UMH Properties Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Yeah, thank you. Good morning. I wanted to ask you on your rent growth expectations. Are you guys still expecting to see 5% rent growth that you've talked about in the past this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, UMH.N - Q1 2025 UMH Properties Inc Earnings Call

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. Second question, I think you talked about tariffs and it seems like you guys have preordered 650 homes. But I was wondering, if you were to order new homes today, are the prices up versus the prices that you guys ordered for preorder?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. And then lastly, the rates for refinancing the mortgage, I think you talked about looking to refinance some mortgages with Fannie Mae this quarter. What kind of rates are you that seeing now? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director Well, the 10-year -- our rates are based on the 10-year treasury because we anticipate doing a 10-year loan. And those rates have stabilized a little bit. It has come down, as a matter of fact, a little and because of that, we believe that the rates will be around the 5.5% to maybe 5.75%, but in that range. But we should know within the next few weeks because we will hopefully be closing within the next few weeks. .

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Good morning guys. Brett, just to follow up on the same-store revenue question. On the expense growth on the same-store portfolio, are you seeing any notable upward pressure on real estate taxes or any other place on the expense side at this point near term?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. That snow removal going to be my next question. And then I guess the question, you guys talked about duplexes and smaller units as well as the solar shingle homes. Have you guys put any considerable numbers of those in the portfolio today? And how is it being -- if so, how are they being received by prospective tenants or buyers if there are going to be ones for sale rather than rent?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : What is -- at this point, what are you looking at as a potential premium for the solar shingle homes over normal shingle homes? And then what's the potential discount or lower pricing of duplexes versus the single wides in your portfolio? .

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : So sorry, I didn't know whether you got me before it cut off, but the solar shingle homes, the premium there and how much cheaper are the -- are you renting out duplexes versus the normal sort of single wides?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Okay, thanks guys. I appreciate the time and have a great weekend.

Question: Craig Kucera - Lucid Capital Markets - Analyst : Hey, good morning, guys. I appreciate the color on the new versus used home sales this quarter. Can you give us a sense of what the gross margins are on sale for those two types

Question: Craig Kucera - Lucid Capital Markets - Analyst : Yeah, I'll just repeat the question. It was a follow-up on sales just that you mentioned that they were very strong but they were down year-over-year for the first time in a few years. And I just would be curious if you attribute that to a more difficult winter and sort of what you're seeing here in the second quarter as far as traffic and volume and sort of interest?

Question: Craig Kucera - Lucid Capital Markets - Analyst : Okay, that's helpful. Thank you. And just changing gears. You mentioned that you thought you'd be able to refinance these mortgages that you paid off here in the first half of the year 5.5%, maybe 5.75%. Can you talk about the interest rates on what is maturing both here in the first half of the year and during the remainder of the year? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director Yes. I mean, the interest rates are, of course, a lot better because it was 10 years ago. And the ones that we are paying off or that we have already paid off as of April 1. The average interest rate there was about 4% and the remaining is about 4%, I think 4.1% for the remaining for the year. Again, we believe that even though we will have a little bit more of an interest cost, we believe that our operations, our rental income will all make up for the increase in interest costs.

Question: Craig Kucera - Lucid Capital Markets - Analyst : Got it. And just when you think about the appreciation in the properties that you are refinancing here in 2025. I guess how are you thinking about mortgage debt as more of a primary source of funding here in 2025 versus the last couple of years where you've leaned a little bit more on common and on the preferred.

Question: Craig Kucera - Lucid Capital Markets - Analyst : Great. Just one more for me. I feel like over the last few quarters, you've been saying that this might be the year where you saw some larger acquisition opportunities out there, maybe some operators that were financial buyers and really didn't know what they were doing and there might be a great opportunity for you or something along those lines. I guess, are you seeing any of those present themselves at this point?

Question: Craig Kucera - Lucid Capital Markets - Analyst : Okay. Thanks guys. That's it for me.

Question: Merrill Ross - Compass Point Research & Trading, LLC - Analyst : Good morning. I have two questions. The first one is on the Mantua acquisition. But Asia stricter properties. I think that's the first time in the many years that I've been following you as that I've ever seen you buy 100% occupied property with no expansion sites available. Can you tell us if that was a one-off and what return expectations and what the drivers of those returns are you incorporate it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, UMH.N - Q1 2025 UMH Properties Inc Earnings Call

Question: Merrill Ross - Compass Point Research & Trading, LLC - Analyst : Great. So it could happen again. But it's kind of like lightning, right? At the way that is right?

Question: Merrill Ross - Compass Point Research & Trading, LLC - Analyst : Right. I had one more follow-up on the refinancing. I was just interested to know if the properties being refinanced, at the GSEs also include rentals as well as owner-occupied because I think that is part of that innovative financing structure that you had a couple of years ago? And maybe there's some follow-through with this refinancing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, UMH.N - Q1 2025 UMH Properties Inc Earnings Call Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director Unfortunately, right now, the rental homes are not going to be financed. However, the rental -- the income from the site underneath the rental home is included in this refinancing. So although the homes are not included, the income from the site of these rental homes are included. So we believe that there was a change in the GSE thinking, but hopefully, we can change their mind again because we did win that battle a few years back. And hopefully, we will be able to do that again.

Question: Merrill Ross - Compass Point Research & Trading, LLC - Analyst : Great. Well, good luck. Thank you.

Question: John Massocca - B. Riley Securities - Analyst : That's the wrong Massocca there, it's B. Riley Securities. But anyway, going back to that last question a little bit. As I'm kind of thinking about the GSE financing and rentals, is it just that you lose some of the LTV on that financing because you can't include the homes? Or does it exclude all kind of communities on rentals in them or portions of communities with rentals in them? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, UMH.N - Q1 2025 UMH Properties Inc Earnings Call

Question: John Massocca - B. Riley Securities - Analyst : So yeah, so kind of going back to the last question on GSE debt. Just to clarify, you can still get debt on communities with rental housing on them. It's just the LTV would be lower because you can't include the actual physical home in kind of the loan value, correct? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director That is correct. The -- my apologies, our phone is kind of cutting in and out. But anyway, the number of rental homes is not an issue right now. If you look at a rental home, you have the income from the home itself and the income from the site rent, combined it's on average about $1,000 per month in our portfolio. What the GSEs are taking right now is the income from the site, which is approximately 50% of that total $1,000. And then that is what they are using as part of the collateral for the loan.

Question: John Massocca - B. Riley Securities - Analyst : (inaudible)

Question: John Massocca - B. Riley Securities - Analyst : It impacts on the value.

Question: John Massocca - B. Riley Securities - Analyst : No worries, it's a question. Can you hear me now?

Question: John Massocca - B. Riley Securities - Analyst : Okay. Moving to the next question. Is the thing about kind of the mechanics of the refinancings, you got another roughly $50 million, $70 million of debt maturing in the back half of the year. Are each of those kind of tranches, the maturity that can be refinanced separately? Or would you end up taking out kind of all of it at once, if you will, in the next coming weeks to be kind of prefunding it, if you will? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director What we are doing is we are already starting to talk about refinancing in the latter half of the year, in the third and fourth quarter. The ones that are -- we believe that we will be able to get GSE financing. But of course, these are communities that already have GSE financing on them. So we don't believe we should have a problem with getting GSE financing.

Question: John Massocca - B. Riley Securities - Analyst : That's fair. And then lastly, as I think about adding new rental homes to existing communities, the 800 target you have out there. it kind of implies a pretty big ramp versus 1Q. Should we expect that to be concentrated maybe in kind of 2Q and 3Q just given that traditional rental season? Or could it be a little more variable over kind of the remaining nine months of the year?

Question: John Massocca - B. Riley Securities - Analyst : Okay, thank you very much for that. That's it for me.