UMH Properties Inc. (NYSE:UMH) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 10:00 am ET

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UMH Properties Inc. (NYSE:UMH) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Samuel A. Landy

newly developed sites will allow us to continue our sales and rental growth at communities that have consistently produced excellent results. Subsequent to quarter end we implemented an at-the-market or ATM sales program allowing us to tap into the preferred market on an as-needed basis. This ATM program further enhances our balance sheet and improves our financial flexibility. This program is intended to largely replace our common stock issuances to the dividend reinvestment and stock repurchase plan.

And now Anna will provide you with greater detail on our results for the quarter.

Executive
Anna T. Chew

Thank you Sam. Funds from operations or FFO was $5.8 million or $0.40 per diluted share for the third quarter of 2019 compared to $7.1 million or $0.19 per diluted share for the prior year period. Normalized FFO which excludes realized gains and losses on the sale of securities and other nonrecurring items was $6 million or $0.15 per diluted share for the third quarter of 2019 compared to $7.1 million or $0.19 per diluted share for the prior year period. This decrease in per share FFO is primarily attributable to the impact of our raise in capital and a reduction in dividend income from our securities portfolio. Sequentially normalized FFO increased 7% as compared to the second quarter. Rental and related income for the quarter was $32.9 million compared to $28.7 million a year ago representing an increase of 15%. This increase was primarily due to community acquisitions the addition of rental homes and the growth in occupancy. Community NOI increased by 11% for the quarter from $15.4 million in 2018 to $17.2 million in 2019. Our normalized operating expense ratio increased to 47.5% from 46.3%.

We expect the expense ratio to decline as new revenue originated during the first 3 quarters offset the increased expenses. As we turn to our capital structure at the end of the quarter we had approximately $452 million in debt of which $376 million was community-level mortgage debt and $76 million were loans payable. 85% of our total debt is fixed rate. Weighted average interest rate on our mortgage debt was 4.1% at the end of the third quarter 2019 compared to 4.2% in the prior year and 4.3% at year-end 2018. The weighted average maturity on our mortgage debt was 6.2 years at quarter end compared to 6.3 years a year ago. During the quarter we completed the financing/refinancing of 4 of our communities for total proceeds of approximately $44.9 million.

These Fannie Mae mortgages are at a weighted average fixed rate of 3.4% with 10-year maturities and principal repayments based on 30-year amortization schedule. Proceeds were primarily used to repay the existing mortgages which had a total balance of approximately $13.8 million with a weighted average interest rate of 5.91%. As of quarter end UMH had a total of $389 million in perpetual preferred equity. Our preferred stock combined with an equity market capitalization of $575 million and our $452 million in debt results in a total market capitalization