debt ($193) and one-time legal fees ($149). For 2021, consists of special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which are being expensed over the vesting period.three and six months ended June 30, 2022.

 

The following are the cash flows provided (used) by (used in) operating, investing and financing activities for the six months ended June 30, 20222023 and 20212022 (in thousands):

 

 Six Months Ended  Six Months Ended 
 6/30/22 6/30/21  6/30/23 6/30/22 
          
Operating Activities $5,415  $33,203  $52,425  $5,415 
Investing Activities  871   (49,573)  (93,819)  871 
Financing Activities  153,701   90,036   49,706   153,701 

 

2829

 

Changes In Results Of Operations

 

Rental and related income increased 7%11% from $39.3 million for the three months ended June 30, 2021 to $42.2 million for the three months ended June 30, 2022.2022 to $47.1 million for the three months ended June 30, 2023. Rental and related income increased 7%10% from $78.1 million for the six months ended June 30, 2021 to $83.8 million for the six months ended June 30, 2022.2022 to $92.4 million for the six months ended June 30, 2023. This increase was primarily due to the acquisitions made during 2021 and 2022, as well as increases in rental rates and same property occupancy and additional rental homes. The Company has been raising rental rates by approximately 3%4% to 4%5% annually at most communities. Same property occupancy remained stable at 86.7%has increased 190 basis points from 86.0% as of June 30, 2021 and 2022.2022 to 87.9% at June 30, 2023. Occupied rental homes increased 2%8% from approximately 8,300 homes at June 30, 2021 to 8,400 homes at June 30, 2022.2022 to 9,000 homes at June 30, 2023.

 

Community operating expenses increased 11%6% from $17.0 million for the three months ended June 30, 2021 to $18.9 million for the three months ended June 30, 2022.2022 to $20.0 million for the three months ended June 30, 2023. Community operating expenses increased 8% from $34.2 million for the six months ended June 30, 2021 to $37.0 million for the six months ended June 30, 2022.2022 to $40.1 million for the six months ended June 30, 2023. These increases were primarily due to acquisitions made during 2022, as well as an increase in personnel costs,payroll, rental home expenses, real estate taxes, insurance, and waterwaste removal and sewer expenses.

 

Community NOI increased 5%16% from $22.3 million for the three months ended June 30, 2021 to $23.3 million for the three months ended June 30, 2022. Community NOI increased 7% from $43.92022 to $27.0 million for the sixthree months ended June 30, 2021 to2023. Community NOI increased 12% from $46.8 million for the six months ended June 30, 2022.2022 to $52.2 million for the six months ended June 30, 2023. These increases were primarily due to the acquisitions during 2021 and 2022 and increases in rental rates, occupancy and rental homes. The Company’s operating expense ratio (defined as community operating expenses divided by rental and related income) was 44.8%42.6% and 43.3%44.8% for the three months ended June 30, 20222023 and 2021,2022, respectively. The Company’s Operating Expense Ratio was 44.1%43.4% and 43.8%44.1% for the six months ended June 30, 20222023 and 2021,2022, respectively. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership. Because most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue to improve. Since the Company has the ability to increase its rental rates annually, increasing costs due to inflation and changing prices have generally not had a material effect on revenue and income from continuing operations.

 

Sales of manufactured homes decreased 27%increased 18% from $9.6 million, or 120 homes, for the three months ended June 30, 2021 to $7.0 million, or 86 homes, for the three months ended June 30, 2022.2022 to $8.2 million, or 91 homes, for the three months ended June 30, 2023. Sales of manufactured homes decreased 20%increased 38% from $14.0 million, or 193 homes, for the six months ended June 30, 2021 to $11.3 million, or 147 homes, for the six months ended June 30, 2022.2022 to $15.5 million, or 174 homes, for the six months ended June 30, 2023. Cost of sales of manufactured homes amounted to $4.8$5.7 million and $7.0$4.8 million for the three months ended June 30, 20222023 and 2021,2022, respectively. Cost of sales of manufactured homes amounted to $7.8$10.7 million and $10.5$7.8 million for the six months ended June 30, 20222023 and 2021,2022, respectively. The gross profit percentage was 31%30% and 27%31% for the three months ended June 30, 20222023 and 2021,2022, respectively, and 31% and 25% for the six months ended June 30, 20222023 and 2021, respectively.2022. Selling expenses, which includes salaries, commissions, advertising and other miscellaneous expenses, amounted to $1.2$1.7 million and $1.4$1.2 million for the three months ended June 30, 20222023 and 2021,2022, respectively, and $2.4$3.5 million and $2.5$2.4 million for the six months ended June 30, 20222023 and 2021,2022, respectively. Gain (loss) from the sales operations (defined as sales of manufactured homes, less cost of sales of manufactured homes, less selling expenses, less interest on the financing of inventory) amounted to a gain of $876,000$665,000 or 13%8% of total sales and a gain of $1.2 million$876,000 or 12%13% of total sales for the three months ended June 30, 20222023 and 2021,2022, respectively. Gain (loss) from the sales operations amounted to a gain of $979,000$901,000 or 9%6% of total sales and a gain of $929,000$979,000 or 7%9% of total sales for the six months ended June 30, 2023 and 2022, respectively. Gain from the sales operations, excluding interest on the financing of inventory, amounted to $822,000 or 10% of total sales and 2021,$943,000 or 13% of total sales for the three months ended June 30, 2023 and 2022, respectively. Gain from the sales operations, excluding interest on the financing of inventory, amounted to $1.3 million or 9% of total sales and $1.1 million or 10% of total sales for the six months ended June 30, 2023 and 2022, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed.

2930

 

HomeDespite an increase in mortgage interest rates, home prices have continued theirto rise as fewer sellers are listing homes and inventories decline. With the passage of time, the inherent relative affordability of our property type becomes more and more apparent, which should result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the fundamental need for affordable housing. The Company believes that sales of new homes produce new rental revenue and represent an investment in the upgrading of our communities.

 

General and administrative expenses increased 29%20% from $3.3 million for the three months ended June 30, 2021 to $4.3 million for the three months ended June 30, 2022.2022 to $5.2 million for the three months ended June 30, 2023. General and administrative expenses increased 21%24% from $6.8 million for the six months ended June 30, 2021 to $8.2 million for the six months ended June 30, 2022.2022 to $10.2 million for the six months ended June 30, 2023. These increases were mainly due to an increase in payroll, personnel costs including an increase inand non-cash stock-based compensation, including the cost of previously issued special restricted stock grants for the groundbreaking Fannie Mae financing completed in 2020, and other non-recurring expenses for the joint venture, early extinguishment of debt and other legal expenses.compensation. General and administrative expenses as a percentage of gross revenue (total income plus interest, dividends and other income) was 9.0% and 9.1% for the three and six months ended June 30, 2023, respectively, as compared to 8.4% and 8.3% for the three and six months ended June 30, 2022, respectively, as compared to 6.5% and 7.4% for the three and six months ended June 30, 2021, respectively. Without the special bonus and restricted stock grants and the non-recurring expenses, this percentage was 6.8% and 7.0% for the three and six months ended June 30, 2022, respectively, as compared to 5.7% and 6.2% for the three and six months ended June 30, 2021, respectively.

 

Depreciation expense increased 7%15% from $11.2 million for the three months ended June 30, 2021 to $12.0 million for the three months ended June 30, 2022. Depreciation expense increased 7% from $22.22022 to $13.8 million for the sixthree months ended June 30, 2021 to2023. Depreciation expense increased 14% from $23.7 million for the six months ended June 30, 2022.2022 to $27.1 million for the six months ended June 30, 2023. This increase was primarily due to the acquisitions and the increase in rental homes during 20212022 and 2022.2023.

 

Interest income increased 35%14% from $792,000 for the three months ended June 30, 2021 to $1.1 million for the three months ended June 30, 2022. Interest income increased 23% from $1.62022 to $1.2 million for the sixthree months ended June 30, 2021 to2023. Interest income increased 19% from $2.0 million for the six months ended June 30, 2022.2022 to $2.4 million for the six months ended June 30, 2023. This increase was primarily due to an increase in the average balance of notes receivable from $43.8 million at June 30, 2021 to $55.1 million at June 30, 2022.2022 to $65.1 million at June 30, 2023.

30

 

Dividend income decreased 44%26% from $1.3 million for the three months ended June 30, 2021 to $721,000 for the three months ended June 30, 2022. Dividend income decreased 42% from $2.6 million2022 to $531,000 for the sixthree months ended June 30, 2021 to2023. Dividend income decreased 18% from $1.5 million for the six months ended June 30, 2022.2022 to $1.2 million for the six months ended June 30, 2023. This decrease was due to reduced dividends from the reductionas a result of our smaller securities portfolio. DividendsThe weighted average yield on our dividends received from our marketable securities investments increased 60 basis points and were at a weighted average yield of approximately 5.9%6.5% and 4.2%5.9% at June 30, 20222023 and 2021,2022, respectively.

 

The Company recognized a loss on sales of marketable securities of $43,000 for the six months ended June 30, 2023. The Company recognized a gain on sales of marketable securities of $30.7 million for the six months ended June 30, 2022 as a result of the cash consideration received in the MREIC merger. The Company recognized a gain on sales of marketable securities of $436,000 for the three months ended June 30, 2021 and a loss on sales of marketable securities of $294,000 for the six months ended June 30, 2021. Increase (decrease)decrease in fair value of marketable securities decreased from a gain of $9.3amounted to $2.5 million for the three months ended June 30, 2021 to a loss ofand $10.0 million for the three months ended June 30, 2022. Increase (decrease) in fair value of marketable securities decreased from a gain of $19.52023 and 2022, respectively, and $4.9 million for the six months ended June 30, 2021 to a loss ofand $41.8 million for the six months ended June 30, 2022.2023 and 2022, respectively. As of June 30, 2022,2023, the Company had total net unrealized losses of $56.1$41.1 million in its REIT securities portfolio.

 

Interest expense, including amortization of financing costs, increased 29%35% from $5.0 million for the three months ended June 30, 2021 to $6.4 million for the three months ended June 30, 2022.2022 to $8.6 million for the three months ended June 30, 2023. Interest expense, including amortization of financing costs, increased 22%43% from $9.8 million for the six months ended June 30, 2021 to $11.9 million for the six months ended June 30, 2022.2022 to $17.0 million for the six months ended June 30, 2023. This increase iswas mainly due to interest on the Series A Bonds.Bonds issued in 2022, an increase in the average balance of loans payable and an increase in interest rates. Loans Payable increased due to additional takedown on the line of credit for payoff of mortgages of approximately $59 million during the six months ended June 30, 2023. Additionally, our floorplan inventory financing revolving lines of credit increased from approximately $22.4 million as of June 30, 2022 to approximately $38.8 million as of June 30, 2023, as a result of increased inventory purchases due to supply chain issues. Inventory was approximately $61.1 million and $46.0 million as of June 30, 2023 and 2022, respectively.

31

 

Changes in Financial Condition

 

Total investment property and equipment increased 3%5% or $43.0$74.8 million during the six months ended June 30, 2022.2023. The Company, through its opportunity zone fund, acquired three communitiesone community with 367118 developed homesites for approximately $17.1$3.7 million. The Company also added 151534 rental homes to its communities during the first six months of 2022.2023. The Company’s occupancy rate on its rental homes portfolio was 94.6%93.9% at June 30, 20222023 as compared to 95.5%93.3% at December 31, 2021.2022.

 

Marketable securities decreased 59%13% or $66.8$5.5 million during the six months ended June 30, 2022.2023. This decrease was due to a net decrease in the fair value of $41.8$4.9 million primarily due to the MREIC merger.and sales of securities with a cost basis of $545,000.

 

Mortgages payable, net of unamortized debt issuance costs, increased 4%decreased 13% or $16.2$64.1 million during the six months ended June 30, 2022. This increase was2023 due to a new mortgage of $25.6 million offset by principal payments of $8.8 million.payments.

 

Loans payable, net of unamortized debt issuance costs, increased 25%19% or $11.6$28.9 million during the six months ended June 30, 2022.2023. This increase was due to an increase of $11.5$19.9 million on our revolving line of credit secured by the Company’s rental homes, $10.0 million on our revolving lines of credit for the financing of home sales and the purchasean increase of inventory.$25.0 million on our unsecured line of credit, offset by a decrease of $25.4 million on our floorplan inventory financing revolving lines of credit.

During the six months ended June 30, 2022, the Company also issued $102.7 million of its new 4.72% Series A Bonds due 2027.

31

 

Liquidity and Capital Resources

 

The Company’s focus is on real estate investments, including investment in rental homes. Additionally, the Company invests in marketable debt and equity securities of other REITs. The REIT securities portfolio provides the Company with liquidity and additional income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. The Company generally limits its marketable securities investments to no more than approximately 15% of its undepreciated assets.

The Company’s principal liquidity demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions, capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental homes, financing of manufactured home sales and payments of expenses relating to real estate operations. We anticipate that the liquidity demands of the recent properties acquired will be met by the operations of these acquisitions. The Company’s ability to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the DRIP, and access to the capital markets, including through its 2022 Common and Preferred ATM Program.Programs.

 

In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including acquisitions. The Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit facility or lines of credit, incur other indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital markets, including through the Company’s ATM Programs. In order to provide financial flexibility to opportunistically access the capital markets, the Company has implemented a 2022 Commonnew 2023 Preferred ATM Program. The 2022Program on January 10, 2023 which allows the Company to offer and sell shares of the Company’s 6.375% Series D Cumulative Redeemable Preferred Stock, having an aggregate sales price of up to $100 million from time to time through B. Riley. On April 4, 2023, the Company also implemented a new 2023 Common ATM Program which allows the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million from time to time through the Distribution Agents. Additionally, the Company amended its unsecured line of credit to expand available borrowings from $100 million to $180 million and expanded its revolving line of credit on notes receivable from $20 million to $35 million.

32

 

The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, on behalf of our recently-formed joint venture with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of our joint venture depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made.

 

32

The Company continues to strengthen its capital and liquidity positions. During the six months ended June 30, 2022,2023, the Company issued and sold 2.45 million shares of Common Stock through our Common ATM Programs, at a weighted average price of $24.29$16.12 per share, generating gross proceeds of $59.3$79.9 million and net proceeds of $58.2$78.4 million, after offering expenses.

During the six months ended June 30, 2022, Subsequent to quarter end, the Company also issued $102.7and sold an additional 2.1 million shares of its new 4.72% Series A Bonds due 2027 in an offering to investors in IsraelCommon Stock under the 2023 Common ATM Program at a weighted average price of $16.23 per share, generating gross proceeds of $34.8 million and received $98.7 million in net proceeds of $34.3 million, after offering expenses.

 

In addition, during the six months ended June 30, 2023, the Company issued and sold 1.6 million shares of Series D Preferred Stock through our Preferred ATM Programs, at a weighted average price of $22.22 per share, generating gross proceeds of $35.2 million and net proceeds of $34.6 million, after offering expenses. Subsequent to quarter end, the Company issued and sold an additional 351,000 shares of its Series D Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $21.55 per share, generating gross proceeds of $7.6 million and net proceeds of $7.5 million, after offering expenses.

The Company also raised $3.0$4.6 million from the issuance of common stock in the DRIP during the six months ended June 30, 2022,2023, which included Dividend Reinvestments of $1.5$1.4 million. Dividends paid on the common stock for the six months ended June 30, 20222023 were $21.3$24.7 million, of which $1.5$1.4 million were reinvested. Dividends paid on the Series C Preferred Stock and the Series D Preferred Stock for the six months ended June 30, 20222023 totaled $15.2$7.9 million.

33

 

Net cash provided by operating activities amounted to $5.4$52.4 million and $33.2$5.4 million for the six months ended June 30, 2023 and 2022, and 2021, respectively. The increase in net cash provided by operating activities was primarily due to the reduction in the inventory of manufactured homes in the amount of $27.4 million for the six months ended June 30, 2023 as compared to the increase in the inventory of manufactured homes in the amount of $22.3 million for the six months ended June 30, 2022. As of June 30, 2022,2023, the Company had cash and cash equivalents of $275.8$41.5 million, marketable securities of $46.9$36.7 million and $80 million available on our unsecured revolving credit facility, with an additional $400 million potentially available pursuant to an accordion feature. We also had approximately $30.1$99.7 million available on our revolving lines of credit for the financing of home sales and purchases of inventory, $15 million available on our line of credit secured by rental homes and rental homes leases and $50 million available on our unsecured credit facility, with an additional $50 million potentially available pursuant to an accordion feature. Subsequent to quarter end, the Company drew down $50 million on its credit facility.

On July 26, 2022, pursuant to its June 16, 2022 notice of redemption, the Company redeemed all 9.9 million issued and outstanding shares of its 6.75% Series C Preferred Stock at a redemption price of $25.00 per share liquidation preference plus accrued and unpaid dividends to, but not including, the July 26, 2022 redemption date in an amount of $0.2578 per share, for a total payment of $25.2578 per share, or $249.6 million.inventory.

 

The Company owns 130135 communities, of which 3256 are unencumbered. Except for 13 communities in the borrowing base for our unsecured credit facility, these unencumbered communities can be used to raise additional funds. Our marketable securities, unencumbered properties, and lines of credit provide the Company with additional liquidity. The Company also holds a 40% equity interest in its joint venture with Nuveen, Real Estate, which owns onetwo newly developed communitycommunities that isare unencumbered.

 

As of June 30, 2022,2023, the Company had total assets of $1.4 billion and total liabilities of $901.4$756.0 million. The Company’s net debt (net of unamortized debt issuance costs and cash and cash equivalents) to total market capitalization as of June 30, 20222023 was approximately 19%34% and the Company’s net debt, less securities to total market capitalization as of June 30, 20222023 was approximately 17%32%. As of June 30, 2022,2023, the Company haddoes not have any mortgages totaling $58.8 million due within the next 12 months. The Company believes that it has the ability to meet its obligations and to generate funds for new investments.

 

33

Impact of COVID-19

The following discussion is intended to provide certain information regarding the impacts of the COVID-19 pandemic on our business and management’s efforts to respond to those impacts.

We continue to monitor our operations and government recommendations and have taken steps to make the safety, security and welfare of our employees, their families and our residents a top priority.

Collections are consistent with pre-pandemic levels and we have collected 93% of July 2022 site and home rent as of today’s date. Some of our residents benefitted from the federal government’s funding of the Emergency Rental Assistance Programs that were enacted in each state.

The impact of the COVID-19 pandemic remains uncertain and dependent on future developments, including the possible emergence of new variants of the original virus and the ongoing roll-out of vaccines and their efficacy. We will continue to monitor these rapidly evolving developments and respond in the best interests of our employees, residents and shareholders. At this time, we believe that the COVID-19 pandemic and its consequences will not have a material adverse effect on our operations.

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Statements contained in this Form 10-Q, that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about the Company’s expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. Forward-looking statements can be identified by their use of forward-looking words, such as “may,” “will,” “anticipate,” “expect,” “believe,” “intend,” “plan,” “should,” “seek” or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking.

34

 

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described below and under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These and other risks, uncertainties and factors could cause our actual results to differ materially from those included in any forward-looking statements we make. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from our expectations include, among others:

 

changes in the real estate market conditions and general economic conditions;
risks and uncertainties related to the COVID-19 pandemic;pandemic or other highly infectious or contagious diseases;

34

the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations affecting manufactured housing communities and illiquidity of real estate investments;
increased competition in the geographic areas in which we own and operate manufactured housing communities;
our ability to continue to identify, negotiate and acquire manufactured housing communities and/or vacant land which may be developed into manufactured housing communities on terms favorable to us;
our ability to maintain or increase rental rates and occupancy levels;
changes in market rates of interest;
inflation and increases in costs, including increases in commodity pricespersonnel, insurance and the cost of purchasing manufactured homes;
our ability to purchase manufactured homes for rental or sale;
our ability to repay debt financing obligations;
our ability to refinance amounts outstanding under our credit facilities at maturity on terms favorable to us;
our ability to comply with certain debt covenants;
our ability to integrate acquired properties and operations into existing operations;
the availability of other debt and equity financing alternatives;
continued ability to access the debt or equity markets;
the loss of any member of our management team;
our ability to maintain internal controls and processes to ensure all transactions are accounted for properly, all relevant disclosures and filings are made in a timely manner in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected;
the ability of manufactured home buyers to obtain financing;
the level of repossessions by manufactured home lenders;
market conditions affecting our investment securities;
changes in federal or state tax rules or regulations that could have adverse tax consequences;
our ability to qualify as a real estate investment trust for federal income tax purposes; and,
those risks and uncertainties referenced under the heading “Risk Factors” contained in this Form 10-Q and the Company’s other filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021.2022.

 

You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. The forward-looking statements contained in this Form 10-Q speak only as of the date hereof and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

35

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

There have been no material changes to information required regarding quantitative and qualitative disclosures about market risk from the end of the preceding year to the date of this Quarterly Report on Form 10-Q.

Item 4.Controls and Procedures

Item 4. Controls and Procedures

 

The Company’s President and Chief Executive Officer (principal executive officer) and the Company’s Executive Vice President and Chief Financial Officer (principal financial and accounting officer), with the assistance of other members of the Company’s management, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of such period.

 

Changes In Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting during the quarterly period ended June 30, 20222023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

3635

 

PART II – OTHER INFORMATION

Item 1.Legal Proceedings

 None.

 

Item 1A.Risk Factors

 There have been no material changes to information required regarding risk factors from the end of the preceding year to the date of this Quarterly Report on Form 10-Q. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, which could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.

 

Item 3.Defaults Upon Senior Securities
 None.

 

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

 None.

 

Item 5.Other Information

 

(a)

Information Required to be Disclosed in a Report on Form 8-K, but not Reported – None.

  
 

(b)

Material Changes to the Procedures by which Security Holders may Recommend Nominees to the Board of Directors – None.

37

Item 6.Exhibits

 

Item 6.Exhibits

31.1

Certification of Samuel A. Landy, President and Chief Executive Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (Filed herewith).
  

31.2

Certification of Anna T. Chew, Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (Filed herewith).
  

32

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Samuel A. Landy, President and Chief Executive Officer, and Anna T. Chew, Chief Financial Officer (Furnished herewith).
  
101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 20222023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

 

As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

  
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

3836

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  UMH PROPERTIES, INC.
   
DATE:August 3, 20228, 2023By/s/ Samuel A. Landy
  Samuel A. Landy
  President and Chief Executive Officer
  (Principal Executive Officer)
   
DATE:August 3, 20228, 2023 By/s/ Anna T. Chew
  Anna T. Chew
  

 

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

 

3937