UMH Properties (UMH) Nareit REIT Week: 2024 Investor Conference summary

Business model and growth strategy

• Operates 136 manufactured home communities with over 25,000 developed sites, focusing on affordable, factory-built homes for sale or rent in high-demand locations.

• Achieved 60% revenue growth, 78% NOI growth, and 99% normalized FFO growth over five years, with a 16% increase in FFO per share and a rising dividend.

• Adds value through capital improvements and modern rental homes, targeting underutilized properties and leveraging demographic trends.

• Rental model enables rapid occupancy increases, with 10,000 homes rented since 2011 and a current focus on filling 3,000 vacant sites.

• Maintains a 30% expense ratio on new rentals, driving profitability as occupancy rises from 70% to 90%.

Recent performance and operational highlights

• Q1 2024 saw 11% rental income growth, 16% NOI growth, 28% normalized FFO growth, and a 200 bps occupancy increase to 87.5%.

• Improved expense ratio from 42.3% to 39.6% year-over-year.

• Expanded unsecured credit facility from $180M to $260M, syndicated with major banks.

• Raised quarterly dividend by 4.9% to $0.215 per share, or $0.86 annually.

• Overcame supply chain and permitting challenges, returning to just-in-time inventory and benefiting from declining factory prices.

Product innovation and market positioning

• Introducing duplex manufactured homes, enabling higher rental yields per lot and offering affordable options as low as $700/month.

• Emphasizes high-quality, energy-efficient homes with modern amenities, challenging outdated perceptions of manufactured housing.

• Leverages cost efficiencies from factory production and bulk purchasing to deliver value.

• Maintains strong demand in diverse markets, including the Southeast and shale regions.