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UMH Properties, Inc. Reports Results For The First Quarter Ended March 31, 2018

  (May 09, 2018)

FREEHOLD, N.J., May 9, 2018 /PRNewswire/ -- UMH Properties, Inc. (NYSE: UMH) reported Total Income for the quarter ended March 31, 2018 of $29,796,000 as compared to $26,449,000 for the quarter ended March 31, 2017, representing an increase of 13%.  Net Loss Attributable to Common Shareholders amounted to $27,155,000 or $0.76 per diluted share for the quarter ended March 31, 2018 as compared to $1,504,000 or $0.05 per diluted share for the quarter ended March 31, 2017.  This increase was due to the change in fair value of our marketable securities.  Starting in 2018, unrealized gains or losses in value on securities holding are included in our operating numbers.  Previously, these unrealized gains or losses were recognized in "Accumulated Other Comprehensive Income" on our Balance Sheet.  At quarter end, the Company had net unrealized losses of $14,379,000 in its securities portfolio, resulting in a $25,899,000 total decrease in fair value for the quarter. 

Core Funds from Operations ("Core FFO"), was $6,355,000 or $0.18 per diluted share for the quarter ended March 31, 2018 as compared to $5,061,000 or $0.17 per diluted share for the quarter ended March 31, 2017, representing an increase in Core FFO per diluted share of 6%.  Normalized Funds from Operations ("Normalized FFO"), was $6,335,000 or $0.18 per diluted share for the quarter ended March 31, 2018, as compared to $5,029,000 or $0.17 per diluted share for the quarter ended March 31, 2017, representing an increase in Normalized FFO per diluted share of 6%. 

A summary of significant financial information for the three months ended March 31, 2018 and 2017 is as follows:



 



For the Three Months Ended



March 31,



2018



2017







Total Income

$

29,796,000


$

26,449,000

Total Expenses

$

25,492,000


$

22,485,000

Dividend and Other Investment Income (Loss), net

$

(23,454,000)


$

1,883,000

Net Loss Attributable to Common Shareholders

$

(27,155,000)


$

(1,504,000)

Net Loss Attributable to Common

  Shareholders per Diluted Common Share

 

$

 

(0.76)


 

$

 

(0.05)

Core FFO (1)

$

6,355,000


$

5,061,000

Core FFO (1) per Diluted Common Share 

$

0.18


$

0.17

Normalized FFO (1)

$

6,335,000


$

5,029,000

Normalized FFO (1) per Diluted Common Share

$

0.18


$

0.17

Weighted Average Shares Outstanding


35,907,000



29,955,000

 

A summary of significant balance sheet information as of March 31, 2018 and December 31, 2017 is as follows:

 


March 31,

2018


December 31,
2017









Gross Real Estate Investments

$  773,642,000


$  764,439,000

Marketable Securities at Fair Value

$  113,344,000


$  132,964,000

Total Assets

$  813,387,000


$  823,881,000

Mortgages Payable, net

$  303,317,000


$  304,895,000

Loans Payable, net

$    50,383,000


$    84,704,000

Total Shareholders' Equity

$  446,549,000


$  421,215,000

 

Samuel A. Landy, President and CEO, commented on the results of the first quarter of 2018.

"We are pleased to announce another solid quarter of operating results and an excellent start to 2018.  Our Normalized FFO for the quarter of $0.18 per diluted share fully covered our dividend.  During the quarter, we:

  • Increased Rental and Related Income by 11.2%;
  • Increased Community Net Operating Income ("NOI") by 11.2%;
  • Increased Same Property NOI by 5.4%
  • Increased Same Property Occupancy by 140 basis points from 81.8% to 83.2%;
  • Increased home sales by 31.7%;
  • Increased our rental home portfolio by 165 homes to approximately 5,800 total rental homes, representing an increase of 17.7%;
  • Increased rental home occupancy by 100 basis points from 93.7% to 94.7%;
  • Reduced the weighted average interest rate on our mortgage debt from 4.4% to 4.2%;
  • Maintained the weighted average interest rate on our total debt at 4.1%;
  • Issued 2,000,000 shares of a new 6.375% Series D Cumulative Redeemable Preferred Stock, for net proceeds after deducting the underwriting discount and other estimated offering expenses, of approximately $48 million
  • Raised $10.1 million through our Dividend Reinvestment and Stock Purchase Plan;
  • Reduced our Net Debt to Total Market Capitalization from 36.4% to 29.0% and our Net Debt Less Securities to Total Market Capitalization from 26.1% to 19.0%; and,
  • Increased our total market capitalization to $1.1 billion, representing an increase of 8.5%."

Mr. Landy stated, "Our positive results were driven by strong operating metrics.  Our rental program remains the most efficient way to drive occupancy and earnings growth.  During the quarter we added 165 rental homes to our communities.  Our rental home portfolio now contains 5,772 homes with an occupancy rate of 94.7%."

"Home sales have been improving and increased 32% this year.  The positive demographic trends and robust labor market, combined with rising conventional home prices, should favor our industry and drive further demand for our homes."

"Same Property NOI increased by 5.4% this year, driven by a 140 basis point increase in the occupancy rate and a 3.3% increase in our weighted average monthly site rent."

"During the quarter, we also enhanced our liquidity by issuing 2,000,000 shares of a new 6.375% Series D Cumulative Redeemable Preferred Stock, for net proceeds, after deducting the underwriting discount and other estimated offering expenses, of approximately $48 million.  We anticipate continued per share earnings accretion once this capital is fully deployed."

"Starting in 2018, unrealized gains or losses in value on securities holding are included in our operating numbers. The REIT market has been under pressure thus far in 2018 losing approximately 10% in value.   We view this as temporary and expect the value of the companies to better reflect their earnings and underlying property values."

"We continue to execute on our business plan.  We have a robust acquisition pipeline of approximately $75 million.  We anticipate completing the acquisition of two of these communities, with a total of approximately 670 sites at a purchase price of $20 million, within the next few weeks.  We look forward to building on the substantial progress we have made thus far."

UMH Properties, Inc. will host its First Quarter 2018 Financial Results Webcast and Conference Call.  Senior management will discuss the results, current market conditions and future outlook on Thursday, May 10, 2018 at 10:00 a.m. Eastern Time.

The Company's 2018 first 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 Thursday, May 10, 2018.  It will be available until August 1, 2018 and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10118610.  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 112 manufactured home communities containing approximately 20,000 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 ("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, plus certain non-cash items such as real estate asset depreciation and amortization.  NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance.  We define Core Funds From Operations ("Core FFO") as FFO plus costs of early extinguishment of debt, change in the fair value of marketable securities and costs associated with the redemption of preferred stock.  We define Normalized Funds From Operations ("Normalized FFO") as Core FFO excluding gains and losses realized on marketable securities investments and certain non-recurring charges. 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.  FFO, Core FFO and Normalized FFO, as well as Community NOI, should be considered as supplemental measures of operating performance used by REITs.  FFO, Core 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, Core FFO, Normalized FFO and Community NOI and, accordingly, our FFO, Core FFO, Normalized FFO and Community NOI may not be comparable to all other REITs.  The items excluded from FFO, Core FFO and Normalized FFO are significant components in understanding the Company's financial performance.




FFO, Core FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an 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 reconciliation of the Company's U.S. GAAP net loss to the Company's FFO, Core FFO and Normalized FFO for the three months ended March 31, 2018 and 2017 are calculated as follows:






Three Months Ended




3/31/18


3/31/17


Net Loss Attributable to Common Shareholders          


$(27,155,000)


$(1,504,000)


Depreciation Expense


7,595,000

6,540,000


Loss on Sales of Depreciable Assets


16,000

25,000


FFO Attributable to Common Shareholders


(19,544,000)


5,061,000


Decrease in Fair Value of Marketable Securities


25,899,000


-0-


Core FFO Attributable to Common Shareholders


6,355,000


5,061,000


Gain on Sales of Marketable Securities, net


(20,000)


(32,000)


Normalized FFO Attributable to Common Shareholders


$6,335,000


$5,029,000








The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 36,195,000 shares for the three months ended March 31, 2018, and 30,427,000 for the three months ended March 31, 2017, respectively.  Common stock equivalents resulting from stock options in the amount of 288,000 shares for the three months ended March 31, 2018, and 472,000 shares for the three months ended March 31, 2017, are included in the diluted weighted shares outstanding.  Common stock equivalents were excluded from the computation of the Diluted Net 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 three months ended March 31, 2018 and 2017:






2018


2017


   Operating Activities


$10,290,000


$11,626,000


   Investing Activities


(17,472,000)


(49,618,000)


   Financing Activities


11,205,000


43,368,000




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SOURCE UMH Properties, Inc.

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