Q1 2024 UMH Properties Inc Earnings Call
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Good morning, everyone and welcome to UMH properties first quarter 2024 earnings conference call.
All participants will be in a listen only mode should you need assistance. Please they know a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
I ask a question you May press star and one on your Touchtone telephones to withdraw your question you May Press Star two.
Also note todays event is being recorded.
It's now my pleasure to introduce your host Mr. Craig Castor Executive Vice President and General Counsel.
Craig Castor: Thank you.
Mr. Koester, you may begin.
Thank you very much operator in addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited first quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q are available on the company's website at UMH REIT.
We would like to remind everyone that certain statements made during this conference call, which are not historical facts may be deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.
Craig Castor: The forward looking statements that we make on this call are based on our 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 that its expectations will be achieved the risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's first quarter 2024 earnings release.
Filings with the Securities and Exchange Commission the company disclaims any obligation to update its forward looking statements.
In addition, during today's call, we will be discussing non-GAAP financial metrics reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as the explanatory and cautionary language are included in our earnings release, our supplemental information and our historical SEC filings having.
Said that I would like to introduce management with US today, Eugene Landy, founder and Chairman Samuel Landy, President and Chief Executive Officer, Anna Chew Executive Vice President and Chief Financial Officer, Brett Taft Executive Vice President and Chief Operating Officer, Jim Viking's, Vice President of capital markets and Danny.
<unk> Executive Vice President.
It is now my pleasure to turn the call over to <unk>, President and Chief Executive Officer Samuel Landy.
Thank you very much Craig UMH is pleased to report continued improved community operating results and growing year over year earnings.
Normalized <unk> per share for the first quarter of 2024 was 22 cents as compared to 20 last year.
Representing an increase of 10%.
Our year over year growth in per share earnings can be attributed to our solid community operating results.
Overall occupancy increased 220 basis points from 84, 9% last year to 87, 1% this year or an increase of 598 units.
Sequentially overall occupancy increased by 132 units.
This improvement in occupancy combined with our annual rent increases generated an 11% increase in rental and related income.
And a 16% increase in community net operating income.
Our community expense ratio improved from 44, 3% last year.
Took 41, 9% this year.
We are on track to grow revenue by $20 million or more in 2024 as compared to 2023.
This growth stems from our increased occupancy from last year's rental home investments our investment in 800 or more new rental homes this year and our annual rent increases.
Our high quality communities exceptional operating platform and strong fundamentals for affordable housing positioning UMH to continue to excel in 2024.
The strength of our operating results and our earnings growth in 2023 positioned us to raise our common stock dividend for a fourth consecutive year.
We are proud to increase the dividend by one cent per quarter or four cents per year, representing an increase of approximately 5%.
This results in a total annualized dividend of 86 cents.
Since 2020, we have increased our dividend four times.
The aggregate amount of 14th.
Representing a 19% increase.
Our rental home portfolio continues to perform well, we now own over 10000 rental units of which 95, 1% are occupied as compared to 93, 7% occupancy last year, representing a 140 basis point increase.
We continue to experience, 30% or less turnover per year, and our expenses average only approximately $400 per unit per year.
Our turnover costs are generally covered by the tenant security deposit.
In most cases the homes are left in room clean condition ready for the next tenant.
Excluding tenants that moved in last year. Our average renters tenure is approximately four years.
We are on track to install and rent 800 homes in 2024.
Backlog from our manufacturers have returned to pre COVID-19 traditional levels of four to eight weeks.
This has helped to reduce our interest expense and carrying cost, while allowing us to generate similar overall occupancy and revenue gains without negatively impacting earnings.
Our annual investment in new rental homes yield approximately 10% on the invested funds. This investment is accretive to earnings and substantially improves our communities aesthetically and financially.
Same property occupancy improved by 121 units from the fourth quarter and 545 units year over year. This represents an increase of 40 and 200 basis points, respectively same property income increased by 10% while expenses only grew 3%, resulting in a <unk>.
16% same property NOI growth or $16 million annualized.
This increase in same property NOI substantially increases the value of our communities as demonstrated by our recent refinancing of three communities acquired in 2012 and five communities acquired in 2013.
Our total investment in these communities, including capital improvements is $52 $2 million or approximately $41000 per site.
The communities appraised for approximately $108 million or <unk> $84000 per site, reflecting an increase in value of $55 $9 million or 107%.
Gross home sales were $7 $4 million as compared to $7 $3 million last year.
Representing an increase of 1%.
During the quarter, we leased our sales center in Belle Vernon, Pennsylvania to Clayton homes.
All the homes that were in inventory at the sales center were sold to Clayton homes at the invoice price.
Excluding the homes liquidated in this sales center sales of manufactured homes amounted to $6 $4 million cost of sales amounted to $4 $2 million and the gross profit percentage was 34% for the three months ended March 31 2024.
Last year's first quarter sales were exceptionally high due to supply constraints pushing many 2022 sales to the first quarter of 2023, our second quarter sales to date are in line with our current sales projections for 2024, we currently have a pipeline of approximately four.
And sales and expect to close those deals and grow our pipeline going into the summer.
At quarter end, the balance of our notes receivable was $85 million at.
At a weighted average interest rate of 7%.
During the first quarter, we financed approximately 53% of our home sales.
Over the last two years, we have developed approximately 440 sites.
These expansions are in good markets in Maryland, Pennsylvania, Tennessee, and Indiana.
We have made investments in these expansions, but they are not yet full and accretive to earnings. We believe these expansions provide us with premier sales slides that should allow us to generate profitable home sales increased occupancy and more valuable communities.
This year, we should obtain approvals to develop 800 sites and plan on developing approximately 300 or more sites.
UMH is well positioned to grow the company through internal and external growth opportunities.
We have 3300 vacant sites, which we plan on filling throughout our rental and sales programs. We have 2100 acres of vacant land that will allow us to expand our communities.
We can profitably sell and finance homes, we can build new communities through our joint venture with Nuveen real estate, we can acquire communities. When they are for sale at reasonable prices. Most importantly, we have a strong balance sheet, which will allow us to execute on these growth opportunities the fundamentals of manufactured housing or <unk>.
Strong and UMH is well positioned to continue to grow through our established long term business plan.
Manufactured housing has two natural tailwind, increasing GDP and inflation.
Craig Castor: We can add 800 rental homes and over 200, new home sales per year and the high quality of our communities its value to our real estate are.
Our hard work grows our communities through developing expansions and by building 200 lots or more per year. This allows us to increase the size of the company when compelling acquisition opportunities arise our hard work has positioned the company with one of the highest quality portfolios of manufactured home community.
He's in the country.
And now Anna will provide you with greater detail on our results for the quarter.
Thank you Sam normalized F F L, which excludes amortization and nonrecurring items was $15 million or 22 cents per share for the first quarter of 2024 compared to $11 $7 million or 20 cents per share for 2023.
Something in the 10% per share increase.
Anna: Rental and related income for the quarter with $53 million compared to $45.3 million a year ago, representing an increase of 11%.
This increase was primarily due to an increase in same property occupancy. The addition of rental homes and an increase in rental rates.
Anna: Community operating expenses increased 5% during the quarter.
This increase was mainly due to an increase in payroll costs rental home expenses real estate taxes and snow removal.
Our same property results continue to meet our expectations.
Same property income increased by 10% for the quarter and despite the increase in community operating expenses community NOI increased by 16% for the quarter from $26 million in 'twenty, two 'twenty $3 million to $30 million in 2024.
As we turn to our capital structure at quarter end, we had approximately $672 million in debt of which $494 million was community level mortgage debt $78 million with loans payable.
$100 million, what's out $4 72 per cent series a bonds.
Total debt was 92% fixed rate at quarter end.
The weighted average interest rate on our mortgage debt was 4.17% at quarter end compared to $3 nine 1% at quarter end last year.
The weighted average maturity on our mortgage debt with 5.1 years at quarter end and five three years at quarter end last year.
Is this increasing interest rate environment, the weighted average interest rate on our short term borrowings with 60 basis points lower at $6 seven 9% at the current quarter end as compared to 7.39% at quarter end last year.
In total the weighted average interest rate on our total debt was 34 basis points lower at 4.56% at the current quarter and compared to four 9% at quarter end last year.
At quarter end UMH had a total of $295 million in perpetual preferred equity.
Our preferred stock combined with an equity market capitalization of over $1.1 billion and $672 million in debt results in a total market capitalization of approximately $2 $1 billion at quarter end as compared to $1 $9 billion.
Last year.
Presenting an increase of 12%.
During the quarter, we issued and sold one 3 million shares of common stock through our common ATM program generating net proceeds of approximately $24 million.
The company also received $2 $5 million, including dividends reinvested through the drip.
Anna: In addition, we issued and sold 194000 shares of <unk>.
Anna: Our series D preferred stock during the first quarter of 2024 through the preferred ATM program generating net proceeds of approximately $4.4 million.
To quarter end, we issued 190000 shares of common stock through our common ATM program generating net proceeds of approximately $3 million.
Anna: In addition, we issued 19000 shares of our series C preferred stock through our preferred ATM program generating net proceeds of approximately $444000.
From a credit standpoint, we ended the quarter with net debt to total market capitalization of 30%.
Anna: Net debt securities to total market capitalization of 28, 6% net debt to adjusted EBITDA of five nine times and net debt less securities to adjusted EBITDA of five six times.
Interest coverage was three one times and fixed charge coverage was two times.
From a liquidity standpoint, we ended the quarter with $39 $9 million in cash and cash equivalents and $130 million available on our unsecured revolving credit facility with an additional $400 million potentially available pursuant to an accordion feature.
We also had $194 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes.
Subsequent to quarter end, we expanded the borrowing capacity of our unsecured revolving credit facility from $180 million in available borrowings to $260 million in available borrowings. This facility is now syndicated with three banks BMO capital markets J P. Morgan.
Anna: Chase and Wells Fargo has joined the Rangers and joint book runners.
Additionally, we had $29 $1 million in our REIT securities portfolio, all of which is unencumbered.
This portfolio represents only approximately 1.6% about underappreciated assets, we are committed to not increasing our investments in our REIT securities portfolio and have in fact continued to sell certain positions. We are well positioned to continue to grow the company internally and external.
<unk>.
And now let me turn it over to gene before we open it up for questions.
UMH is off to a strong start to 2024, where demand for affordable housing in our markets and across the country remain incredibly strong.
Our communities continue to fill sites with homeless program and sale.
Long term business plan is favorably positioned the company with 3300 vacant sites, the pill and 'twenty 100 acres of land to develop.
These vacant lots in vacant anchors are increasingly valuable as the affordable housing crisis continues to only intensify.
We have done an incredible job rehabilitating old communities, we acquired that had deferred maintenance and deferred capital improvements. We have also made substantial progress expanding our communities and acquiring newly developed communities.
Improvements have transformed the press commuters into first class communities, creating waiting lists for our homes.
This business plan has allowed us to profitably increase the supply of quality affordable housing and the markets we serve.
Within the next five years, our community should be full and there will be limited to what's available at a place homes on the housing crisis.
Are they for conventional builders to deliberate how's it going and affordable price point highlight the tail winds behind UMH in our industry.
UMH has achieved nearly 100% occupancy and made continued progress developing our expansion land well.
This will translate to substantial earnings improvement.
Table the income stream.
Track the valuation.
That being said, we must do more to combat the affordable housing crisis, our nation must work to expedite the approval of new land lease communities. We are proud of the progress. We have made educated in our nation and our elected officials about the benefits of manufactured housing and community living.
Anna: We invite all of you to attend the innovative housing showcase in Washington D. C. From June 7th of June we will be partnering with some of our manufacturers to display a HUD code multi section homes in a modular single section duplex on the National Mall there.
This event allows us to show our product to the legislators and lobby for changes, which will allow us to produce more affordable housing.
Ladies and gentlemen at this time, we'll begin the question and answer session to.
To ask a question you May press Star and then one using a touchtone telephone to withdraw your question you May Press Star two.
If you are using a speaker phone, we do ask that you. Please pick up your handset prior depressing the numbers to ensure the best sound quality.
Again that is star and then one to join the question queue.
Our first question today comes from Rob Stevenson from Janney. Please go ahead with your question.
Hi, good morning, guys.
Sam can you talk a little bit about the acquisition pipeline today I know that when you guys have talked in previous quarters that there was a couple of deals that you guys have been working on etcetera.
There was getting closer to fruition there've been hiccups there.
Well.
I'm Gonna, it's Sam here I'm going to have Bret fill you in on the acquisitions, but go ahead Brett.
The two properties, you're referring to are the two properties in Maryland next to our cinnamon Woods community.
Really can't get into too much detail, but we are in due diligence or some matters that were working with the seller to resolve we think we can resolve those problems, but it's obviously delayed the closing on those properties I wouldn't want to sit here right now and put a tentative closing date out there, but it wouldn't be until later this year.
And then as to other acquisitions, we continue to monitor the acquisition market. We're looking at a lot of deals both stabilized and value add haven't found much that is really checked our acquisition criteria boxes, but we continue to look and we're hopeful that throughout the remainder of the year, we'll find some deals that are either provide longer term.
<unk> strategy or are accretive in the short term.
Okay. That's helpful. And then I guess a question on the rental units now that things have returned to a more normalized supply.
Environment and we're beyond Covid, what are you guys seeing in terms of the seasonality in terms of rental velocity like the apartment see significantly greater foot traffic in the second and third quarters, and then substantially less than the first and fourth but homebuilders don't see as much variability.
Is that what are you guys seeing these days on the rental units and the ability and the absorption numbers there on a on a quarterly basis, you're seeing significant seasonality in the summer months.
Anna: But while there may be seasonality.
Our problem in the last two years was you know first the inability to get their houses thing getting them all at once at this moment, we're filling homes as quickly asleep.
Put them in the managers are asking us for.
We're more homeless, we've been trying to limit their inventory to five homes, which kind of slows down the set up a little bit, but but all of them are very optimistic about their ability to fill every house, we could put in there. So that you know our goals to fill a minimum of 800, new rentals this year and every.
Things are on target to do that in regard to seasonality Brett Yeah, well first of all we did worked through almost all of our inventory that we had at the beginning of last year, which was 12 or 1300 units.
Now we have about 280 homes that are actually in our communities of 150 of those homes were delivered in the first quarter. So we're getting those homes set up and they'll be ready for occupancy.
You know that is a total of 442 homes, we've already filled 120, new homes. This year, we're confident in our ability to fill those $4 40, and then begin placing our next orders. So another 320 orders would bring us to 800, we're very confident we can do that theres certainly some seasonality.
And I think you're right in that the second and third quarters are our strongest for rentals and for sales, but we do experienced strong demand in the fourth and first quarters as well.
Okay.
And then last one for me and Where's the best <unk>.
Source of debt capital today, I mean, how meaningful are the rate differentials between your line in mortgage debt and other borrowing sources that you have access to today.
I think I'm the best source is still the Gse's as you know at the end of last year, we were able to close on E. G. S E alone at under 6% and of course right.
Higher unless afterwards, but we were able to do that when other places we're quoting a lot higher rates.
The good thing about our mortgage portfolio. This year is that we don't have anything coming due in 2024, we do have approximately 100 million coming due of 118 million coming due in 2025, and we are hoping that the rates will.
Hopefully stabilize or maybe decrease a little bit in 2025 and since most of these communities in that 118 million.
Right now currently have GSE financing, we do not anticipate any problems getting additional GSE financing.
When in in 'twenty, five is that $118 million up throughout the year all throughout the year I mean, it goes from there.
Yes exactly.
Anna: March all the way through to the end of the year Okay.
Alright, guys appreciate the time and have a great weekend.
Thank you.
Our next question comes from Rich Anderson from Wedbush. Please go ahead with your question.
Hey, Thanks, and good morning, My first few them age experience.
So I'm wondering a question on on length of stay you mentioned four years I'm curious how you feel about that do you see any kind of strategy to change. It would you rather be shorter. So you can mark rents to market or would you rather to be longer and sort of make it more of a less a lesser risk situation.
What's your view on length of stay today.
No. We appreciate that we have only approximately 30% turnover of rental homes and the occupants stability is actually growing and that's very beneficial in that it reduces.
Anna: Turnover costs. Additionally, each satisfied residents.
Invites family and friends to the community to the houses generating additional sales and additional rentals. So we like that number to be a low number I'd point out that we started doing rentals 10 years ago buying the homes for $40000 a piece and renting them out for 8000 per year replacement cost is now 70000.
Per house.
And keeping these homes occupied with the same resident is very beneficial even even though you do get better rent increases on turnover. It reduces your cost and I think the better business plan.
Okay.
And I think you said a target of 800 rentals to that this year and 200 sales. It correct me if I got that wrong and if I. If it's right is is that a little bit more in the way of sales volume relatively speaking than you would normally do.
So the 200 is probably our new home sale number the 200 as new home sales numbers and it is slightly above last year I think we did about 180 last year and in a similar range 100, 6400, but we are very optimistic about the new home sales.
Six of those locations are just opened within the last 12 months of expansions and those six locations are in great markets such as <unk>.
Cinema Woods, and kind of Swagel, Maryland kind of kind of Wingo, Maryland. The these are that's a place where we think manufactured homes will sell for as much as $300000.
Uh huh.
You're dealing with approximately a 30% markup, so we see $2 million and additional sales profits potentially this year from those locations.
And sales remain strong.
Have the.
Baby Boomers, who can pay cash so.
Sales, we see growing higher higher grosses and higher net okay.
In terms of the 16% same store NOI growth.
Very good number how sustainable is it in your mind.
You've got a lot of occupancy lift this quarter.
And do you see yourself, you know producing another double digit type of same store NOI growth year or is there may be some some movement in the occupancy that might change the math a little bit as we go through the year.
No, but what happens is until communities are 80% occupied they're really not efficient and then from that 80% to 100%, that's where we're going to get the expense ratio going down. There is only 3000 vacant lots left today. So you know four to five years will fill those 3000 vacant lots so that.
Four to five years.
We project the 5% rent increase plus the 800, new rental units generating increased revenue, meaning that you know these double digit increases in operating.
Income are possible until we run out of lots, but Meanwhile, we keep getting our expansion lots approved and those expansion lots have the possibility of generating increased sales income.
Going all the way back to 2006.
Anna: When we had.
Uh huh.
Expansion lots at a profitable good time to sell homes. We were we were much smaller company, maybe only 30 communities and we did $16 million in sales and made $2 million. So today, we're building more expansions in great locations and we hope to one day show what a great job, we can do selling homes in our earned.
Sales profit, Okay last one for me.
And maybe a bit.
A little ignorance here again, you know my my first conference call with you guys, but on the on the occupancy for rentals, and then well into the 90, 90%, 90%, 95% or whatever it was this quarter, but owned homes are much lower there I can understand logically why why occupancy would be greater for the rental.
Model, but maybe you can fill in some blanks for me to to explain why it's such a difference in what you might try to do to.
To narrow.
Narrow that spread thank you the important thing to understand the community occupancy number the vacancies are vacant lots lots that exist in the community that are not earning revenue. So all of the homes in the community are occupied rate weather, whether it's a rental home or a resident owned home those are aki.
Anna: Pied units right. So yeah, so that that 86 point something percent occupancy consists of our 10000 rental homes that are occupied plus community resident homes that are occupied but the 14% vacancy.
Is lots that exist they physically exists they have driveway they have water and sewer there on roads and all they need is the addition of a house and so during the many years.
Going back to about 2006, we intentionally acquired communities with vacancies buying lots for as little as $30000 per site because they were vacant and then we added $70000 rental home to that lot. So that for $100000, we create a thousand.
Square foot three bedroom, two bath dwelling unit on a 5000 square foot lot that old rent today for about $1000 per month. So we're basically building horizontal apartments with our cost per lot roughly ranges from 30000 to 70000, when you're buying them you build them for about a one.
<unk> thousand and then we're adding that factory build house, that's an incredibly efficient quality energy efficient house and then we're renting it out and because this product.
As good as sending an apartment, but costs less we have these waiting list and we have that strong rental occupancy and so.
We ran into problems when COVID-19 closed down the factories and we couldn't get the homes. So that was the problem that year, we were able to the next year, we were able to get our 5% rent increase but we couldn't tell you that we added 800 rentals and fill them because they didn't come from the factory and the year that followed that the homes all came from the <unk>.
Through it all at once so the first half of the year, we had to set them up and then the second half of the year, we rented them and now we're in the next year and all of those problems.
Where are behind US are now behind us everything's back to normal we have 3000 vacant lots to fill by getting the home from the factory setting it up in two to three months and renting it out so that that 14% vacancy should be filled over the next four years. Okay. I was I think I was asking.
Slightly different question I, probably didn't phrase it right, but I'll I'll take it offline that was good color, regardless, so thanks for that and a great great quarter. Thank you.
Thank you.
Anna: Our next question comes from Jeff Walkenhorst from Copeland Capital Management. Please go ahead with your question.
Alright, Thank you good morning.
So actually it's a shame you covered a lot of ground. There that was very helpful and the shame I was going to ask you about the same store NOI growth, which is really again unparalleled in the REIT universe today, and I think that should certainly make UMH stand out and the question was how long can that continue. So I think you you suggested that there's a double digit pace.
Should be sustainable my question follow up question to that is how does that translate into bottom line per share episode growth in the last several years, we saw flattish <unk> per share performance from U M. H and I think you went through some of the challenges, which the company worked through so even.
<unk> now today and the higher cost of funding environment, you drove 10% year over your adjusted episodes normalized <unk> per share growth.
Is it your view that that we are at a point, where you have major can continue to show very healthy per share <unk> growth over the next several years.
Absolutely. It's it's important to think of how equity leverage worked right. So the money has to come from somewhere to buy these new rental homes and to do the expansion. So you know what.
We are trying to use 50% equity and 50% debt. So it comes from the common ATM as well as debt, but when you do the math and you figure out that that new money buys that $70000 rental home that create $12000 per year in gross income.
Right. So each each $70000 is going to bring in 12000, new dollars in rent.
Anna: To be about.
40% expense ratio is 60% of that is income.
And so you know without leverage we're earning about 9% with leverage we're earning about 13, 14%.
So this this new equity could be earning over $2 per share. So it is accretive and it will be more and more accretive and it's it's that it's that time that the brakes got hit when we couldn't get the houses from the factory that that May distort People's view about.
How well equity leverage will work for us.
If I might add.
Anna: The nation needs 4 million homes.
The shortage of housing is growing the population is growing well.
We're not building enough housing in fact, the shortage will increase.
My estimate is that the nation needs 500, new communities of 200 units a piece 100000 units that means the industry should double its production from 100000 units to 200000 news. The housing shortage is very very real.
Anna: I've lived through the times when you woke up in the.
Anna: The apartments became vacant in the houses are getting bacon that we've all seen the recessions, but I don't think that's in the cards for a nation that has the kind of housing shortage we have today.
Boeing MD population, we get requests from groups for a thousand units and we've been.
One of the leaders in the industry, though so I'm at AOS was doing last year, we've been providing at least a thousand units a year, we really should provide to 3000 units a year. So the problem reservation theres not a an abundance of housing and shortages the problem for the nation as supervisor housing now.
Is that housing profitable, we are providing housing the best quality housing at the lowest price that's a nice place to be in an industry with.
Which is in demand.
In the early stages of new construction Greenfield construction, we don't make any money.
In the early stages of rehabilitating parks, we don't make sufficient money.
Question is long term are you going to have increased rents and compounding and we've proven that over the decades and.
Estimates of where we're going we have this that we will grow at a 5% compound rate.
As far as the eye can see certainly for 14 years, where everything doubles. So when you look at our per share earnings are you using.
We reported earnings today.
Reported earnings would we put tomorrow it would be to look at what tomorrow as earnings will be will bring will be able to do two things.
Alleviate the housing crisis and make a great deal of money.
Okay that sounds good to follow ups. The demand I think you said that you have waiting lists for your communities are the waiting list.
Pretty balanced across the geographies different locations.
It's not completely uniform Western New York is not as strong as other locations, but we do continue to grow occupancy there I would say, Michigan is not as strong in Michigan's been doing okay, specifically close to Ohio, Ohio is very strong, Indiana is very strong Tennessee is very strong Eastern New York.
Eastern Pennsylvania, all very strong with waiting lists the others.
One of them in those other markets do have waiting list they might just not be as long as the ones for reporting elsewhere, but I think it's a testament to our 95% rental home occupancy most of our vacancy is just your typical turnover in our ability to fill 800, new rental homes per year, so and those homes geographically are going to every corner.
<unk> of our portfolio.
Okay. So the demand side sounds good the ability to drive continued occupancy gains there.
Anna: No roadblocks or concerns that you see in that front.
No, we're very confident with our ability to maintain our 94%, 95% occupancy ranges and install in rent or 800 homes. This year our markets continue to do well, we continue to achieve our 5% rent increases and as a result of the increased revenue and occupancy or expense ratio.
Those are decreasing which is allowing us to hit these same property double digit NOI increases. So we're optimistic this will continue but we.
Closely monitor every community in our portfolio I'd also add to that that.
Our collections are as strong as they are normally are historically in the first quarter. It was 98, 7% almost 99% so the.
The company is doing well operationally from just about every standpoint.
Speaker Change: Okay, Thanks, and one final comment or or inside its interesting that the valuation for single family rental REIT to receiving versus UMH when in fact.
How have I think over 10000 rental units effectively single family homes in your portfolio.
Agreed and thank you and it's very efficient to operate rental homes in a manufactured home community on 50 acres. We have 250 homes. So it's much simpler to manage our homes then.
You owned rental homes scattered throughout many towns in many counties.
Thanks, guys.
Thank you.
And our next question comes from John Masako from B Riley Securities. Please go ahead with your question.
John Massocca: Good morning.
So maybe just I know you kind of mentioned on the call and it was in the queue.
Q.
I was just maybe some more color on.
Why are you close the one sale center.
And kind of get rented that muscle facility to Clayton home, just any kind of.
John Massocca: It makes no color on that would be helpful.
That that particular sale center is a highway location in what was once one of the top sales locations in the country, but it's it's a land home place. We're good at selling homes in our community land home as a whole separate specialty where you have to mobilize contractors to go to India.
Visual loss you have to hold the homeowners hand on all of the permitting.
Loft construction home set up.
It involves so many different things that are not part of our day to day business, whether that's septic well excavation.
Got it.
I I believe that we could do it but at the same time, we haven't made money at that sales centers. Since we opened it and create Clayton homes wanted to acquire it they'll do extremely well there and on top of that we have an expansion we built a port royal So we have vacant lots and port Royal that they could put homes in.
That will result in us filling the community faster. It's a good point to mention that we have 500 expansion lots that we've built which is approximately $30 million of investments. That's currently not earning anything and the faster we get a return on that investment to better it is for us to grow.
<unk> per share so the sale of that sales center is for that purpose.
We don't want to lose money on sales and Clayton will make more money there than we did and it will fill our community faster.
And is that.
Are there other examples of that center within the portfolio today that you could you could do a similar transaction with or is that kind of a one off.
That's a one off we have other vacant land that can be used for different uses this vacant land. It's not vacant land. There was a sales center there, but this separate parcel of land with us.
Was conducive to being acquaintance sales center, we have other vacant land conducive to being single family homes that we are in the process of trying to find a way to monitor eyes.
Okay.
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I guess, maybe just based on that kind of last comment I mean are there any I know, it's very bespoke, but any brackets around.
John Massocca: You know the value of some of those parcels of land that may be either have a higher and better use than manufactured housing or just aren't appropriate for manufactured housing for some reason.
John Massocca: So we've spoken about it on the prior calls we have you know.
Approximately 130 acres in Vineland, New Jersey, joining our Fairview manor, which is very close to the mic trout Tiger Woods Golf course, that's being constructed today. So we suspect we will be able to enter into a joint venture with the homebuilder, we can't predict exactly how many lots they will have approved but.
My guess is somewhere around 150 lot and you know we can't predict with those homes will sell for but my guess is it will certainly be over 500000 could be $1 million and we believe the proper deal for that is that US is the landowner would receive 20% of the gross price.
So the house so no way to know what will happen will they ever get it approved how many years will it take to get built but we do own a 130 acres right near a Tiger Woods, Microsoft Golf course, and we believe a homebuilder worldwide.
Okay, and then maybe bigger picture I think.
And a lot of other.
The industry's period, but also you know there are other types of.
Reits Youre seeing is kind of narrative, maybe around a bifurcation in terms of the economic impact on.
Different income levels of consumers of residents et cetera, I mean are you seeing any evidence of it.
John Massocca: That on your residence whether it be.
An uptick in move outs or delinquencies et cetera.
So youre asking a very broad very important question. So first.
Manufactured homes and communities can service the blue collar worker, who earns $40000 per year through our rental home because 30% of income as $12000 and we're the only one who provides that house and that house is our bread and butter 10000 unit rental.
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Works phenomenally, well, but on top of that and maybe in a sense. The exact opposite cinnamon woods is going to be.
Manufactured homes that retails for 300000, a piece. So these are people who can have other housing choices right.
You know theyre downsizing their 55 and older.
Pretty much anywhere they want yet they choose the manufactured home and art community at $300000 and both these groups of people.
The blue collar worker is doing extremely well.
The baby boomers have money to retire and can sell their home paying off their existing mortgage. So we see both extremes to $40000 wage earner and if people are going to pay $300000 per home as ready to continue our sales and rental occupancy.
John Massocca: <unk>.
And I guess, maybe like on a trailing 12 month basis any change to either.
The scale of move outs or bad debt or anything like that.
No business is strong no again, our historical rental home move out rate is about 30% a year last year. It was actually below 30%, which we're very happy about.
I think our tenants like living in our properties, they try and paid their rent on time and in our collections in the first quarter were 98, 7%, which is in line with where they generally are in that number will grow over the coming weeks.
Write offs and write offs I mean, it's always been 1% or less and it continues to be that through to the whole pretty much the history of the company even through Covid, there was only about 1%.
Okay. That's very helpful and that's it for me. Thank you very much.
And ladies and gentlemen, with that we'll be concluding today's question and answer session I'd like to turn the conference back over to Samuel Landy for closing remarks.
Thank you operator, I would like to thank the participants on this call for their continued support and interest in our company as always gene Anna Brett and I are available for any follow up questions. We look forward to reporting back to you in August with our second quarter 2024 results. Thank you.
Ladies and.
The conference has now concluded we thank you for attending today's presentation.
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