UMH - Earnings call transcript Q3 2018

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Operator

Good morning, and welcome to UMH Properties Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Investor of Director Madden, Relations. Nelli Thank you. Ms. may you Madden, begin.

Nelli Madden

you much, very operator. Thank

information historical Private we facts, to the during Litigation made an may our the supplemental in information deemed the are the I are various are addition statements at like the filed along unaudited this The uncertainties. with presentation involve conference XXXX. within the call, based XX-Q risks and quarter company's forward-looking that on filed In of certain meaning Act not available have of statements to we Securities which that with Reform statements on remind XX-Q forward-looking that supplemental this expectations, and be we The SEC current third make umh.reit. call website presentation. would yesterday, everyone

results and the Securities to earnings with forward-looking assumptions, that Although, on to materially filings expectations its achieved. based in in detailed believes The no reflected assurance and release quarter are the company's provide risks expectations update expectations that company statements third be its Exchange any are forward-looking disclaims the any XXXX the Commission. uncertainties the will could can statements. company obligation cause company actual and reasonable from differ The

Chief Executive the It Samuel Officer, Taft, Officer; Samuel Officer; Chairman; is included Eugene would and In Reconciliations as said that, metrics and President. well addition, discussing of and our my be Chief to turn filings. our Brett Having Landy. during metrics. release, Executive comparable today's cautioning UMH's call management Anna and pleasure historical now earnings information Chief GAAP to with President financial introduce and as are call, non-GAAP to President these language metrics financial in like we today: President I our will Financial Landy, over SEC and us the Chew, non-GAAP Vice to supplemental financial Vice Landy, explanatory

Samuel Landy

and everyone, us. Nelli. you Good Thank thank morning, joining you much, very for

We to that are report making business. all we progress pleased in our are aspects of

communities and identify with Low and created and projects. there a When during which has to rising economies earnings markets we capital our in resulted acquire is growing and and for a Our acquire demand rates products. demographics have ability improvement wages unemployment value-add community X-year turnaround we additional in exceptional deferred growth. income complete improving maintenance period,

improvements become more improving the desirable to the As improvements value completion paired climate the positively thus community our rapidly shareholders. our numbers, communities at generating are communities improving earnings while our significant The operating live. with places is benefiting turnaround long-term completed, economic of our for

us markets. an runway XXX provides XX.X%. Our X,XXX vacant a portfolio XX.X% already factor approximately currently successful very occupancy were utilize home and vacant of We sites for currently rentals, realize in acquired. sites, fill consists our which the X,XXX We business program. which have to of This of sites, our XX,XXX Demand to The vacancy currently with upon plan. improve most have strong overall is rental containing of the home efficient the are a approximately is communities, most to all rentals value significant rate occupied. with way

and to installing annual year. on of our new homes are renting XXX this meet We goal track

added XXX to year, this far portfolio. have So we rental homes our

XXXX strong since been year XX%. an an sales. were already increase million last monthly the $XXX, $X.X of surpassed as year, million, over increase XX%. representing sales to our for compared have as home has it prior of Sales increased is date have to as And Year $X.X quarter we which total prior is is period. Sales now the recession. to demand average Our X.X% rent the

of $XX,XXX to For at XXX an $XX,XXX, compared average the price year average in as XXX homes sold have dollars of price we prior months the X at this period. year, an

encouraged profit portion this to a for of are business our come. dramatic years increase could major by be believe We center and sales in this

As The conventional good market rising have as to because housing high slowing is continue at down, and of rate. sales healthy been, prices them to a interest increase we rates. expect

of cost better as potential to the Manufactured coming legislatures sides affordable the conventional increases, our been As has more housing crisis. housing increased driving becomes on sales both the housing product to solution of consumer, a the by and advantageous margins. aisle recognized

this and anticipate broken have of We on several sites year. completing ground expansions our XXX

are expansions best of primarily one in performing rentals. located our for which Tennessee, Our and is markets sales both

in XXX at separate sites X Tennessee. We building will locations be

to in sites plan in additional also XX and Indiana additional develop We sites XX Ohio.

obtain We are sites build XXX XXXX. to currently approvals approximately to in working

diluted Moving Normalized per per share results, $X.XX an as last increase year, XX%. FFO on diluted financial to compared to our share of $X.XX was representing quarterly

FFO Our Normalized FFO cover to our Core dividend. and are projected $X.XX

period for an was million, million XX%. of we $XX.X to Community $XX.X As year, million the per period for compared compared for $XX.X the million same our was same as quarter and representing representing plan, increase last we execute $XX.X NOI Rental expect earnings business on for income last related increase our an year, the share further. to quarter the XX%. increase as of to

to XX.X% expense was year. current operating community as XX.X% Our last for ratio quarter, the compared

of increase demonstrate $XX quarter million to year, and an representing million, for X%. $XX.X $XX.X quarter as business Property Property related the the the NOI representing Same same to Same million, rental was increase our quarter last was an to plan. compared Our the income results same of as of the for for continued year, last compared $XX.X Same for X%. Property success million quarter Community

improved compared Property to year-ago. as to ratio Same XX.X%, a XX.X% expense Our

year. quarter XX.X% to rate for occupancy same for last XX.X%, the Property quarter the as Same compared is Our

site Our rent year. X.X% of Same an increase Property which $XXX, is last is over

further recent our our We we as expect strengthen Property to Same to continue acquisitions. results upgrade

contains on XXX high-quality a the for occupied. XX% community we community This developed community land developed all-age asset a one XXXX which rents. expansion the total for currently in This $X.X sites in below and of the quarter, of year price of home with additional During is acquisition million. market located purchase closed are Indiana

five a consists XX% properties deals, rate X,XXX $XX containing for rate blended continued currently of Our acquisition total Many resulting compression. a for Success breeds of competing with success. in sites, are million. occupancy cap of funds private pipeline

earnings positive drive growth our our price more expect our acquisitions us. to share This We make to capital. will higher, of reducing available cost

them that experiencing required expansions improved crisis. affordable build the community that quality successful to UMH the economic will Our locations communities housing has conditions. solve has portfolio government built will are to communities UMH demonstrate local new help and that a expertise of

demand of supply is home manufactured Our limited industry for in highly coveted, communities. increased the resulting

continues grow. line to top Our

platform efficiently line in operating more continues run better to Our bottom resulting growth.

Our continue to sales improve. have improved and should

to begun impact We our and expanding our communities. industry. communities are opportunities Regulatory release to acquired have positively has

Anna is the earnings greater enhance capital now, share company. factors And results. for and These to detail provide our structure built quarter. you Our improve per our can with grow indicate on that to we rapidly will continue the results

Anna Chew

Rental share for was From items diluted on Sam. period. or share was period. represents per XXXX Core to a nine of you, for to million an basis. and per of of of increase gains XX% diluted compared $X.X basis. diluted a Core the million or diluted share prior This diluted rental Thank the the the quarter compared or occupancy. and realized was FFO months million share year million third for primarily year homes FFO, per of in share to $X.XX to $XX.X non-recurring on $X.XX a the the XX% other share a $XX.X or the million XX%, $X.XX $X.XX $X.X to community million or FFO due $XX.X which increase was per the on representing Funds million and or Normalized a $XX.X per the quarter or an addition share $X.X per income $X.X per for sale representing $X.XX share excludes Operations securities compared diluted year-ago, for related prior quarter XXXX per $X.XX acquisitions, million Normalized year-ago, compared growth third for of increase

at approximately most been communities. to raising We by rental have rates X% X%

Same for for were our $XX.X quarter $XX.X currently expenses to prior the operating for representing Community Community million of average Sam in year-ago. million to As income rent period. rental and XXXX XX.X% in weighted site increase XX.X% an monthly from the quarter the mentioned, a XXXX. NOI from Property year XX% by compared of X.X% $XXX, is increased related

months, expense the For the for to year nine our ratio XX% XX.X% was compared period. prior

and As the ratios integrate past, we occupancy improve we continue expense rise as rates and upgrade our to noted in acquisitions. as will our

of decrease $XXX million the loss for required company exclude previously securities a the $X.X in of our At a discussed, Normalized the million had new it of us Core with $XX.X value our end is in it earnings. a value FFO, current to but the decrease and net This the FFO, this As the We the unrealized include accounting portfolio marketable since of in quarter. million. securities fair adoption a quarter, from in of change unrealized. represents fair pronouncement our include net

additional portfolio securities additional provides REIT liquidity, Our us with income. and diversification

third income dividend XX% $X.X in the increased million million Our of from quarter. $X.X quarter current the in XXXX to

our debt. the of debt, was as community $XXX end the had which fixed rate quarter, of approximately to of capital structure, mortgage in As $XXX level we million turn million we

our end, maturity to a fixed average end year-ago. was debt mortgage average compared the mortgage XX-year mortgage X.X% year At to quarter, in was X.X at paid a on at have the our X.XX%. years During X.X% a we the on $XX.X years weighted rate The million quarter period. of X.X prior debt weighted quarter compared interest rate

total equity. loans had interest to million The prior fixed have prior period. X.X% debt in year at XX% compared of rate perpetual payable total X.X% the average of end, rate. $XX At also total a of in average is compared preferred weighted a the quarter to debt our year UMH our interest on in X.X% We period. of million weighted rate is X.X% $XXX

of with a market to XX%. continue billion at Our increase conservatively XX% capitalization with at From quarter market combined market million equity and capitalization stock market XX% we of and $X.X be end, capitalized net total less approximately credit in a our debt representing debt-to-total preferred year-over-year. total million our $XXX in securities $XXX results an net capitalization standpoint, a at our debt to capitalization

Additionally, was fixed times. X.X our coverage charge

to a X.X loans $XXX adjusted Our potentially by margin times. was $XX on the and net feature. in debt securities portfolio, with facility our million EBITDA standpoint, an X.X less net available encumbered million million pursuant From accordion $XX available and cash a equivalents, million EBITDA liquidity we in adjusted to $X quarter was an in and $XX with additional debt million ended securities credit our cash to our times,

let now, of on financing million turn open to had of And available up we $XX the revolving it home purchase over We sales questions. our before also the of it lines me Gene credit and for inventory. for

Eugene Landy

UMH Thank XXXX. you, an Anna. is way to on excellent its

Our growth is strong. income

Our XX% XX% share to months. growth. been the FFO the jobs There year, overall the a have the throughout build up modest quarter operating an continues the by for average growth short expected X.X% The is third the needed this enabled confidence, our unemployment and quarter. and U.S. to of per demand. positive has population still experiencing strong economy These for housing X.X is grew keep of metrics for increases, Sales, have historical rate The in improved. market, X.X increased year, to us overall to positive an double-digit at impressive quarter results all Normalized XX% with which nine low million of increase consumer for a housing high shortage. homes which benefit are wage million and from

program growth conventional our favoring push improving zoning. for the for bright which rising our been industry. decelerating potentially a well mortgage and legislative initiatives, Pressure These outlook shareholders. in the Furthermore, backdrop its sales GSE's future shown due highlight recent allow introduced on home affordability are has and rate economic against higher could However, Act, back to initiatives, amendments us including Legislation Dodd-Frank demographic prices UMH a bode to discriminatory and to the value Duty Serve of Senate, the to inherent conventional the home home rates. and sales homes. have and

We now happy questions. will to be take

Operator

of We question-and-answer the Janney. Stevenson Rob will session. first the now Instructions] [Operator And question begin comes from

Rob Stevenson

the completed expected Good roughly fourth the that million the still we Last far for you when was a it $X.X and close you similar And morning, pipeline million expecting adjusting would to XXXX. that Is in into And $XX the spoke, over case? how had pipeline XXXX quarter, for acquisition that guys. are during close? the you quarter quarter. sized that remaining

Samuel Landy

the case. is still that Yeah,

we then the to up like possibly. coming here deal those looks weeks, two dates have for about few the QX as $XX next And are that's close as in million. far to XXXX closing, expect the then December scheduled We and be QX, it closing with actually going

Anna Chew

Right.

Rob Stevenson

sales single-family less guys much or and Okay. given your sales, the the weather first mean, from you seasonality homes, of in guys much standpoint. And I traditionally then experience that? you How a everything how the seasonal of the in the days? the terms seasonality fourth markets experience for quarter in normally do quarter poor do else sales, these and home are from

Samuel Landy

Well, you're correct.

back that XXXX. second to is time, approximately before dramatically, bad ago at improved best for And from be generally has that situations XXXX so as The I'm what But it the the to could quarter three sales same saying like were for manufactured sales. that, was quarter coming sales. they months the home are as

a sales In October, fact, year-ago. were for they what triple were

though best, usually than sales even XXXX the stronger a there growing since seasonality, quarter is any the even right considerably. though So are time now, is second

Rob Stevenson

Anna, what have, then you changes major guys K? portfolio? composition the sort disclosed the guess, there it's Okay. Or I today as And of same been the last one, the composition on largely securities it in has any is of

Anna Chew

same. predominantly been was the there hasn't Right. many It - There is changes.

Rob Stevenson

Okay. you. Thank

Anna Chew

Thank you.

Operator

Craig from Riley come will FBR. question next of The Kucera B.

Craig Kucera

Hi, enacted? sales, Can the seems new it to you regarding before do versus you're Sam, morning, were I now maybe clearly to guys. your do that was what guess, that legislation comments helping. you able what is about not talk able good on

Samuel Landy

income. you into a coming buy payment, had household $XX,XXX they and to persons the Well, have house year $XX,XXX discuss monthly a ability

satisfaction because If them buyers. payment. cash blue-collar for do the And are monthly house. can't you incomes the discuss possible. experiencing the more monthly can't payment, scores getting you we're and that, rising again customer and We we're worker, can top we sell discuss a now of On highest report, more

sales sales date. XXX,XXX it's going in like from fall imaged business They're back just virtually XXXX. shipments are industry And over the So XXXX XX,XXX as phenomenally. we've low to been growing. never could almost that as out of UMH in is and state UMH look [ph] and sales, one Pennsylvania million] at expansion great center sales. when the do could I or and our is highest that. with fact I sales But at states, locations, [$X.X one look our in The

up room to have even grow sales XX% quarter. for still we the of though were So plenty

Craig Kucera

last it both you before you given you continue the - do up the a home need cycle And maybe sales years, get on it. Or that ample the because sense Got and have as of of you might what sales the do do to demand kind be would rentals? of kind there continues? sense in were several to draw maybe renting involved a so company land and got versus sort of you to I will rentals pick into were think for the have back in of before what your renting was you weak. homes, guess, the size now more

Samuel Landy

Right.

way a great, experience home great We XXX is people demand It's in to and add buy manufactured a company. just the then a believe new people at up and to move home getting houses, continue program to sale rental sales. and we're being we'll use rental it. it's community year, never who will for a home to starter lived I The great great that have a units continue there. they started generate

could a We land great Street want sales home to pretty We easily. one Street marketing, [ph] other people's do communities becoming great have million] stronger more in into fantastic sales, dealerships, year our people, of of do locations, get [$X.X sales product. dealership more

and room we staff great grow that's to So a better have better. this, getting there's of and plenty

Craig Kucera

kind acquisition expectations as us the timing, you you a to two color but that back Has of far all XX% appreciate sort circling a have And on as ago? pipeline, will sense of the changed your be we where can were yield from update do initial on quarter of on at occupied, your those? And there? what or

Samuel Landy

looking in. the going the The the underwritten rate are communities So are about better been lot we've done communities of in of cap Most past. CapEx in a quality has the already been the has these work pipeline, These completed. X.XX% along than done at way.

rental going our to in pretty be to minimal putting cleanup, we're So able grow yield should so be homes, really quickly. we

Craig Kucera

it. Got

natural like sort going you're that acquisitions. drag from it of So sounds not of to margin have assume? this to round that fair Is

Samuel Landy

Yes.

Craig Kucera

to so your value But Okay. you're your of income, the And we impactful if it Because be fair it just base your possible? out possible your has securities calculate I in me, a impact investor in market positions least Anyway, at thought what one it. every as your report is will for in quarterly to calculation. of to I quarter I'd more net what for would the if your guys FFO you of you value, that know better that, that to guess, now report are and Q it having I your net supplement, be your sense asset be? sort back or request possible,

Samuel Landy

interesting we an from our change Anna it. month-to-month, view securities the I'll and quarter-to-quarter. liquid pointed that's But as day-to-day, out, Well, don't portfolio real views suggestion. state, we as consider

decades. So positions we hold for

quarterly. the that's gotten that And now year-end. will the whether the maybe markets we I appreciate publish I consider so so have reason we - it But volatile, suggestion. usually should And publish

Craig Kucera

Thank you.

Operator

of question Wagner next Wealth. The Brendan Montag comes from

Brendan Wagner

don't why on home REIT it call. investing was I is when but models, concept property, margin the up myself REIT do. just the But and bread my business okay you're in specifically could guys question Thanks be of the to capital like portfolio, you some allocating ASP congrats. chatted to you in Hi. we're extent if Because improve the rationale past, the good to because you which Anna. Thanks. me And it's client gross terrific, CFO butter piece that, you and color I of about me of as Anna, do, give and to as understand My the the wondering is the it course. see could the help were we with of see portfolio for the I that. taking not I the results see sales. like a my and great entirety, for and curious the on to to having terrific, seems it's what on Indiana so it's understand

Anna Chew

Okay.

has that real portfolio as the liquidity for mentioned, had for acquisitions. - portfolio down didn't use were purchase in consider - the liquid funds. estate. acquisitions Gene In We REIT we we securities when and the total We purposes. portfolio able of the and some take As we liquidity primarily past, to the have

when in, we securities have back portfolio. the that into Additionally, comes money we it put

we we don't Sometimes, money of the funds, useful is times it at way capital. a when raise have storing can good so

Samuel Landy

In our have Samuel. I'd portfolio realized XX-Q, add. you'll gains. in results that generated $XX see from This is the securities million REIT and the dividends

So stock that history $XX have million time-to-time. we is prices and our in long-term gains. realized dividend fluctuate The from

Anna Chew

total Additionally our capitalization. it's of market about XX% only

Brendan Wagner

And do Difficulty]… Thank appreciate know the the you I I that for follow-up color. my [Technical [Technical is, where Difficulty] quick

Samuel Landy

breaking I'm sorry, up. you're

Brendan Wagner

I'm [Technical sorry. Oh, Yes. Difficulty]

Anna Chew

Brendan, hear we you. can't

Operator

Wagner? Mr.

Brendan Wagner

up. sorry. sorry. I'll I'm I'm follow

Anna Chew

you. Thank

Samuel Landy

Okay.

Brendan Wagner

me? Oh, can you hear

Samuel Landy

Yes.

Brendan Wagner

dividends the coming that including on - dividends, Sorry. impact Core from was [ph]? looking knockdown ability? FFP will And percentage the dividend My in SIR, that REIT paying what those CPL] the and from - [GOV, dividends your will portfolio, from question back of is

Samuel Landy

phone know using. I you're don't what again. You're breaking up

Brendan Wagner

I'm sorry. offline. follow-up I'll Okay.

Anna Chew

Thank you. Okay.

Samuel Landy

Okay. Thank you.

Operator

The Ross next of Merrill question from Boenning. comes

Merrill Ross

from given about a that capability have. morning. you program, XXX the rate value returns the and And that would from to creation have I'm the to, or the you wondering rental XXX XXX say, XXXX good in future? run that target increase Hi,

Samuel Landy

Yes.

rentals see rentals XX In see much What out. is, that do quickly out. had how and rented rented we they pretty we have ability. quickly cases some we We how per community X had and they

to to looks the all demanding the XXX increases, that's for ability as number. predicted XXXX that go But and watching we're be have going So time, we like we the faster. do it

Merrill Ross

Thank Great. you.

Operator

to [Operator Samuel turn I Instructions] would closing like concludes conference remarks. question-and-answer Landy our for back any over This the session. to

Samuel Landy

to like our Thank you, their for thank operator. support would participants this in on continued and call interest the company. I

the available you month, Gene, always, hope to conference As and year-end later for to and our to Anna see are you I in March follow-up any reporting questions. back forward we results. this with look NAREIT at We

Operator

attending ID and please The approximately you, hour. presentation. in today's conference be free Thank is dial disconnect or conference available this number Thank The will lines. has your XXXXXXXX. now replay replay, teleconference To concluded. X-XXX-XXX-XXXX. International you access one please XXX-XXX-XXXX U.S. for toll The

UMH Properties (UMH) 2 Nov 182018 Q3 Earnings call transcript