UMH Properties, Inc. Reports Results For The Year Ended And The Fourth Quarter Ended December 31, 2018
FREEHOLD, N.J., March 7, 2019 /PRNewswire/ -- UMH Properties, Inc. (NYSE: UMH) reported Total Income of $129,587,000 for the year ended December 31, 2018 as compared to $112,648,000 for the year ended December 31, 2017, representing an increase of 15%. Total Income for the quarter ended December 31, 2018 was $34,245,000 as compared to $28,697,000 for the quarter ended December 31, 2017, representing an increase of 19%. Net Loss Attributable to Common Shareholders amounted to $56,532,000 or $1.53 per diluted share for the year ended December 31, 2018 as compared to $7,679,000 or $0.24 per diluted share for the year ended December 31, 2017. Net Loss Attributable to Common Shareholders amounted to $32,853,000 or $0.87 per diluted share for the quarter ended December 31, 2018 as compared to $796,000 or $0.03 per diluted share for the quarter ended December 31, 2017. This increase was due to the change in fair value of our marketable securities, which are now included in our operating numbers.
Core Funds from Operations Attributable to Common Shareholders ("Core FFO") was $26,966,000 or $0.72 per diluted share for the year ended December 31, 2018 as compared to $23,462,000 or $0.71 per diluted share for the year ended December 31, 2017. Core FFO was $7,363,000 or $0.19 per diluted share for the quarter ended December 31, 2018 as compared to $6,553,000 or $0.19 per diluted share for the quarter ended December 31, 2017. Normalized Funds from Operations Attributable to Common Shareholders ("Normalized FFO"), was $27,471,000 or $0.74 per diluted share for the year ended December 31, 2018, as compared to $21,714,000 or $0.66 per diluted share for the year ended December 31, 2017, representing an increase in Normalized FFO per diluted share of 12%. Normalized FFO was $7,363,000 or $0.19 per diluted share for the quarter ended December 31, 2018, as compared to $6,324,000 or $0.18 per diluted share for the quarter ended December 31, 2017, representing an increase in Normalized FFO per diluted share of 6%.
A summary of significant financial information for the three and twelve months ended December 31, 2018 and 2017 is as follows:
For the Three Months Ended |
||||||
December 31, |
||||||
2018 |
2017 |
|||||
Total Income |
$ |
34,245,000 |
$ |
28,697,000 |
||
Total Expenses |
$ |
29,320,000 |
$ |
24,568,000 |
||
Gain on Sales of Marketable Securities, net |
$ |
-0- |
$ |
229,000 |
||
Decrease in Fair Value of Marketable Securities |
$ |
(31,913,000) |
$ |
-0- |
||
Net Loss Attributable to Common Shareholders |
$ |
(32,853,000) |
$ |
(796,000) |
||
Net Loss Attributable to Common Shareholders per Diluted Common Share |
$ |
(0.87) |
$ |
(0.03) |
||
Core FFO (1) |
$ |
7,363,000 |
$ |
6,553,000 |
||
Core FFO (1) per Diluted Common Share |
$ |
0.19 |
$ |
0.19 |
||
Normalized FFO (1) |
$ |
7,363,000 |
$ |
6,324,000 |
||
Normalized FFO (1) per Diluted Common Share |
$ |
0.19 |
$ |
0.18 |
||
Weighted Average Shares Outstanding |
37,841,000 |
35,072,000 |
||||
For the Twelve Months Ended |
||||||
December 31, |
||||||
2018 |
2017 |
|||||
Total Income |
$ |
129,587,000 |
$ |
112,648,000 |
||
Total Expenses |
$ |
111,010,000 |
$ |
96,616,000 |
||
Gain on Sales of Marketable Securities, net |
$ |
20,000 |
$ |
1,748,000 |
||
Decrease in Fair Value of Marketable Securities |
$ |
(51,675,000) |
$ |
-0- |
||
Net Loss Attributable to Common Shareholders |
$ |
(56,532,000) |
$ |
(7,679,000) |
||
Net Loss Attributable to Common Shareholders per Diluted Common Share |
$ |
(1.53) |
$ |
(0.24) |
||
Core FFO (1) |
$ |
26,966,000 |
$ |
23,462,000 |
||
Core FFO (1) per Diluted Common Share |
$ |
0.72 |
$ |
0.71 |
||
Normalized FFO (1) |
$ |
27,471,000 |
$ |
21,714,000 |
||
Normalized FFO (1) per Diluted Common Share |
$ |
0.74 |
$ |
0.66 |
||
Weighted Average Shares Outstanding |
36,871,000 |
32,676,000 |
||||
A summary of significant balance sheet information as of December 31, 2018 and 2017 is as follows:
December 31, 2018 |
December 31, |
||
Gross Real Estate Investments |
$ 881,456,000 |
$ 764,439,000 |
|
Marketable Securities at Fair Value |
$ 99,596,000 |
$ 132,964,000 |
|
Total Assets |
$ 878,986,000 |
$ 823,881,000 |
|
Mortgages Payable, net |
$ 331,093,000 |
$ 304,895,000 |
|
Loans Payable, net |
$ 107,985,000 |
$ 84,704,000 |
|
Total Shareholders' Equity |
$ 424,698,000 |
$ 421,215,000 |
Samuel A. Landy, President and CEO, commented on the 2018 results.
"During 2018, we continued to execute on our long-term business plan. We have generated solid operating results, achieved strong growth and strengthened our financial position. Our accomplishments during the year include:
- Generated a 12% increase in Normalized FFO per share;
- Increased Rental and Related Income by 12%;
- Increased Community Net Operating Income ("NOI") by 13%;
- Improved our Operating Expense ratio by 50 basis points to 46.5%;
- Increased Same Property NOI by 7%;
- Increased Same Property Occupancy by 40 basis points from 82.6% to 83.0%;
- Increased home sales by 45%;
- Acquired 6 communities containing approximately 1,600 homesites for a total cost of $59.1 million, bringing our total property portfolio to 118 manufactured home communities with approximately 21,500 developed homesites;
- Increased our rental home portfolio by 905 homes to approximately 6,500 total rental homes, representing an increase of 16%;
- Expanded and extended our existing unsecured revolving credit facility, increasing the available borrowings and reducing interest costs;
- 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; and
- Raised $35.1 million through our Dividend Reinvestment and Stock Purchase Plan."
"In 2018, we acquired 6 communities containing approximately 1,600 developed homesites for an aggregate cost of approximately $59.1 million. The average occupancy of these communities is 79%. We have expanded into new markets within our existing footprint. These new communities have favorable demographics with significant upside potential through the filling of vacant sites and from expansion capabilities. The acquisition market remains competitive, but we are pleased with our ability to source deals and further grow the company through our acquisition program."
"We have experienced double-digit sales growth in each of the past 3 years, increasing sales by 45% this year. Home sales have returned to profitability. The housing market is benefiting from rising wages, increased employment and reduced government regulations. We are very optimistic about the future of our sales division."
"Our rental operation continues to drive our occupancy rates and improve our property operations. We have added an additional 905 homes to our rental portfolio which now contains 6,500 homes. We have maintained a healthy occupancy rate of over 92% for our rental units."
"The public REIT market experienced tremendous volatility during the fourth quarter and our GAAP earnings were negatively impacted as a result. The fair market value of our REIT securities portfolio has improved substantially subsequent to quarter end."
"Same Property NOI increased by 7% this year, driven by a 40-basis point increase in occupancy and a 350-basis point increase in site rent. Our same property results reflect the strength of our platform and the successes of our business plan."
"UMH is well positioned for continued success in 2019. We have grown our portfolio to 118 communities containing 21,500 developed homesites. Our overall occupancy rate increased by 40 basis points during the year from 82.6% to 83.0% at yearend. We have a business plan that has proven to deliver consistent long-term results. We have developed an irreplaceable platform that will enhance shareholder value. The demand for affordable housing in our markets remains strong which should lead to future revenue and earnings growth."
UMH Properties, Inc. will host its Fourth Quarter and Year Ended December 31, 2018 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, March 8, 2019 at 10:00 a.m. Eastern Time.
The Company's fourth quarter and year ended December 31, 2018 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, March 8, 2019. It will be available until June 1, 2019, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10127590. 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 118 manufactured home communities containing approximately 21,500 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, 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 Attributable to Common Shareholders ("Core FFO") as FFO plus change in the fair value of marketable securities and costs associated with the redemption of preferred stock. We define Normalized Funds From Operations Attributable to Common Shareholders ("Normalized FFO") as Core FFO excluding gains and losses realized on 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 attributable to common shareholders for the three and twelve months ended December 31, 2018 and 2017 are calculated as follows:
Three Months Ended |
Twelve Months Ended |
||||||||
12/31/18 |
12/31/17 |
12/31/18 |
12/31/17 |
||||||
Net Loss Attributable to Common Shareholders |
$(32,853,000) |
$(796,000) |
$(56,532,000) |
$(7,679,000) |
|||||
Depreciation Expense |
8,281,000 |
7,297,000 |
31,691,000 |
27,557,000 |
|||||
Loss on Sales of Depreciable Assets |
22,000 |
52,000 |
132,000 |
81,000 |
|||||
FFO Attributable to Common Shareholders |
(24,550,000) |
6,553,000 |
(24,709,000) |
19,959,000 |
|||||
Decrease in Fair Value of Marketable Securities (2) |
31,913,000 |
-0- |
51,675,000 |
-0- |
|||||
Redemption of Preferred Stock |
-0- |
-0- |
-0- |
3,503,000 |
|||||
Core FFO Attributable to Common Shareholders |
7,363,000 |
6,553,000 |
26,966,000 |
23,462,000 |
|||||
Gain on Sales of Marketable Securities, net |
-0- |
(229,000) |
(20,000) |
(1,748,000) |
|||||
Non-Recurring Other Expense (1) |
-0- |
-0- |
525,000 |
-0- |
|||||
Normalized FFO Attributable to Common Shareholders |
$7,363,000 |
$6,324,000 |
$27,471,000 |
$21,714,000 |
|||||
(1) |
Consists of one-time payroll expenditure. |
(2) |
Represents change in unrealized gain (loss) in marketable securities which is included in the Consolidated Statements of Income (Loss). |
The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 38,135,000 and 37,214,000 shares for the three and twelve months ended December 31, 2018, respectively, and 35,478,000 and 33,146,000 shares for the three and twelve months ended December 31, 2017, respectively. Common stock equivalents resulting from stock options in the amount of 294,000 and 342,000 shares for the three and twelve months ended December 31, 2018, respectively, and 406,000 and 470,000 shares for the three and twelve months ended December 31, 2017, respectively, 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 twelve months ended December 31, 2018 and 2017:
2018 |
2017 |
||
Operating Activities |
$40,175,000 |
$40,857,000 |
|
Investing Activities |
(137,603,000) |
(152,920,000) |
|
Financing Activities |
82,314,000 |
130,604,000 |
SOURCE UMH Properties, Inc.
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