Umh Properties, Inc. (UMH) June 2, 2026 Conference Transcript

All right. Good morning, everyone, and welcome to the 2026 REIT Week presentation for UMH Properties. I am John Masoka, a Senior Research Analyst at B. Riley Securities, and I will be moderating the presentation this morning. With me, I have Sam Landy, President and CEO of UMH, COO Brett Taft, as well as CFO Kevin Miller.

As a quick background, UMH owns 145 manufactured housing communities largely in the eastern United States with over uh 21 sorry 27,000 developed home sites at these properties and to tell us more about those communities in the UMH business model I will now hand the floor over to Sam thank you thank you for having us here today uh our chairman and founder Eugene Landy is watching this from home on television today he has always believed deeply in the REIT industry and the power of common shares in REITs to deliver returns through longevity and compounding but what he's most excited about at this moment is the changes in the rural opportunity zone law which will allow us to create a subsidiary of rural opportunity zone fund where we could do development and redevelopment and the importance of that is building communities or rehabilitating communities takes a couple years three to five years during which we can lose money that could affect ffo per share if you do it in a in a oz fund an opportunity zone fund as a separate subsidiary that's fee income to umh and the potential for this is great because you won't have the barriers zoning barriers that you have in most areas when you're working in opportunity zones and so this could potentially give us the opportunity to do a hundred million dollars in projects per year about a thousand sites per year and over ten years a billion dollars that we'd be earning three percent fee income for UMH shareholders or thirty million dollars so that's what our chairman is most excited about at this moment I'm proud to now introduce Brett Taft our chief operating officer and Kevin Miller our new CFO many of you know Kevin Miller from the exemplary job he did a CFO of Monmouth one of the two New York Stock Exchange REITs founded by Eugene Landy and as you know industrial REITs and manufactured housing have been the two best areas in the REIT industry and that's what our REITs did our business is the creation and operation of communities of factory-built homes for sale and rent we take the efficiency of factory-built homes great housing that costs us about eighty dollars per square foot and place those homes in great professionally managed communities we earn income renting lots renting homes selling homes financing homes brokering home sales from self storage revenue and even now a million dollars per year in oil and gas royalties our annual report investor presentation and website clearly tell our story we have a phenomenal group of shareholders and some of our UMH employee shareholders are here today, and it's great that employees have confidence and own stock in the company, a fantastic board, and a strong, experienced management team. I believe as great as our last five-year accomplishments were, and that accomplishment over 10 years is 157% total return over 10 years, but I believe as great as our last five-year accomplishments were, our next five years will be even better. because we have built and acquired expansion lots turned around communities and and purchased new communities in great locations that currently cannot possibly earn enough money because we need 80 occupancy to come become efficient we have 200 million or more in assets that will produce seven percent seven percent returns over the next five years but are not earning money today the The Marcellus and Utica shale areas will grow in value and importance, which will increase the value of our drilling rights, royalties, and further improve the demographics of our communities. Our southern strategy is also performing very well, with the communities in the south being the leading revenue growth communities. I believe that home sales will grow to be a larger part of our income. It will grow because of current changes in the finance laws happening at this moment, as well as government policy today that will improve the prospects for our existing residents who rent homes will be more able to purchase the homes they're renting in the future. When we increase community operating income 9%, as we did in 2025, it means the value of our communities went up 9%. If the value of our communities was $2 billion, 9% is $180 million. dollars subtract out the 80 million in rentals we added and the 20 million in capital improvements and that 80 million dollars is roughly 100 is roughly one dollar per share in capital appreciation add the 90 cent dividend and the internal rate of return is a dollar 90. and that is how we achieved 157 percent return for shareholders over the past 10 years and why we will do even better the next 10 years. And now Brett Taft will provide more details on operations.

Sure, thank you Sam. So our mission at UMH Properties is to provide quality affordable housing to America's workforce by building and managing sustainable communities for both renters and buyers. We're the sixth largest owner and operator of manufactured housing communities in the country. As John mentioned earlier, we own 145 communities containing 27,100 developed home sites. We've acquired many communities. Since 2010, we've acquired 112 communities containing over 19,000 home sites. So over the past 15 or 16 years, we've really experienced a ton of growth. We're predominantly buying value-add communities with lower occupancy levels when we purchase them. Those communities I mentioned were 74% occupied at the time of acquisition, and now our same property occupancy rate is about 89%. So we buy these communities, we work with the tenants to improve their existing homes, we remove any dilapidated homes, we fix the water and sewer lines, we pave the streets, we add amenities, and then we install brand new homes for sale and for rent. We now have a portfolio of 11,200 rental units, which maintain an occupancy rate of about 95%. Through those acquisitions I previously mentioned, we have 3,300 existing vacant sites that we can go continue to put these rental homes on and continue to generate occupancy and revenue growth for the foreseeable future. On top of that, we have 2,300 vacant acres that predominantly adjoin our existing communities that we can continue to develop and expand, which would result in additional sales profits and additional lot rent. And some of those we've already started, as Sam pointed out, in the capital we've deployed that aren't yet returning on the investment the way that they will. But we're pretty far along in that process. We've, over the past five years, developed over 1,000 expansion sites. We still have about 485 of those sites to fill. We expect to make a $30,000 per sale profit on those and then generate lot rent in the $700 or $800 a month range. So, you know, we've done very well over the past few years. We have a lot of room to continue to grow internally, but we also continue to look for external acquisitions. Last year, we acquired five communities containing 587 sites for a total of $41.8 million. Two of those communities were located in New Jersey, two of them were located in Maryland, and one of them was in Alabama. You know, great opportunities that, you know, fit in nicely with our portfolios. Some of them were stabilized in New Jersey where we can increase sales profits and bring rents to market when those homes turn over. And some of them have the typical vacancy upside that we see at most of our acquisitions. So, you know, we've performed well over the past few years. I did want to point out that, you know, we always have phenomenal same property NOI growth. The first quarter of this year it was 7.1%. It was impacted by higher expenses related to the winter. Payroll was up. Water and sewer costs were up. You know, real estate taxes are always up. Overtime is up. So, you know, that was largely a result of the winter. So we expect our expenses to come down from the 8.2% we experienced in the first quarter, somewhere in the 5% to 7% range going forward. Wanted to point out, though, that over the past five years, we've had an average same property NOI increase of about 11%. Same property NOI five years ago was $79 million. At the end of last year, it was $135 million. So that's a $56 million improvement in same-property NOI over a five-year period. And, again, given the vacancy we have within the existing portfolio, the opportunity to expand our communities and generate additional sales profits, we believe that we can produce similar results over the next five years. So it's really an exciting time to be at UMH. We've got a great team. We've got great leadership. And, you know, we really look forward to providing more quality, affordable housing for the nation's workforce.

All right. And with that, we'll turn it over to Q&A. As a reminder, if you would like to ask a question, either use the mic or I will repeat your question for the webcast. I'll kick things off just to kind of get started here. Can you talk about the broader regulatory environment for the manufactured housing space? And specifically, how could changes to the FHA Title I manufactured home loan program impact your business?

Well, MHI and the federal government are working on reducing the barriers to building manufactured home communities. And the rural opportunity zone law is one of those things that will help us build more communities in rural opportunity zones. In 2011, the greatest difficulty in the industry was financing the retail customer, which is why we turned to rentals and rented out 11,000 homes from 2011 to date many things are coming into play to make it much easier to get the customer finance no tax on tips you can report one person twenty five thousand and to become two people fifty thousand fifty thousand is two hundred thousand dollars in buying power for a couple twenty five thousand a hundred thousand buying power so these people who previously rented a house from us but did not qualify to buy it based on income will now qualify additionally the title one program we were talking about it had a very low loan limit and now they're going to up that to approximately a hundred thousand dollars it's even more than that but in addition to that small loans let's say sixty thousand dollar loans have a high cost to originate and that and when you have a higher high origination cost for a small loan that triggers all sorts of regulatory effect and and you know people just left the business of doing small manufactured home loans that's going to change now because they're uh changing those definitions so many more lenders are going to come in to do small loans they'll be profitable and all of this means the current situation is we buy 800 rental units and need about 64 million dollars in cash to do that as we start selling those 15 year old rental units for cash it will reduce the amount of cash we need to buy the new units and you know it's difficult to predict how quick or how many homes will sell but we imagine eventually it will be substantial and and so you know we'll go from needing 64 million in cash to needing a lower number and those home sales will generate approximately twenty thousand dollars per sale in profits after the home was rented for 15 years we expect to sell it for twenty thousand more than we paid it for so in 2011 we bought them and set up for forty thousand we have to sell them for sixty thousand today so every hundred homes well it will make an extra two million dollars in sales and on the regulatory front nationally state and even local people recognize the incredible need for affordable housing and UMH once we're in a location and the mayor and council see what we do improving the existing community in their town when we yes to expand we get the approvals to expand because they know us our great difficulty is the places were not located but we found a solution to that problem too by getting outside developers and we did the joint venture with Nuveen and we built three new brand new communities but but the greatest problem is everything's local you've got to get local approvals to build communities but we have even the ability to do that and the regulatory climate is getting much more favorable okay maybe sticking with regulations for just a little bit can you maybe explain the recent changes in chassis requirements for manufactured homes and how does that impact your business model if at all yeah so removing the chassis does a lot uh 55 and older people don't like walking up steps we have a saying in manufactured housing leave it low and watch it go so now like if you look at a manufactured home and you see the vinyl skirting that's that's kind of a negative to our product you know uh it can ship away uh it's not the same as a conventional house well now you're going to put that house flat on the concrete slab no steps no skirting fantastic improvement additionally you're going to be able to do two-story houses so take our most valuable lots in the most densely populated places those are places where people are going to want us to buy a 1970 home junk it remove it and now could put a two-story house so you could sell you know 2,000 square feet it could be 4,000 square feet for more money than the than the one-story house the lot rent you know what they're willing to pay for rent for a bigger house is a higher number so it increases the value of every lot in our community increases the amount of gross income we could get in sales profit and we've already experienced this not with two-story homes but with duplex homes where we could take 1000 square foot box and turn it into two 500 square foot one-bedroom units and we we have to do more of that but we've done it and it's very successful and it works maybe kind of focusing more on umh specifically what's the outlook for growth within the umh portfolio as it stands today and can you walk us through how you kind of envision growth with your existing tenants versus kind of adding new units to the portfolio um and even the potentially we fill vacancy within the portfolio today yeah the first thing to look at is the simplicity of hitting our goals right five percent rent increase ten million dollars add 800 rental units ten million dollars that 20 million is almost 10 percent increased revenue and we're on track to do that and the The next objective is increase sales, increase other income. We have the self-storage, we have the drilling rights, but Brett will go into that in more Yeah, absolutely.

And to Sam's point about the oil and gas rights, we own about 4,000 acres in the Mars Ellis and Utica Shale areas. We do see the phone ringing with land man that would like to lease these lots. We're getting offers of, you know, and it's property dependent. So they put a unit together, they look at our assets, they make an offer on one individual property at a time. But we've been seeing rates of about $3,000 to $5,000 an acre and then 18% gross royalties on top of that. So that's been going very well. As Sam mentioned, you know, the best thing we can do, though, is to continue to operate our existing business. The quality of our communities, the locations of our communities, the demand for affordable housing in the market make it, I don't want to say easy, but we get our 5% rent increases and we don't get too much pushback from our tenants. and we maintain 98.5% collections on our rent. So that tells us we're doing a good job. On top of that, we believe that we will install and rent 800 new homes this year. We did 166 new rental homes in the first quarter. We have over 600 homes on order. We've got about 300 of them on site that are all being set up right now. So that is our pipeline to grow occupancy into the second and third quarters. we feel we're very much on track to do that and sales last year and I do want to point it out again I actually didn't mention it earlier but in 2020 sales were only 20 million dollars a year at the end of last year we did 36 million dollars in sales and made about five and a half million on that sales operation again we believe with the expansions we're opening in the location of our communities we've got the potential to grow sales considerably on top of that 36 million we did last year so that's how we view the business and where the growth is going to go I'll just mention quickly in our presentation we show page 17 which shows you the new communities and expansions we've built in the past

new communities built a thousand seventeen lots expansions a thousand three hundred ninety six lots before the year 2000 many people became incredibly wealthy in this business building communities and they would sell the home for enough of a profit to even pay for a hundred percent of a lot so if a lot cost us a hundred thousand dollars to build the ultimate goal you know a home run would be you sold that house at a hundred thousand dollar profit to a hundred percent pay for the lot from the sale of the home and then you're going to collect lot rent of about eight hundred dollars per month and you know a perfect community operates at thirty percent expenses but so you know of of that uh 800 approximately 500 would be net income on a lot that you have no money in and then the rents go up five percent a year from from there and that's why you know people who built communities in the 70s 80s 90s became incredibly wealthy and we're doing that for our shareholders we've been fighting a battle in kooksackie new york for 20 years and we think finally this summer we'll get approvals to build 360 lots 18 miles south of albany and we've built other expansions and new communities in places where a hundred thousand dollar markup is possible um i know it's kind of early days but are you seeing any impact to your tenants from recent macro uncertainty and specifically kind of the impact of kind of conflicts in the middle east on gas prices especially given kind of umh's harm hallmark for tenants is kind of the affordability of of the offering i'm very aware that short funds who believe that our tenants right you know uh you know wage earning people you know there is a high likelihood that they're going to be affected by high gas prices and high interest rates so we become a short target our our short interest is the highest it's ever been but I polled our managers is anybody seeing any negative impact from the high gas prices and high interest rates and they are

busier than ever out in the field it could be a combination of factors it could be people choosing to downsize but we have our incredible low turnover Brett will give you details on this our great collections and our great home sales and it's all continuing yeah our rental homes are turning over about 20 annually which is fantastic you know our r&m on those rental homes is only about 400 a month we do have some capital improvements on turn that we generally are able to mark up the new rent 10 to earn whatever we put into that house so we're very happy there i do also want to point out that in 2022 when inflation was you know eight or nine percent our tenants also did very well we maintained that 98 and a half percent collection rate we actually rented about 900 new homes that year and we've been growing occupancy ever since so you know we monitor these numbers on a daily basis collections are right in line with where they always have been occupancy is growing you know there could be an impact to home prices here at some point we have not seen it yet home prices are within five percent of where they were a year ago you know there's some rumblings from manufacturers they may have to start pushing but you know they're also looking to grow their volume so I don't anticipate any major increases coming from manufacturers but if there are we believe our rents are at a point where we can still price to earn a net 10% on whatever investment we make in rental

homes I just wanted to add something to what everyone was saying you know housing is it's not a luxury it's not something you just want it's something you need and you know when prices go up for everything else like Walmart is reporting that they're seeing you know less sales so people when people need to cut back they'll cut back on things that they don't have to get but for housing they have to make sure that you know they think they could afford to live somewhere and when they know there's no other option that is more cost effective and such a nice house to live in they're gonna make sure that they pay their rent because they don't want they don't want the alternative to get kicked out and go somewhere else where it's going to be more expensive and not a not as nice a

house I'm just a reminder if there are any questions for the audience please up right there I can repeat your question if you just want to on it with regards to selling homes so can you address that issue in terms of the capital

need yeah just the question was kind of you know there's a great opportunity for further growth and development but potentially an issue with kind of cost of capital both on the equity side and with interest rates going up so so first in the new mortgages we did they were at a lower cost debt and then they went to a higher cost debt we absorbed that during the past year the increased interest rate was absorbed and income rose but additionally we need new capital to buy the rentals to grow the company etc whatever interest rates are if they were 3% or if they were 8% it's not physically possible for us to earn that return immediately so we take the money today or we took it last year and you know it's more than a hundred million dollars which costs more than six million dollars and the minute an expansion is complete you have to start expensing the interest well when the expansion is complete there's zero income you haven't filled a single lot so you get the interest expense before you get the income so the second half of last year and and i guess maybe even the first quarter of this year interest expense is up some people object to us issuing shares because they view additional shares as dilutive but again we need that money to grow and physically impossible for that money to make money in six months but 12 months I think will do it and so whatever interest rates are we need to charge enough markup to make an adequate return above the cost of funds so when you go to people's objection one year ago right now they were very upset we were issuing stock at $15 through the ATM our point is we earn $1.50 on that money it's a creative but nothing is a creative in 30 days 60 days 90 days it takes longer so but I'm saying to you right now I believe you're going to receive those results in the next two or three quarters from raising that capital at $15 which people objected to but it's going to earn $1.50 and we heard their objections and we 100% stopped issuing stock from the ATM so that over the past year zero new shares common shares have been issued so we're relying on preferred stock which with interest rates what they are today is expensive and debt which interest rates are high but again we are the lowest cost producer of quality affordable housing and interest is just one component of those costs and everybody doesn't matter you're building a condo you're building apartments townhouses conventional homes you have to pay those rates so it's just one of our costs that we have to mark up over and again it can't be done in a six month timeframe. It takes longer. That money will earn the adequate return. People will be deeply satisfied with what we do as we do it.

Yeah, I just wanted to point out that the refinancings we did last year really do demonstrate the value created by our business plan. We refinanced 17 communities. We had invested a total of about $140 million in those communities. They appraised for about $300 million. We paid off the existing $115 million in principal balances and took out a total of 190 million so we were able to free up some capital through those refinancings to go and invest in the rental homes you know as much as expansions and some of the value-ad communities take a longer time to start generating returns the rental homes are fairly quick you know we as soon as we get a home we get it set up within two to three months it's generally rented within four months and again we're earning about 10% on that rental home investment so that that does help in the shorter term but the Sam's point the expansions and evaluate acquisitions do have a three to five year time horizon you know a we're talking about how

we're going to sell rental units to generate cash B we're going to sell oil and gas leases to generate cash see we were working on the hundred thirty four acres in violent New Jersey but home builders just are not buying new projects right now when they do we have a hundred thirty four acres that it joins the Tiger Woods Mike trap Mike trap golf course will sell that for cash which are additional sources of cash on top of that Fannie and Freddie were lending us money directly on the rental homes until approximately three years ago we're working on reinstating that which is it going to be another major source of cash it's debt close money it's not free but it's an alternative to common stock just to add another source of capitals we just refinanced our line

credit um it's a 260 million dollar line with an accordion feature that can bring it up to 600 million if we need to and we've actually refinanced it at a lower rate than our previous line about 40 bips you know less depending on our current leverage ratio so until the stock price comes up and we think it's high enough to issue equity you know we have all these sources of raising money we have time for one more question i prefer to favor the floor if anyone wants to but i have one all right so the question is about the renting model margins were about

65% what are the kind of 35% what's causing 35% of expenses essentially yeah our largest expense items are going to be payroll real estate taxes water and sewer every year that's where it's going to shake out any other questions from the floor i guess maybe just one last one on my end um if you could correct one kind of misconception about the manufactured housing industry or umh what would it be so so rentals solved an incredible problem for us there were so many people in the world who just never thought of living in a manufactured home in a manufactured home community and and when they when they wouldn't

you know think about that if you were buying the house the commitment you had to make was 10% down which today could be $20,000 and the 25 year loan that that's a big commitment for anybody for a product that they're questioning but if you can rent them that house it's one month rent one month security $2,000 they could come in the community try it out on a one-year lease if they like it they could stay if they like it their family members could move in and that's why those 11 000 rentals rented out and when we began doing the rentals we didn't know that we were ever going to increase sales sales were terrible in 2009 they were four million dollars was all we were doing in sales today sales are up to about 36 million dollars because rentals attract customers who bring us buyers and and that will continue and you know the the misconceptions still out there is just municipalities who don't understand the new product the fact that those old homes lasted from the 1970s today proved their value right they lasted this long they served their purpose they were quality affordable housing that people lived in but so that's what's in people's mind as manufactured housing in many towns and the new houses that today or nothing like that energy efficient vinyl sided shingle roof phenomenal kitchens bathrooms lots of space you know once we get people in the house they always love the house the manufacturers do a phenomenal job for us and and we have to get them in the door and and that's the perception issue of both federal state municipal government and even even investors we have to get investors to understand how great the product is and what a value it is okay with that um thank you very much for your time and thank you everyone for attending.