UMH Properties Inc Q3 2024 Earnings Call Transcript

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

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Sam, how is the acquisition pipeline today in the overall transaction environment versus a quarter or 2 ago?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : All right. That's helpful, Brett. Self-storage, was that just a unique opportunity in the quarter? Are there real synergies that would make sense to own storage units peripheral to a number of your other communities at this point?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. And then what are you guys paying today for new rental units? And how much upward cost pressure is there on the part of the manufacturers in terms of cost inflation today?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. Brett, I mean, I guess on that, I guess, obviously, single-wide, double-wide makes a difference, but it seems like a huge gap versus the $151,000 per home on the 98 new home sales in the third quarter. Anything else other than wholesale versus retail pricing coming into play here in terms of that gap versus what it would cost you for those homes or people increasing optionality when they buy at $151,000 per home? Can you talk a little bit about that?

Question: Robert Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. And then last one for me. Sam, you talked about that the New Jersey JV with the homebuilder is making progress. If that comes to fruition, is that first half '25, second half '25 type of deal? How would you sort of handicap the timing there and when we should expect additional news?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : I wanted to ask on your rental homes. You said you're looking to add 800 rental homes next year. And I think this year, you said you added 284, excluding the used home sales. So, that 800 number for next year, what's the comparable number for 2024 to compare to that 800 number?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. That's helpful. I also wanted to ask you on your comments around self-storage. Just to clarify, the self-storage units that you talked about, are those units for UMH residents only? Or are they open to anybody?

Question: RIch Anderson - Wedbush Securities LLC - Analyst : I think there was mentioned storm costs. Did you quantify that number for the quarter?

Question: RIch Anderson - Wedbush Securities LLC - Analyst : Okay. And so if you were to remove those costs, would you -- would that have sprung you over into double-digit NOI growth territory for the quarter? Or would you have still been -- some think the magic number here is double-digit same-store NOI growth. So, I'm wondering if there's a return to that next quarter and down the line?

Question: RIch Anderson - Wedbush Securities LLC - Analyst : Fair enough. Noticed at the same-store level, you had flat occupancy sequentially at 87.7%. And we've talked in the past, what's the optimal occupancy to carry so that you have availability to grow? I'm just wondering, is there a number in mind? Or do you just -- are you driving towards 100% occupancy muscling through? Or is -- sort of low 90s, high 80s sort of the optimal level? Anything to read in from that flat occupancy sequential growth this quarter?

Question: RIch Anderson - Wedbush Securities LLC - Analyst : Great color. Last question for me. Of the 10,089 rental homes in the portfolio today, when you look at that, what percentage of that would you say is obsolete? And will -- when a day comes that there is a vacancy that you'll have to replace it? And what percentage can carry on either through a home sale or a re-rental?

Question: Craig Kucera - Lucid Capital Markets - Analyst : I have another follow-up on the rental home deployments. I'm just trying to understand if you're deploying 800, let's say, in 2025, should we expect somewhat of a programmatic sale, and so maybe you don't have a net 800 added to the rental pool? Or I think we're just trying to figure out how much growth you're going to have in the rental pool if you're starting to sell out of it, which I don't think you've done too much of in the past?

Question: Craig Kucera - Lucid Capital Markets - Analyst : Okay. I appreciate the color there. A big quarter from an equity issuance perspective, and you pay down the line of credit, but should we anticipate that you may pay down the loans payable that remain because I think they are still the highest cost to remain debt that you have? Or is it somehow cost prohibitive to do that? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director I think the only loans payable we have is the term loan on our rental homes, and that's not due for another couple of years. And that's only $20-something million. But on an annual basis, we need between $120 million to $150 million. So therefore, we are able, with our ATM issuance this quarter, we are all set in order to execute our business plan next year as well as anticipating any acquisitions that may come about. --

Question: John Massocca - B. Riley FBR, Inc. - Analyst : So maybe touching on external growth a little bit more. You seemed a little more optimistic that there might be opportunities out there that maybe the bid-ask spread between buyers and sellers of communities has narrowed. I was just wondering if there's any color you can give on what's driving that or any specific kind of operators in the market that are kind of more likely to sell now than they were three to six months ago?

Question: John Massocca - B. Riley FBR, Inc. - Analyst : Okay. I mean, with that in mind, I mean, how are you thinking about kind of your current leverage levels? They've obviously come down pretty significantly over the last couple of quarters. I mean is that more leaving you kind of a coiled spring to do more investments? Or do you kind of feel like all else being equal from a cost of capital perspective, you'd like to stay at this level going forward?

Question: John Massocca - B. Riley FBR, Inc. - Analyst : Switching gears just a little bit. Last one for me. On the self-storage units. I mean you talked about them being kind of additive to kind of existing and potential future communities. Is there a scenario where you would develop kind of on a more -- on a basis that's a little bit less tied to your kind of manufactured housing communities just given it may be a higher and better use for some of the land you have in the portfolio or for zoning reasons? Or do you think future development of that kind of asset class is going to be really tied to kind of community growth -- manufactured housing community growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 3:00PM, UMH.N - Q3 2024 UMH Properties Inc Earnings Call

Question: Richard Anderson - Wedbush Securities - Analyst : Just a quick follow-up on same-store methodology. So, let's -- I know your same-store is calculated at the community level, you've excluded some for various reasons in the same-store pool. But let's say a community in a same-store pool has been expanded via your expansion site process. Are those new expansion units included in the pool such that it could weigh down the optics of growth initially before you start seeing units get -- or sites getting cash paying? Or do you exclude the expansion component from the same-store calculation until a full year has passed? Anna Chew - UMH Properties Inc - Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director They are included if the community itself was included. So, it is included in our same-store numbers.