UMH PROPERTIES, INC. REPORTS RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2019
FREEHOLD, NJ, Aug. 08, 2019 (GLOBE NEWSWIRE) -- UMH Properties, Inc. (NYSE:UMH) reported Total Income for the quarter ended June 30, 2019 of $37,230,000 as compared to $32,099,000 for the quarter ended June 30, 2018, representing an increase of 16%. Net Loss Attributable to Common Shareholders amounted to $5,537,000 or $0.15 per diluted share for the quarter ended June 30, 2019 as compared to Net Income of $14,949,000 or $0.40 per diluted share for the quarter ended June 30, 2018. This decrease was due to the change in fair value of our marketable securities. During the second quarter of 2019, we recognized $2.4 million of unrealized losses as compared to $16.6 million of unrealized gains in the prior year period.
Funds from Operations Attributable to Common Shareholders (“FFO”), was $5,671,000 or $0.14 per diluted share for the quarter ended June 30, 2019 as compared to $6,154,000 or $0.17 per diluted share for the quarter ended June 30, 2018. Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), was $5,671,000 or $0.14 per diluted share for the quarter ended June 30, 2019, as compared to $6,679,000 or $0.18 per diluted share for the quarter ended June 30, 2018. These decreases were primarily attributable to the impact of our $100 million preferred issue in late April, which have not yet been fully deployed.
A summary of significant financial information for the three and six months ended June 30, 2019 and 2018 is as follows:
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2019 | 2018 | |||||||
| Total Income | $ | 37,230,000 | $ | 32,099,000 | ||||
| Total Expenses | $ | 32,588,000 | $ | 27,761,000 | ||||
| Increase (Decrease) in Fair Value of Marketable Securities | $ | (2,352,000 | ) | $ | 16,624,000 | |||
| Net Income (Loss) Attributable to Common Shareholders | $ | (5,537,000 | ) | $ | 14,949,000 | |||
| Net Income (Loss) Attributable to Common Shareholders per Diluted Common Share | $ | 0.15 | $ | 0.40 | ||||
| FFO (1) | $ | 5,671,000 | $ | 6,154,000 | ||||
| FFO (1) per Diluted Common Share | $ | 0.14 | $ | 0.17 | ||||
| Normalized FFO (1) | $ | 5,671,000 | $ | 6,679,000 | ||||
| Normalized FFO (1) per Diluted Common Share | $ | 0.14 | $ | 0.18 | ||||
| Diluted Weighted Average Shares Outstanding | 39,649,000 | 36,971,000 | ||||||
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2019 | 2018 | |||||||
| Total Income | $ | 71,517,000 | $ | 61,895,000 | ||||
| Total Expenses | $ | 62,338,000 | $ | 53,253,000 | ||||
| Increase (Decrease) in Fair Value of Marketable Securities | $ | 6,244,000 | $ | (9,275,000 | ) | |||
| Net Income (Loss) Attributable to Common Shareholders | $ | 377,000 | $ | (12,206,000 | ) | |||
| Net Income (Loss) Attributable to Common Shareholders per Diluted Common Share | $ | 0.01 | $ | (0.34 | ) | |||
| FFO (1) | $ | 11,762,000 | $ | 12,509,000 | ||||
| FFO (1) per Diluted Common Share | $ | 0.30 | $ | 0.34 | ||||
| Normalized FFO (1) | $ | 12,137,000 | $ | 13,014,000 | ||||
| Normalized FFO (1) per Diluted Common Share | $ | 0.31 | $ | 0.36 | ||||
| Diluted Weighted Average Shares Outstanding | 39,390,000 | 36,246,000 | ||||||
A summary of significant balance sheet information as of June 30, 2019 and December 31, 2018 is as follows:
| June 30, 2019 | December 31, 2018 | |||||||
| Gross Real Estate Investments | $ | 905,830,000 | $ | 881,456,000 | ||||
| Marketable Securities at Fair Value | $ | 106,773,000 | $ | 99,596,000 | ||||
| Total Assets | $ | 915,287,000 | $ | 880,902,000 | ||||
| Mortgages Payable, net | $ | 327,609,000 | $ | 331,093,000 | ||||
| Loans Payable, net | $ | 38,723,000 | $ | 107,985,000 | ||||
| Total Shareholders’ Equity | $ | 529,988,000 | $ | 424,698,000 | ||||
Samuel A. Landy, President and CEO, commented on the results of the second quarter of 2019.
“During the quarter, we raised $100 million if preferred equity to fund our future growth. As we deploy this capital into new acquisitions, rental homes and expansions, our earnings will rise accordingly. Subsequent to quarter end, we utilized some of the proceeds from our preferred offering and closed on the acquisition of 3 communities containing 1,100 developed homesites for a total purchase price of approximately $31 million or $28,000 per site. The blended occupancy rate for these communities was 54% at the time of acquisition. We anticipate increased occupancy and earnings as we upgrade and improve these communities.”
“We are pleased to announce another solid quarter of operating results. During the quarter, we:
| ● | Increased Rental and Related Income by 11% over the prior year period; | |
| ● | Increased Community Net Operating Income (“NOI”) by 6% over the prior year period; | |
| ● | Increased Same Property NOI by 4% over the prior year period; | |
| ● | Increased Same Property Occupancy by 301 sites or 140 basis points over the prior year period from 82.2% to 83.6%; | |
| ● | Increased home sales by 51%, generating a net profit of $178,000 as compared to a net loss of $288,000 over the prior year period; | |
| ● | Increased our rental home portfolio by 336 homes to approximately 6,800 total rental homes, representing an increase of 5% from yearend 2018; | |
| ● | Increased rental home occupancy by 130 basis points from 92.3% at yearend 2018 to 93.6% at quarter end; | |
| ● | Issued 4 million shares of our 6.75% Series C Perpetual Preferred Stock resulting in net proceeds of approximately $96.7 million; | |
| ● | Raised $10.7 million through our Dividend Reinvestment and Stock Purchase Plan; | |
| ● | Reduced our Net Debt to Adjusted EBITDA from 6.1x to 5.6x year over year; | |
| ● | Reduced our Net Debt to Total Market Capitalization from 29.9% to 28.9% year over year; and, | |
| ● | Subsequent to quarter end, we completed the financing/refinancing of three of our communities for total proceeds of approximately $38.8 million, reducing the interest rate on the existing $11.6 million mortgage from 5.94% to 3.41%.” |
Mr. Landy further stated, “Our same property results remain strong. Same property occupancy increased 140 bps to 83.6% at quarter end 2019 as compared to 82.2% in the prior year period.”
“Home sales have been accelerating. After delivering sales growth of 45% in 2018, and 44% in the first quarter, sales for the second quarter increased 51% year over year. A continuing national need for affordable housing coupled with UMH’s availability of vacant sites provide an opportunity for continued growth in earnings and value.”
UMH Properties, Inc. will host its Second Quarter 2019 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, August 9, 2019 at 10:00 a.m. Eastern Time.
The Company’s 2019 second quarter financial results being released herein will be available on the Company’s website at www.umh.reit in the “Financial Information and Filings” section.
To participate in the webcast, select the microphone icon found on the homepage www.umh.reit to access the call. Interested parties can also participate via conference call by calling toll free 877-513-1898 (domestically) or 412-902-4147 (internationally).
The replay of the conference call will be available at 12:00 p.m. Eastern Time on Friday, August 9, 2019. It will be available until November 1, 2019 and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10132371. A transcript of the call and the webcast replay will be available at the Company's website, www.umh.reit.
UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 121 manufactured home communities containing approximately 22,600 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan and Maryland. In addition, the Company owns a portfolio of REIT securities.
Certain statements included in this press release which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are based on the Company’s current expectations and involve various risks and uncertainties. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can provide no assurance those expectations will be achieved. The risks and uncertainties that could cause actual results or events to differ materially from expectations are contained in the Company’s annual report on Form 10-K and described from time to time in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.
Note:
| (1 | ) | Non-GAAP Information: We assess and measure our overall operating results based upon 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 The 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 United States 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, and the change in the fair value 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 change in the fair value of marketable securities from our FFO calculation. Prior to the adoption of the FFO White Paper – 2018 Restatement, we utilized Core Funds from Operations (Core FFO), which we defined as FFO, excluding the change in the fair value of marketable securities. 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 gains and losses realized on marketable securities investments 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. |
FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as alternatives 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 reconciliation of the Company’s U.S. GAAP net loss to the Company’s FFO and Normalized FFO for the three and six months ended June 30, 2019 and 2018 are calculated as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||
| 6/30/19 | 6/30/18 | 6/30/19 | 6/30/18 | |||||||||||||
| Net Income (Loss) Attributable to Common Shareholders | $ | (5,537,000 | ) | $ | 14,949,000 | $ | 377,000 | $ | (12,206,000 | ) | ||||||
| Depreciation Expense | 8,868,000 | 7,764,000 | 17,620,000 | 15,359,000 | ||||||||||||
| (Gain) Loss on Sales of Depreciable Assets | (12,000 | ) | 65,000 | 9,000 | 81,000 | |||||||||||
| (Increase) Decrease in Fair Value of Marketable Securities (2) | 2,352,000 | (16,624,000 | ) | (6,244,000 | ) | 9,275,000 | ||||||||||
| FFO Attributable to Common Shareholders | 5,671,000 | 6,154,000 | 11,762,000 | 12,509,000 | ||||||||||||
| Non-Recurring Other Expense (3) | -0- | 525,000 | -0- | 525,000 | ||||||||||||
| Settlement of utility billing dispute over a prior 10-year period | -0- | -0- | 375,000 | -0- | ||||||||||||
| Gain on Sales of Marketable Securities, net | -0- | -0- | -0- | (20,000 | ) | |||||||||||
| Normalized FFO Attributable to Common Shareholders | $ | 5,671,000 | $ | 6,679,000 | $ | 12,137,000 | $ | 13,014,000 | ||||||||
The diluted weighted shares outstanding used in the calculation of FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 39,931,000 and 39,390,000 shares for the three and six months ended June 30, 2019, respectively, and 36,971,000 and 36,546,000 shares for the three and six months ended June 30, 2018, respectively. Common stock equivalents resulting from stock options in the amount of 282,000 and 245,000 shares for the three and six months ended June 30, 2019, respectively, and 371,000 and 300,000 shares for the three and six months ended June 30, 2018, respectively, are included in the diluted weighted shares outstanding. Common stock equivalents for the three months ended June 30, 2019 and for the six months June 30, 2018 were excluded from the computation of the Diluted Net Income (Loss) per Share as their effect would be anti-dilutive.
The following are the cash flows provided (used) by operating, investing and financing activities for the six months ended June 30, 2019 and 2018:
| 2019 | 2018 | |||||||
| Operating Activities | $ | 11,648,000 | $ | 14,445,000 | ||||
| Investing Activities | (34,463,000 | ) | (61,477,000 | ) | ||||
| Financing Activities | 19,334,000 | 39,107,000 | ||||||
| (2 | ) | (Increase) Decrease in Fair Value of Marketable Securities, if any, were previously recorded in Core FFO. | |
| (3 | ) | Consists of one-time payroll expenditures. |
Contact: Nelli Madden
732-577-9997
UMH PROPERTIES, INC.
Juniper Business Plaza
3499 Route 9 North, Suite 3-C
Freehold, NJ 07728
(732) 577-9997
Fax: (732) 577-9980
# # # #
