Table of Contents

 

		Page
Financial Highlights		3
Consolidated Balance Sheets		4
Consolidated Statements of Income (Loss)		5
Consolidated Statements of Cash Flows		6
Reconciliation of Net Income to EBITDA and Net Loss Attributable to Common Shareholders to FFO, Core FFO and Normalized FFO		7
Market Capitalization, Debt and Coverage Ratios		8
Debt Analysis		9
Debt Maturity		10
Property Summary and Snapshot		11
Same Property Statistics		12
Acquisition Summary and Property Portfolio		13
Definitions		14
Press Release Dated August 3, 2017		15

 

 

Financial Highlights

(unaudited)

 

		Three Months Ended								Six Months Ended
		6/30/2017				6/30/2016				6/30/2017				6/30/2016
Operating Information
Number of Communities											107				98
Number of Sites											19,383				17,760
Rental and Related Income		$	25,293,961			$	22,423,876			$	49,824,316			$	44,210,056
Community Operating Expenses		$	11,871,578			$	10,718,738			$	23,351,937			$	21,274,676
Community NOI		$	13,422,383			$	11,705,138			$	26,472,379			$	22,935,380
Expense Ratio			46.9	%			47.8	%			46.9	%			48.1	%
Sales of Manufactured Homes		$	3,523,887			$	2,786,831			$	5,442,081			$	4,505,025
Number of Homes Sold			65				49				108				90
Number of Rentals Added			190				228				433				410
Net Income		$	3,589,871			$	3,051,462			$	5,875,417			$	4,957,931
Net Loss Attributable to Common Shareholders		$	(199,876	)		$	(682,729	)		$	(1,704,077	)		$	(1,566,007	)
EBITDA		$	14,535,215			$	12,719,859			$	27,511,654			$	24,178,572
FFO and Core FFO		$	6,526,591			$	5,041,464			$	11,587,008			$	9,661,940
Normalized FFO		$	5,506,714			$	4,259,091			$	10,535,240			$	8,647,562
Shares Outstanding and Per Share Data
Weighted Average Shares Outstanding Basic and Diluted			31,769,287				27,314,361				30,888,218				27,221,879
Net Loss Attributable to Common Shareholders per Share - Basic and Diluted		$	(0.01	)		$	(0.03	)		$	(0.06	)		$	(0.06	)
FFO and Core FFO per Share- Basic and Diluted		$	0.20			$	0.18			$	0.37			$	0.35
Normalized FFO per Share- Basic and Diluted		$	0.17			$	0.16			$	0.34			$	0.32
Dividends per Common Share		$	0.18			$	0.18			$	0.36			$	0.36
Balance Sheet
Total Assets										$	746,221,437			$	652,048,063
Total Liabilities										$	389,229,804			$	344,734,788
Market Capitalization
Total Debt, Net of Unamortized Debt Issuance Costs										$	375,481,649			$	331,907,203
Equity Market Capitalization										$	570,225,929			$	310,625,561
Series A Preferred Stock										$	91,595,000			$	91,595,000
Series B Preferred Stock										$	95,030,000			$	95,030,000
Total Market Capitalization										$	1,132,332,578			$	829,157,764

 

 

Consolidated Balance Sheets

 

		June 30, 2017				December 31, 2016
			(unaudited)
ASSETS
Investment Property and Equipment
Land		$	58,527,464			$	47,476,314
Site and Land Improvements			429,630,057				398,776,390
Buildings and Improvements			22,289,352				21,101,836
Rental Homes and Accessories			194,304,294				172,862,227
Total Investment Property			704,751,167				640,216,767
Equipment and Vehicles			15,774,490				14,986,196
Total Investment Property and Equipment			720,525,657				655,202,963
Accumulated Depreciation			(153,087,967	)			(140,255,603	)
Net Investment Property and Equipment			567,437,690				514,947,360
Other Assets
Cash and Cash Equivalents			8,166,402				4,216,592
Securities Available for Sale at Fair Value			109,079,105				108,755,172
Inventory of Manufactured Homes			20,932,899				17,424,574
Notes and Other Receivables, net			23,950,403				20,323,191
Prepaid Expenses and Other Assets			4,756,794				4,497,937
Land Development Costs			11,898,144				10,279,992
Total Other Assets			178,783,747				165,497,458
TOTAL ASSETS		$	746,221,437			$	680,444,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages Payable, net of Unamortized Debt Issuance Costs		$	311,303,776			$	293,025,592
Other Liabilities
Accounts Payable			4,601,407				2,962,037
Loans Payable, net of Unamortized Debt Issuance Costs			64,177,873				58,285,385
Accrued Liabilities and Deposits			4,332,532				4,820,142
Tenant Security Deposits			4,814,216				4,319,695
Total Other Liabilities			77,926,028				70,387,259
Total Liabilities			389,229,804				363,412,851
COMMITMENTS AND CONTINGENCIES
Shareholders’ Equity:
Series A - 8.25% Cumulative Redeemable Preferred Stock, par value $0.10 per share: 3,663,800 shares authorized, issued and outstanding as of June 30, 2017 and December 31, 2016, respectively			91,595,000				91,595,000
Series B - 8.0% Cumulative Redeemable Preferred Stock, par value $0.10 per share: 4,000,000 shares authorized; 3,801,200 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively			95,030,000				95,030,000
Common Stock – $0.10 par value per share: 85,000,000 and 75,000,000 shares authorized; 33,444,336 and 29,388,811 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively			3,344,434				2,938,881
Excess Stock – $0.10 par value per share: 3,000,000 shares authorized; no shares issued or outstanding as of June 30, 2017 and December 31, 2016, respectively			-0-				-0-
Additional Paid-In Capital			156,874,954				111,422,691
Accumulated Other Comprehensive Income			10,815,038				16,713,188
Accumulated Deficit			(667,793	)			(667,793	)
Total Shareholders’ Equity			356,991,633				317,031,967
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	746,221,437			$	680,444,818

 

 

Consolidated Statements of Income (Loss)  

(unaudited)  

 

		Three Months Ended								Six Months Ended
		6/30/2017				6/30/2016				6/30/2017				6/30/2016
INCOME:
Rental and Related Income		$	25,293,961			$	22,423,876			$	49,824,316			$	44,210,056
Sales of Manufactured Homes			3,523,887				2,786,831				5,442,081				4,505,025
TOTAL INCOME			28,817,848				25,210,707				55,266,397				48,715,081
EXPENSES:
Community Operating Expenses			11,871,578				10,718,738				23,351,937				21,274,676
Cost of Sales of Manufactured Homes			2,746,689				2,161,344				4,249,898				3,475,272
Selling Expenses			865,462				674,717				1,624,841				1,458,469
General and Administrative Expenses			2,634,309				1,943,011				4,836,611				3,639,933
Depreciation Expense			6,740,205				5,679,167				13,280,443				11,205,009
TOTAL EXPENSES			24,858,243				21,176,977				47,343,730				41,053,359
OTHER INCOME (EXPENSE):
Interest Income			495,778				397,083				969,137				805,959
Dividend Income			1,795,600				1,623,844				3,646,840				3,079,379
Gain on Sales of Securities, net			1,019,877				782,373				1,051,768				1,014,378
Other Income			417,487				155,763				465,591				249,213
Interest Expense			(4,112,214	)			(3,896,305	)			(8,169,944	)			(7,829,782	)
TOTAL OTHER INCOME (EXPENSE)			(383,472	)			(937,242	)			(2,036,608	)			(2,680,853	)
Income before Gain (Loss) on Sales of Investment Property and Equipment			3,576,133				3,096,488				5,886,059				4,980,869
Gain (Loss) on Sales of Investment Property and Equipment			13,738				(45,026	)			(10,642	)			(22,938	)
NET INCOME			3,589,871				3,051,462				5,875,417				4,957,931
Less: Preferred Dividends			3,789,747				3,734,191				7,579,494				6,523,938
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(199,876	)		$	(682,729	)		$	(1,704,077	)		$	(1,566,007	)

 

 

Consolidated Statements of Cash Flows

(unaudited)

 

		Six Months Ended
		6/30/2017				6/30/2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	5,875,417			$	4,957,931
Non-Cash Items Included in Net Income:
Depreciation			13,280,443				11,205,009
Amortization of Financing Costs			326,614				384,813
Stock Compensation Expense			670,057				476,773
Provision for Uncollectible Notes and Other Receivables			550,728				546,363
Gain on Sales of Securities, net			(1,051,768	)			(1,014,378	)
Loss on Sales of Investment Property and Equipment			10,642				22,938
Changes in Operating Assets and Liabilities:
Inventory of Manufactured Homes			(3,508,325	)			(3,522,102	)
Notes and Other Receivables, net of Notes Acquired with Acquisitions			(902,475	)			(596,916	)
Prepaid Expenses and Other Assets			(258,857	)			(391,371	)
Accounts Payable			1,639,370				535,204
Accrued Liabilities and Deposits			(480,463	)			(1,327,397	)
Tenant Security Deposits			494,521				411,956
Net Cash Provided by Operating Activities			16,645,904				11,688,823
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Manufactured Home Communities			(40,877,655	)			-0-
Purchase of Investment Property and Equipment			(29,400,897	)			(26,353,180	)
Proceeds from Sales of Investment Property and Equipment			1,221,672				635,264
Additions to Land Development Costs			(1,618,152	)			(1,316,797	)
Purchase of Securities Available for Sale			(13,699,545	)			(17,193,903	)
Proceeds from Sales of Securities Available for Sale			8,522,083				7,710,233
Net Cash Used in Investing Activities			(75,852,494	)			(36,518,383	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages			31,050,000				15,458,000
Net Proceeds (Payments) on Short Term Borrowings			5,893,852				(12,531,013	)
Principal Payments of Mortgages			(12,659,812	)			(11,946,213	)
Financing Costs on Debt			(439,982	)			(370,392	)
Proceeds from Issuance of Preferred Stock, net			-0-				49,120,853
Proceeds from Registered Direct Placement of Common Stock, net of Offering Costs			22,527,507				-0-
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments			28,659,238				2,830,263
Proceeds from Exercise of Stock Options			5,435,634				591,225
Preferred Dividends Paid			(7,579,494	)			(6,595,262	)
Common Dividends Paid, net of Dividend Reinvestments			(9,730,543	)			(8,673,257	)
Net Cash Provided by Financing Activities			63,156,400				27,884,204
NET INCREASE IN CASH AND CASH EQUIVALENTS			3,949,810				3,054,644
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD			4,216,592				6,535,897
CASH AND CASH EQUIVALENTS – END OF PERIOD		$	8,166,402			$	9,590,541

 

 

Reconciliation of Net Income to EBITDA and Net Loss Attributable

to Common Shareholders to FFO, Core FFO and Normalized FFO

(unaudited)

 

		Three Months Ended								Six Months Ended
		6/30/2017				6/30/2016				6/30/2017				6/30/2016
Reconciliation of Net Income to EBITDA
Net Income		$	3,589,871			$	3,051,462			$	5,875,417			$	4,957,931
Interest Expense			4,112,214				3,896,305				8,169,944				7,829,782
Franchise Taxes			92,925				92,925				185,850				185,850
Depreciation Expense			6,740,205				5,679,167				13,280,443				11,205,009
EBITDA		$	14,535,215			$	12,719,859			$	27,511,654			$	24,178,572
Reconciliation of Net Loss Attributable to Common Shareholders to Funds from Operations
Net Loss Attributable to Common Shareholders		$	(199,876	)		$	(682,729	)		$	(1,704,077	)		$	(1,566,007	)
Depreciation Expense			6,740,205				5,679,167				13,280,443				11,205,009
(Gain) Loss on Sales of Depreciable Assets			(13,738	)			45,026				10,642				22,938
Funds from Operations (“FFO”) and Core
Funds from Operations (“Core FFO”)			6,526,591				5,041,464				11,587,008				9,661,940
Adjustments:
Gain on Sale of Securities, net			(1,019,877	)			(782,373	)			(1,051,768	)			(1,014,378	)
Normalized Funds From Operations
(“Normalized FFO”)		$	5,506,714			$	4,259,091			$	10,535,240			$	8,647,562

 

 

Market Capitalization, Debt and Coverage Ratios

(unaudited)

 

		Six Months Ended								Year Ended
		6/30/2017				6/30/2016				12/31/2016
Shares Outstanding			33,444,336				27,611,161				29,388,811
Market Price Per Share		$	17.05			$	11.25			$	15.05
Equity Market Capitalization		$	570,225,929			$	310,625,561			$	442,301,606
Total Debt			375,481,649				331,907,203				351,310,977
Preferred			186,625,000				186,625,000				186,625,000
Total Market Capitalization		$	1,132,332,578			$	829,157,764			$	980,237,583
Total Debt		$	375,481,649			$	331,907,203			$	351,310,977
Less: Cash and Cash Equivalents			(8,166,402	)			(9,590,541	)			(4,216,592	)
Net Debt			367,315,247				322,316,662				347,094,385
Less: Securities Available for Sale at Fair Value (“Securities”)			(109,079,105	)			(103,916,497	)			(108,755,172	)
Net Debt Less Securities		$	258,236,142			$	218,400,165			$	238,339,213
Interest Expense		$	8,169,944			$	7,829,782			$	15,432,364
Capitalized Interest			237,648				168,948				359,906
Preferred Dividends			7,579,494				6,523,938				14,103,432
Total Fixed Charges		$	15,987,086			$	14,522,668			$	29,895,702
EBITDA		$	27,511,654			$	24,178,572			$	50,565,254

 

Debt and Coverage Ratios
Net Debt / Total Market Capitalization			32.4	%			38.9	%			35.4	%
Net Debt Plus Preferred / Total Market Capitalization			48.9	%			61.4	%			54.4	%
Net Debt Less Securities / Total Market Capitalization			22.8	%			26.3	%			24.3	%
Net Debt Less Securities Plus Preferred / Total Market Capitalization			39.3	%			48.8	%			43.4	%
Interest Coverage			3.3	x			3.0	x			3.2	x
Fixed Charge Coverage			1.7	x			1.7	x			1.7	x
Net Debt / EBITDA			6.7	x			6.7	x			6.9	x
Net Debt Less Securities / EBITDA			4.7	x			4.5	x			4.7	x
Net Debt Plus Preferred / EBITDA			10.1	x			10.5	x			10.6	x
Net Debt Less Securities Plus Preferred / EBITDA			8.1	x			8.4	x			8.4	x

 

 

Debt Analysis

(unaudited)

 

		Six Months Ended								Year Ended
			6/30/2017				6/30/2016				12/31/2016
Debt Outstanding
Mortgages Payable:
Fixed Rate Mortgages (1)		$	314,766,636			$	289,630,588			$	296,209,454
Variable Rate Mortgages			187,535				518,295				354,529
Total Mortgages Before
Unamortized Debt Issuance Costs			314,954,171				290,148,883				296,563,983
Unamortized Debt Issuance Costs			(3,650,395	)			(3,566,301	)			(3,538,391	)
Mortgages, Net of Unamortized Debt Issuance Costs		$	311,303,776			$	286,582,582			$	293,025,592
Loans Payable:
Unsecured Line of Credit		$	35,000,000			$	15,000,000			$	20,000,000
Other Loans Payable			29,287,290				30,455,492				38,393,439
Total Loans Before
Unamortized Debt Issuance Costs			64,287,290				45,455,492				58,393,439
Unamortized Debt Issuance Costs			(109,417	)			(130,871	)			(108,054	)
Loans, Net of Unamortized Debt Issuance Costs		$	64,177,873			$	45,324,621			$	58,285,385
Total Debt, Net of Unamortized Debt Issuance Costs		$	375,481,649			$	331,907,203			$	351,310,977
% Fixed/Floating
Fixed			84.5	%			87.8	%			85.0	%
Floating			15.5	%			12.2	%			15.0	%
Total			100.0	%			100.0	%			100.0	%
Weighted Average Interest Rates
Mortgages Payable			4.34	%			4.47	%			4.40	%
Loans Payable			3.91	%			3.59	%			3.06	%
Total Average			4.27	%			4.35	%			4.18	%

 

	Notes:
	(1) Includes a variable rate mortgage with a balance of $10,215,752, $11,020,831 and $10,625,352 as of June 30, 2017, June 30, 2016 and December 31, 2016, respectively, which has been effectively fixed at an interest rate of 3.89% with an interest rate swap agreement.

 

 

Debt Maturity

(unaudited)

 

 

 

As of 6/30/17:  

 

Fiscal Year Ended		Mortgages				Loans				Total				% of Total
2017		$	10,215,752			$	13,648,736			$	23,864,488				6.3	%
2018			8,931,490				368,427				9,299,917				2.5	%
2019			2,762,755				4,365,001				7,127,756				1.9	%
2020			12,334,955				39,351,360	(1)			51,686,315				13.6	%
2021			2,211,151				238,695				2,449,846				0.6	%
Thereafter			278,498,068				6,315,071				284,813,139				75.1	%
Total Debt Before Unamortized Debt Issuance Cost			314,954,171				64,287,290				379,241,461				100.0	%
Unamortized Debt Issuance Cost			(3,650,395	)			(109,417	)			(3,759,812	)
Total Debt, Net of Unamortized Debt Issuance Costs		$	311,303,776			$	64,177,873			$	375,481,649

 

	Notes:
	(1) Includes $35 million balance outstanding on the Company’s Line of Credit due March 2020, with an additional one year option.

 

 

Property Summary and Snapshot

(unaudited)

 

		6/30/2017				6/30/2016				% Change
Communities			107				98				9.2	%
Developed Sites			19,383				17,760				9.1	%
Occupied			15,632				14,213				10.0	%
Occupancy % (1)			81.2	%			80.7	%			0.5	%
Total Rentals			5,092				4,142				22.9	%
Occupied Rentals			4,768				3,911				21.9	%
Rental Occupancy %			93.6	%			94.4	%			-0.8	%
Monthly Rent Per Site		$	426			$	419				1.7	%
Monthly Rent per Home Rental Including Site		$	716			$	704				1.7	%

 

Region		Number				Total Acreage				Developed Acreage				Vacant Acreage				Total Sites				Occupied Sites				Occupancy Percentage				Monthly Rent Per Site				Total Rentals				Occupied Rentals				Rental Occupancy Percentage				Monthly Rent Per Home Rental
							(2)								(2)												(1)																				(3)
Indiana			11				815				685				130				3,219				2,434				75.6	%		$	394				980				925				94.4	%		$	727
Maryland			1				77				10				67				63				58				92.1	%		$	478				-0-				-0-				N/A				N/A
Michigan			2				68				68				-0-				354				251				70.9	%		$	428				141				134				95.0	%		$	710
New Jersey			4				348				187				161				1,006				956				95.0	%		$	598				40				33				82.5	%		$	883
New York			7				616				308				308				1,132				933				82.4	%		$	505				273				259				94.9	%		$	859
Ohio			32				1,473				1,065				408				5,104				4,019				78.7	%		$	359				1,257				1,177				93.6	%		$	652
Pennsylvania			43				1,943				1,588				355				6,691				5,386				80.5	%		$	441				1,617				1,486				91.9	%		$	735
Tennessee			7				413				321				92				1,814				1,595				87.9	%		$	439				784				754				96.2	%		$	705
Total as of June 30, 2017			107				5,753				4,232				1,521				19,383				15,632				81.2	%		$	426				5,092				4,768				93.6	%		$	716

 

Notes:
(1) The 156 Sites at Memphis Blues are not included in the calculation of occupancy.
(2) Total and Vacant Acreage of 220 for the Mountain View Estates property is included in the above summary.
(3) Includes home and site rent charges.

 

Same Property Statistics

(unaudited)

 

		For Three Months Ended																For Six Months Ended
		6/30/2017				6/30/2016				Change				% Change				6/30/2017				6/30/2016				Change				% Change
Community Net Operating Income
Rental and Related Income		$	23,867,981			$	22,423,876			$	1,444,105				6.4	%		$	47,284,283			$	44,210,056			$	3,074,227				7.0	%
Community Operating Expenses			10,431,197				10,265,815				165,382				1.6	%			20,670,735				20,344,635				326,100				1.6	%
Community NOI		$	13,436,784			$	12,158,061			$	1,278,723				10.5	%		$	26,613,548			$	23,865,421			$	2,748,127				11.5	%

 

		As of
		6/30/2017				6/30/2016				% Change
Other Information
Total Sites			17,589				17,604				-0.1	%
Occupied Sites			14,504				14,213				2.0	%
Occupancy %			82.5	%			80.7	%			1.8	%
Number of Properties			98				98				N/A
Total Rentals			4,928				4,142				19.0	%
Occupied Rentals			4,635				3,911				18.5	%
Rental Occupancy			94.1	%			94.4	%			-0.3	%
Monthly Rent Per Site		$	431			$	419				2.9	%
Monthly Rent Per Home Rental Including Site		$	717			$	704				1.8	%

 

Notes:

Same Property includes all properties owned as of January 1, 2016, with the exception of Memphis Blues.

 

 

Acquisition Summary

 

At Acquisition:

 

Year of Acquisition		Number of Communities				Sites				Occupied Sites				Occupancy %				Price				Total Acres
2015			10				2,774				1,764				64	%		$	81,217,000				717
2016			3				289				215				74	%		$	7,277,000				192
2017			6				1,354				873				64	%		$	40,510,000				461

 

 

2017 Acquisitions

 

Community		Date of Acquisition		State		Number of Sites				Purchase Price				Number of Acres				Occupancy
Marysville Estates and Hillcrest Estates		January 20, 2017		OH			532			$	9,588,000				149				57	%
Boardwalk and Parke Place		January 20, 2017		IN			559				24,437,000				155				77	%
Hillcrest Crossing		January 24, 2017		PA			200				2,485,000				78				40	%
Cinnamon Woods		May 31, 2017		MD			63				4,000,000				79				92	%
Total 2017 to Date							1,354			$	40,510,000				461				64	%

 

 

Definitions

 

Investors and analysts following the real estate industry utilize funds from operations (“FFO”), core funds from operations (“Core FFO”), normalized funds from operations (“Normalized FFO”), community NOI, same property NOI, and earnings before interest, taxes, depreciation and amortization (“EBITDA”), variously defined, as supplemental performance measures. While the Company believes net income available to common stockholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), is the most appropriate measure, it considers Community NOI, Same Property NOI, EBITDA, FFO, Core FFO and Normalized FFO, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of U.S. GAAP depreciation and amortization of real estate assets. Core FFO reflects the same assumptions as FFO except that it also adjusts for the effects of acquisitions costs and costs of early extinguishment of debt. Normalized FFO reflects the same assumptions as Core FFO except that it also adjusts for gains and losses realized on securities investments and certain one-time charges. Community NOI and Same Property NOI provides a measure of rental operations, and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses. EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs. In addition, Community NOI, Same Property NOI, EBITDA, FFO, Core FFO and Normalized FFO are commonly used in various ratios, pricing multiples, yields and returns and valuation of calculations used to measure financial position, performance and value.

 

As used herein, the Company calculates FFO, as defined by The National Association of Real Estate Investment Trusts (“NAREIT”), to be equal to net income (loss) applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by 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. FFO includes gains and losses realized on securities investments.

 

Core FFO is calculated as FFO plus acquisition costs and costs of extinguishment of debt.

 

Normalized FFO is calculated as Core FFO excluding gains and losses realized on securities investments and certain one-time charges.

 

Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share is calculated using diluted weighted shares outstanding of 32,279,000 and 31,353,000 shares for the three and six months ended June 30, 2017, respectively, and 27,436,000 and 27,301,000 for the three and six months ended June 30, 2016, respectively. Common stock equivalents resulting from stock options in the amount of 510,000 and 465,000 shares for the three and six months ended June 30, 2017, respectively, and 122,000 and 79,000 shares for the three and six months ended June 30, 2016, 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.

 

Community NOI is calculated as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses. Community NOI excludes realized gains (losses) on securities transactions.

 

Same Property NOI is calculated as Community NOI, using all properties owned as of January 1, 2016, with the exception of Memphis Blues.

 

EBITDA is calculated as net income plus interest expense, franchise taxes, depreciation expense and acquisition costs.

 

Community NOI, Same Property NOI, EBITDA, FFO, Core FFO and Normalized FFO do not represent cash generated from operating activities in accordance with U.S. GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. Community NOI, Same Property NOI, EBITDA, FFO, Core FFO and Normalized FFO should not be considered as substitutes for net income applicable to common shareholders (calculated in accordance with U.S. GAAP) as a measure of results of operations, or cash flows (calculated in accordance with U.S. GAAP) as a measure of liquidity. Community NOI, Same Property NOI, EBITDA, FFO, Core FFO and Normalized FFO as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.

 

 

Press Release Dated August 3, 2017

FOR IMMEDIATE RELEASE	August 3, 2017
	Contact: Nelli Madden
	732-577-9997

 

UMH PROPERTIES, INC. REPORTS 2nd QUARTER 2017 EARNINGS

 

FREEHOLD, NJ, August 3, 2017   UMH Properties, Inc. (NYSE:UMH) reported Total Income of $28,818,000 for the quarter ended June 30, 2017 as compared to $25,211,000 for the quarter ended June 30, 2016, representing an increase of 14%. Net Loss Attributable to Common Shareholders amounted to $200,000 or $0.01 per diluted share for the quarter ended June 30, 2017 as compared to $683,000 or $0.03 per diluted share for the quarter ended June 30, 2016.

 

Core Funds from Operations (“Core FFO”) was $6,527,000 or $0.20 per diluted share for the quarter ended June 30, 2017, as compared to $5,041,000 or $0.18 per diluted share for the quarter ended June 30, 2016, representing an increase of 11%. Normalized Funds from Operations (“Normalized FFO”) was $5,507,000 or $0.17 per diluted share for the quarter ended June 30, 2017, as compared to $4,259,000 or $0.16 per diluted share for the quarter ended June 30, 2016, representing an increase in Normalized FFO per diluted share of 6%.

 

A summary of significant financial information for the three and six months ended June 30, 2017 and 2016 is as follows:

 

		For the Three Months Ended June 30,
		2017				2016
Total Income		$	28,818,000			$	25,211,000
Total Expenses		$	24,858,000			$	21,177,000
Gain on Sales of Securities, net		$	1,020,000			$	782,000
Net Loss Attributable to Common Shareholders		$	(200,000	)		$	(683,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(0.01	)		$	(0.03	)
Core FFO (1)		$	6,527,000			$	5,041,000
Core FFO (1) per Diluted Common Share		$	0.20			$	0.18
Normalized FFO (1)		$	5,507,000			$	4,259,000
Normalized FFO (1) per Diluted Common Share		$	0.17			$	0.16
Weighted Average Diluted Shares Outstanding			31,769,000				27,314,000

 

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		For the Six Months Ended June 30,
		2017				2016
Total Income		$	55,266,000			$	48,715,000
Total Expenses		$	47,344,000			$	41,053,000
Gain on Sales of Securities, net		$	1,052,000			$	1,014,000
Net Loss Attributable to Common Shareholders		$	(1,704,000	)		$	(1,566,000	)
Net Loss Attributable to Common Shareholders per Diluted Common Share		$	(0.06	)		$	(0.06	)
Core FFO (1)		$	11,587,000			$	9,662,000
Core FFO (1) per Diluted Common Share		$	0.37			$	0.35
Normalized FFO (1)		$	10,535,000			$	8,648,000
Normalized FFO (1) per Diluted Common Share		$	0.34			$	0.32
Weighted Average Diluted Shares Outstanding			30,888,000				27,222,000

 

A summary of significant balance sheet information as of June 30, 2017 and December 31, 2016 is as follows:

 

		June 30, 2017				December 31, 2016
Gross Real Estate Investments		$	704,751,000			$	640,217,000
Securities Available for Sale at Fair Value		$	109,079,000			$	108,755,000
Total Assets		$	746,221,000			$	680,445,000
Mortgages Payable, net		$	311,304,000			$	293,026,000
Loans Payable, net		$	64,178,000			$	58,285,000
Total Shareholders’ Equity		$	356,992,000			$	317,032,000

 

Samuel A. Landy, President and CEO, commented on the results of the second quarter of 2017.

 

“We are pleased to announce another strong quarter of operating results. Net Loss Attributable to Common Shareholders (which includes depreciation expense), decreased from $0.03 per diluted share to $0.01 per diluted share. Our Core FFO (which excludes depreciation expenses) increased from $0.18 per diluted share to $0.20 per diluted share, representing an 11.1% year over year increase. Normalized FFO increased from $0.16 per diluted share to $0.17 per diluted share, representing a 6.3% year over year increase. The positive momentum created by our strong first quarter performance has continued into the second quarter, with double-digit growth in core FFO, rental revenue, home sales and NOI. We are also pleased to be included in the MSCI REIT Index. We anticipate that this will result in greater visibility and allow us to reach a broader pool of investors. During the quarter, we also:

 

	●	Increased Rental and Related Income by 12.8% over the prior year period;
	●	Increased Community Net Operating Income (“NOI”) by 14.7% over the prior year period;
	●	Improved our Operating Expense ratio by 90 basis points over the prior year period from 47.8% to 46.9%;
	●	Increased Same Property NOI by 10.5% over the prior year period;
	●	Increased Same Property Occupancy by 180 basis points over the prior year period from 80.7% to 82.5%;
	●	Increased home sales by 26.4% over the prior year period;
	●	Increased our rental home portfolio by 190 homes to approximately 5,100 total rental homes, representing an increase of 9.3% from yearend 2016;

 

(continued on next page)

 

 

	●	Increased rental home occupancy by 210 basis points from 91.5% at yearend 2016 to 93.6% at quarter end;
	●	Acquired our first community in Maryland, a 63-site age restricted community with vacant land for future development for a total of 170 sites;
	●	Obtained a $16.8 million, 4.12% mortgage and repaid the existing $9 million, 6.175% mortgage;
	●	Reduced the weighted average interest rate on our mortgage debt from 4.5% to 4.3%;
	●	Issued 1.4 million shares of our common stock raising net proceeds of $22.5 million, in conjunction with our inclusion in the MSCI REIT Index;
	●	Raised $15.6 million through our Dividend Reinvestment and Stock Purchase Plan; and,
	●	Increased our total market capitalization to $1.1 billion, an increase of 36.6% over the prior year period.”

 

“Subsequent to quarter end, we increased our liquidity and further strengthened our financial flexibility and balance sheet by issuing 5 million shares of a new 6.75% Series C Cumulative Redeemable Preferred Stock on July 26, 2017, for net proceeds after deducting the underwriting discount and other estimated offering expenses, of approximately $121 million. In addition, the underwriters exercised their overallotment option and we issued an additional 750,000 shares of Series C Preferred Stock on August 2, 2017 for additional net proceeds of $18 million. We intend to use a portion of the net proceeds from our sale of Series C Preferred Stock to redeem all of the 3,663,800 outstanding shares of our 8.25% Series A Preferred Stock, with a total redemption value of $91.6 million on August 31, 2017. This 150 basis point reduction will result in $1.4 million in annual preferred dividend savings. The balance of the offering proceeds will be used for general corporate purposes, including potential acquisitions, expansions of communities and for the purchase of additional homes for sale or lease to customers, which will generate additional per share earnings accretion once they are fully deployed.”

 

“We look forward to building on the substantial progress we have made thus far.”

 

UMH Properties, Inc. will host its Second Quarter 2017 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Friday, August 4, 2017 at 10:00 a.m. Eastern Time.

 

The Company’s 2017 second 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 Friday, August 4, 2017. It will be available until November 1, 2017, and can be accessed by dialing toll free 877-344-7529 (domestically) and 412-317-0088 (internationally) and entering the passcode 10108600. 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 107 manufactured home communities containing approximately 19,400 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.

 

(continued on next page)

 

 

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 acquisition costs and costs of early extinguishment of debt. We define Normalized Funds From Operations (“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 for the three and six months ended June 30, 2017 and 2016 are calculated as follows:

 

		Three Months Ended								Six Months Ended
		6/30/17				6/30/16				6/30/17				6/30/16
Net Loss Attributable to Common Shareholders		$	(200,000	)		$	(683,000	)		$	(1,704,000	)		$	(1,566,000	)
Depreciation Expense			6,740,000				5,679,000				13,280,000				11,205,000
Loss on Sales of Depreciable Assets			(13,000	)			45,000				11,000				23,000
FFO and Core FFO Attributable to Common Shareholders			6,527,000				5,041,000				11,587,000				9,662,000
Gain on Sales of Securities, net			(1,020,000	)			(782,000	)			(1,052,000	)			(1,014,000	)
Normalized FFO Attributable to Common Shareholders		$	5,507,000			$	4,259,000			$	10,535,000			$	8,648,000

 

The diluted weighted shares outstanding used in the calculation of Core FFO per Diluted Common Share and Normalized FFO per Diluted Common Share were 32,279,000 and 31,353,000 shares for the three and six months ended June 30, 2017, respectively, and 27,436,000 and 27,301,000 shares for the three and six months ended June 30, 2016, respectively. Common stock equivalents resulting from stock options in the amount of 510,000 and 465,000 shares for the three and six months ended June 30, 2017, respectively, and 122,000 and 79,000 shares for the three and six months ended June 30, 2016, 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.

 

(continued on next page)

 

 

The following are the cash flows provided (used) by operating, investing and financing activities for the six months ended June 30, 2017 and 2016:

 

		Six Months Ended
			6/30/17				6/30/16
Operating Activities		$	16,646,000			$	11,689,000
Investing Activities			(75,852,000	)			(36,518,000	)
Financing Activities			63,156,000				27,884,000

 

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