UMH Properties Inc (UMH) Q4 2024 Earnings Call Highlights: Strong Financial Performance and ...

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Fri, Feb 28, 2025, 12:24 AM 4 min read

Normalized FFO (Funds From Operations): $0.24 per share for Q4 2024, up 4% from $0.23 per share in Q4 2023; $0.93 per share for the full year 2024, up 8% from $0.86 in 2023.
Rental and Related Income: $53.3 million for Q4 2024, up 8% from $49.2 million in Q4 2023; $207 million for the full year 2024, up 9% from $189.7 million in 2023.
Community NOI (Net Operating Income): $31.1 million for Q4 2024, up 8% from $28.7 million in Q4 2023; $119.7 million for the full year 2024, up 10% from $108.4 million in 2023.
Same Property Income: Increased by 8% for Q4 2024 and 9% for the full year.
Same Property NOI: Increased by 8% for Q4 2024 and 10% for the full year.
Occupancy Growth: Increase of 216 units, resulting in a 70 basis point increase.
Rental Homes: 10,300 rental homes owned, with 94% occupancy; added 565 homes in 2024.
Gross Sales: $33.5 million for 2024, up 8% from $31.2 million in 2023.
Cash and Cash Equivalents: $99.7 million at year-end 2024.
Total Debt: $615 million, with 99% at fixed rates; weighted average interest rate of 4.38% at year-end 2024.
Total Market Capitalization: Approximately $2.5 billion at year-end 2024, up 23% from $2 billion in 2023.
Dividend Increase: 19% increase since 2020.
2025 Normalized FFO Guidance: $0.96 to $1.04 per share.

Warning! GuruFocus has detected 7 Warning Signs with UMH.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

UMH Properties Inc (NYSE:UMH) reported an increase in normalized FFO per share by 4% for the quarter and 8% for the year, indicating strong financial performance.
The company achieved a new all-time high sales record, with gross sales increasing by 8% year-over-year.
UMH Properties Inc (NYSE:UMH) successfully added 565 rental homes to its portfolio, with a high occupancy rate of 94%.
The company anticipates further growth in occupancy and rental income with plans to add 800 new homes in 2025.
UMH Properties Inc (NYSE:UMH) is well-positioned for future acquisitions, with four communities under contract and a strong acquisition pipeline.

Negative Points

Community operating expenses increased by 8% during the quarter and 7% for the year, driven by higher payroll, taxes, and maintenance costs.
The company has $115.2 million in mortgage debt due within the next 12 months, which could impact liquidity if refinancing terms are unfavorable.
UMH Properties Inc (NYSE:UMH) faces challenges in the acquisition market due to high interest rates, which may affect the pricing and availability of new properties.
The company is experiencing inflationary pressures, which could impact future operating expenses and profitability.
There is uncertainty regarding changes in financing laws, which could affect the company's ability to convert renters to homeowners and impact home sales growth.

Q & A Highlights

Q: Can you provide more details on the four acquisitions under contract and any value-add opportunities? A: Brett Taft, Chief Operating Officer, explained that the acquisitions include two communities in New Jersey with 266 sites, fully occupied, purchased for $24.6 million. These are stabilized but offer potential for rent increases and sales profits. The two Maryland communities, previously under contract, are expected to close in the second quarter. One Maryland property has a value-add component with 45 vacant sites, where UMH plans to upgrade and implement their rental home program to drive occupancy growth.

Q: What interest rates do you expect for the refinancing of mortgages due in the first half of 2025? A: Anna Chew, Executive VP and CFO, stated that they are in discussions with Fannie Mae and expect interest rates to be under 6%, likely in the 5.5% to 5.75% range. The refinancing proceeds are expected to exceed current balances, allowing for additional capital extraction.

Q: What are the main factors that could influence the high or low end of your 2025 guidance range? A: Jim Lykins, Vice President of Capital Markets, identified home sales and acquisitions as the primary factors. Achieving the high end would involve exceeding the four acquisitions discussed and increasing home sales beyond 2024 levels.

Q: How do you plan to achieve the target of adding 800 new rental homes in 2025? A: Brett Taft noted that they have about 680 homes in inventory or on order, with 490 already delivered. These homes are in strong markets and are expected to rent quickly once set up. They anticipate faster growth in the rental home program in the first half of the year compared to last year.

Q: How does the cost of solar shingles compare to traditional shingles, and who bears the cost? A: Eugene Landy, Founder and Chairman, explained that installing solar shingles in the factory costs under $15,000, compared to over $25,000 if done on-site. A third-party company owns the solar roofing, reducing tenants' utility bills, and UMH receives a small payment for roof use. The cost does not impact UMH's rental unit expenses.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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