Q3 2024 UMH Properties Inc Earnings Call
Operator: Thank you for standing by.
Thank you for standing by.
Operator: Good morning and welcome to UMH Properties third quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: Good morning, and welcome to UMH properties third quarter 2024 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded.
Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one touch tunes.
Speaker Change: To withdraw your question. Please press Star then two please note. This event is being recorded.
Craig Koster: It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel.
Speaker Change: It is now my pleasure to introduce your host Mr. Craig Castor Executive Vice President and General Counsel. Thank you. Mr. Koster you may begin.
Craig Koster: Thank you, Mr. Koster. You may begin.
Samuel Landy: Thank you very much, Operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited third quarter Supplemental Information Presentation. This Supplemental Information Presentation, along with our 10-Q, are available on the company's website at umh.reef.
Speaker Change: Thank you very much operator in addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited third quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q are available on the company's website at UMH REIT.
Samuel Landy: 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 1995. 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 third quarter 2024 earnings release and filings with the Securities and Exchange Commission.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: We 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 third quarter 2024 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward looking statements.
Samuel Landy: The company disclaims any obligation to update its forward-looking statements.
Samuel Landy: 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 cautioning language, are included in our earnings release, our supplemental information, and our historical SEC filings.
Speaker Change: 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.
Samuel Landy: 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 Mikans, Vice President of Capital Markets, and Daniel Landy, Executive Vice President.
Speaker Change: 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 Daniel Landy.
Speaker Change: They've vice President.
Samuel Landy: It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy. UMH is pleased to report a third consecutive quarter of year-over-year normalized FFO growth. Normalized FFO per diluted share for the third quarter of 2024 was $0.24 as compared to $0.22 last year, representing an increase of approximately 9%. Sequentially, normalized FFO per diluted share increased from $0.23 in the second quarter to $0.24 in the third quarter, representing a 4% per diluted share increase. Year to date, normalized FFO increased from $39.2 million last year to $50.3 million this year, representing an increase of 28%.
Speaker Change: It is now my pleasure to turn the call over to <unk>, President and Chief Executive Officer Samuel Landy.
Samuel Landy: UMH is pleased to report a third consecutive quarter of year over year normalized <unk> growth.
Samuel Landy: Normalized <unk> per diluted share for the third quarter of 2024 was 24 cents as compared to 22 cents last year, representing an increase of approximately 9%.
Samuel Landy: Sequentially normalized <unk> per diluted share increased from 23 in the second quarter to 24 cents in the third quarter, representing a 4% per diluted share increase year to date normalized <unk> increased from $39 $2 million last year to.
Samuel Landy: $53 million this year, representing an increase of 28%.
Samuel Landy: Our communities continue to experience strong demand for our homes, which is resulting in increased occupancy, revenue, sales income, and ultimately earnings per share. Our long-term business plan is delivering best-in-class results. We will continue to improve our operating results through the infill of our 3,300 vacant sites, development of our vacant land, and increasing the profitability of our sales and rental program. During the quarter, we issued and sold approximately 5.7 million shares through our common ATM at a weighted average price of $18.93, raising net proceeds of $107 million. In the short term, we utilize this capital to fully pay down our line of credit.
Samuel Landy: Our communities continued to experience strong demand for our homes, which is resulting in increased occupancy revenue sales income and ultimately earnings per share.
Samuel Landy: Our long term business plan is delivering best in class results.
Samuel Landy: We will continue to improve our operating results through the infill of our 3300 vacant sites development of our vacant land and increasing the profitability of our sales and rental programs.
Samuel Landy: During the quarter, we issued and sold approximately five 7 million shares to our common ATM at a weighted average price of $18 93.
Samuel Landy: Raising net proceeds of $107 million.
Samuel Landy: In the short term, we utilize this capital to fully pay down our line of credit.
Samuel Landy: This capital will allow us to invest in our value-added business plan and positions us to execute on potential acquisitions should they become available at the right prices. Turning to our third quarter operating results, we are proud that our communities are experiencing strong demand for home sales and rentals. This demand is the result of investing in the right locations and rapidly improving the quality and reputation of our communities. Overall, occupancy increased by 39 units to 87.4% during the quarter and 234 units year-to-date. Year over year, overall occupancy increased by 271 units or 120 bases. During the quarter, we experienced some storm-related expenses, which increased our overall expense ratio to 43.3%.
Samuel Landy: This capital will allow us to invest in our value added business plan and positions us to execute on potential acquisitions should they become available at the right prices.
Samuel Landy: Turning to our third quarter operating results. We are proud that our communities are experiencing strong demand for home sales and rentals. This demand is the result of investing in the right locations and rapidly improving the quality and reputation of our communities.
Samuel Landy: Overall occupancy increased by 39 units to 87, 4% during the quarter and 234 units year to date.
Samuel Landy: Year over year overall occupancy increased by 271 units or 120 basis points.
Samuel Landy: During the quarter, we experienced some storm related expenses, which increased our overall expense ratio to 43, 3%.
Samuel Landy: Year-to-date, our expense ratio is 42.4% as compared to 43.3% last year. Our collection rate remains strong, and our third quarter rents are 98.5% collected. Our same property results continue to meet expectations. Third quarter rental and related income grew by approximately 8%, and NOI increased by approximately 7%. Year to date, same property income is up 9%, and same property NOI is up 11%, or $9.2 million. Annualized, this equates to a $12 million increase in community NOI. We anticipate similar results in the coming quarters and years as we continue to fill our 3,300 vacant sites through our rental and sales program.
Samuel Landy: Year to date, our expense ratio was 42, 4% as compared to 43, 3% last year.
Samuel Landy: Our collection rate remains strong and our third quarter rents are 98, 5% collected our same property results continue to meet expectations third quarter rental and related income grew by approximately 8% and NOI increased by approximately 7% year to date same property.
Samuel Landy: Income is up 9% and same property NOI is up 11% or $9 $2 million.
Samuel Landy: Annualized this equates to a $12 million increase in community NOI.
Samuel Landy: We anticipate similar results in the coming quarters and years as we continue to fill our 3300 vacant sites through a rental and sales programs.
Samuel Landy: We anticipate further occupancy growth in the coming quarters as we obtain and set up our rental homes. We currently have over 200 homes on order and 300 homes recently delivered that are ready for occupancy or are in various stages of setup. Next year we anticipate a $10 million increase in revenue through the occupancy of 800 new rental homes and a $10 million increase from our 5% annual rent increase. We continue to invest in new rental homes and now own 10,300 homes. Our rental home occupancy rates remain stable at 94% compared to the prior year. During the quarter, we converted 179 new homes from inventory to revenue-producing rental homes.
Samuel Landy: We anticipate further occupancy growth in the coming quarters, as we obtain and set up our rental homes. We currently have over 200 homes on order and 300 homes recently delivered that are ready for occupancy or are in various stages of setup.
Samuel Landy: Next year, we anticipate a $10 million increase in revenue through the occupancy of 800, new rental homes and a $10 million increase from our 5% annual rent increases.
Samuel Landy: We continue to invest in new rental homes, and now own 10300 homes, a rental home occupancy rates remained stable at 94% compared to the prior year during the quarter, we converted 179, new homes from inventory to revenue producing rental homes the.
Samuel Landy: The net increase in our rental home portfolio was 117 homes because of the sale of older homes. Year-to-date, we have converted 443 homes from inventory to revenue-producing rental homes. The net increase was 284 units because of the sale of older homes. During the first half of the year, we replenished our inventory, which will allow us to further increase occupancy, revenue, and sales income in the fourth quarter of the year and into 2025. Our annual investment in new rental homes yields approximately 10% on the funds invested. We anticipate the addition of 800 new rental homes in 2025.
Samuel Landy: Net increase in our rental home portfolio was 117 homes because of the sale of older homes.
Samuel Landy: Year to date, we have converted 443 homes from inventory to revenue producing rental homes. The net increase was 284 units because of the sale of older homes. During the first half of the year, we replenished our inventory, which will allow us to further increase occupancy Rev.
Samuel Landy: And sales income in the fourth quarter of the year and into 2025.
Samuel Landy: Our annual investment in new rental homes yields approximately 10% on the funds invested we anticipate the addition of 800 new rental homes in 2025.
Samuel Landy: Moving on to sales, our team sold 100 homes during the quarter, of which 34 were new home sales, for gross home sales revenue of approximately $8.7 million. This compares to 90 homes last year, of which 41 were new home sales, with gross home sales revenue of $7.9 million, representing an increase of 10%. Our gross sales margin increased 500 basis points from 33% for the same quarter last year to 38% for this year's quarter. Our gross sales profit increased 30% from $2.6 million in the third quarter of last year to $3.3 million this year. We financed approximately 53% of these home sales.
Samuel Landy: Moving onto sales our team sold 100 homes during the quarter of which 34 were new home sales for gross home sales revenue of approximately $8 7 million. This compares to 90 homes last year of which 41 were new home sales with gross home sales revenue of $7 9 million.
Samuel Landy: Representing an increase of 10% our gross sales margin increased 500 basis points from 33% for the same quarter last year to 38% for this year's quarter.
Samuel Landy: Our gross sales profit increased 30% from $2 6 million in the third quarter of last year to $3 $3 million this year.
Samuel Landy: We financed approximately 53% of these home sales.
Samuel Landy: We have a $4 million sales pipeline, which should allow us to generate year-over-year sales growth in the fourth quarter. Our sales results still have the potential to substantially improve. Several high-end expansions in good locations are just opening, or are just about to open, which will generate a pipeline of sites where we can profitably sell homes. We are on track to develop approximately 200 expansion sites this year. Additionally, we anticipate approvals to develop approximately 500 new sites next year. We plan to develop approximately 300 of these sites in 2025. These expansion sites allow us to grow organically without the need for acquisition.
Samuel Landy: We have a $4 million sales pipeline, which should allow us to generate year over year sales growth in the fourth quarter. Our sales results still have the potential to substantially improve.
Samuel Landy: Several high end expansions in good locations are just opening or just about to open which will generate a pipeline of sites, where we can profitably sell homes.
Samuel Landy: We are on track to develop approximately 200 expansion sites. This year. Additionally, we anticipate approvals to develop approximately 500 new sites next year, we plan to develop approximately 300 of these sites in 2025.
Samuel Landy: These expansion sites allow us to grow organically without the need for acquisitions. We have 2200 acres of vacant land that may be able to be developed into 8800 sites. We have made progress negotiating a joint venture with a major homebuilder for 131 acres in Vineland, New Jersey.
Samuel Landy: We have 2,200 acres of vacant land that may be able to be developed into 8,800 sites. We have made progress negotiating a joint venture with a major home builder for 131 acres in Vineland, New Jersey. UMH is on track to continue to deliver per share earnings growth this year, and we are pleased with the results being generated by our platform. We have a business plan and a platform that has proven to deliver outstanding results and a pipeline of organic growth opportunities to continue delivering these results for the next several years. Our 3,300 vacant sites and our 2,200 vacant acres provide internal growth opportunities for years to come.
Samuel Landy: UMH is on track to continue to deliver per share earnings growth. This year and we are pleased with the results being generated by our platform. We have a business plan and a platform that has proven to deliver outstanding results and a pipeline of organic growth opportunities to continue delivering these results for the next several.
Samuel Landy: Years, our 3300 vacant sites and our 2200 vacant acres provide internal growth opportunities for years to come we have positioned the company with a strong balance sheet with $66 $7 million in cash and full availability of our credit line, our strong balance sheet and act.
Samuel Landy: We have positioned the company with a strong balance sheet with $66.7 million in cash and full availability of our credit line. Our strong balance sheet and access to capital gives us the ability to invest in new homes, capital improvements, and the expansion of our communities, which will enhance the long-term value of our portfolio and further increase our earnings per share. Additionally, we are prepared to acquire new communities when accretive investment opportunities become available.
Samuel Landy: As to capital gives us the ability to invest in new homes capital improvements and the expansion of our communities, which will enhance the long term value of our portfolio and further increase our earnings per share. Additionally, we are prepared to acquire new communities when accretive investment opportunities become available.
Anna Chew: And now, Anna will provide you with greater detail on our results for the quarter.
Anna Chew: And now Anna will provide you with greater detail on our results for the quarter.
Anna Chew: Thank you, Sam. Normalized FFO, which excludes amortization and non-recurring items, was $18.5 million or $0.24 per diluted share for the third quarter of 2024 compared to $14.4 million or $0.22 per diluted share for 2023, resulting in a 9% per diluted share increase and a 28% overall increase. Sequentially, normalized FFO increased from $0.23 for the second quarter to $0.24 in the third quarter, representing a 4% per diluted share increase. Rental and related income for the quarter was $51.9 million compared to $48.1 million a year ago, representing an increase of 8%. This increase was primarily due to an increase in rental rates and same property occupancy and additional rental homes.
Anna Chew: Thank you, Sam normalized <unk>, which excludes amortization and nonrecurring items was $18 $5 million or 24 cents per diluted share for the third quarter of 2024 compared to $14 4 million or 22 cents per diluted share.
Anna Chew: For 2023, resulting in a 9% per diluted share increase and a 28% overall increase.
Anna Chew: Sequentially normalized <unk> increased from 23 cents for the second quarter to 24.
Anna Chew: In the third quarter, representing a 4% per diluted share increase.
Anna Chew: Rental and related income for the quarter with 51 $9 million.
Anna Chew: Compared to $48 $1 million, a year ago, representing an increase of 8%.
Anna Chew: This increase was primarily due to an increase in rental rates and same property occupancy and additional rental homes.
Anna Chew: Community operating expenses increased 9% during the quarter. This increase was mainly due to an increase in payroll costs, real estate taxes, rental home expenses, and storm cleanup. Our same property results continue to meet our expectations. Same property income increased by 8% for the quarter and community NOI increased by 7% for the quarter from $28.2 million in 2023 to $30.3 million in 2024. Year-to-date, same property NOI has increased by 11 percent from $82 million last year to $91.2 million this year.
Anna Chew: Community operating expenses increased 9% during the quarter. This increase was mainly due to an increase in payroll costs real estate taxes rental home expenses and storm cleanup.
Anna Chew: Our same property results continue to meet our expectations.
Anna Chew: Same property income increased by 8% for the quarter and community NOI increased by 7% for the quarter from $28 $2 million in 2000 $23 million to $33 million.
Anna Chew: In 2024.
Anna Chew: Year to date same property NOI has increased by 11% from $82 million last year to $91 2 million.
Anna Chew: Yes.
Anna Chew: As we turn to our capital structure, at quarter end, we had approximately $615 million in debt, of which $488 million was community-level mortgage debt, $26 million was loans payable, and $101 million was our 4.72% Series A bond. Total debt was 99.5% fixed rate at quarter end. The weighted average interest rate on our mortgage debt was 4.17% at quarter end compared to 3.88% at quarter end last year. The weighted average maturity on our mortgage debt was 4.6 years at quarter end and 5 years at quarter end last year. The weighted average interest rate on our short-term borrowings was 79 basis points lower at 6.47% at the current quarter end as compared to 7.26% at quarter end last year.
Anna Chew: As we turn to our capital structure at quarter end, we had approximately $615 million in debt.
Anna Chew: Of which $488 million with community level mortgage debt.
Anna Chew: The $6 million was loans payable and $101 million without for 72% series a bonds.
Anna Chew: Total debt was 99, 5% fixed rate at quarter end.
Anna Chew: Weighted average interest rate on our mortgage debt was $4, one 7% at quarter end compared to 388% at quarter end last year.
Anna Chew: The weighted average maturity on our mortgage debt was four six years at quarter end and five years at quarter end last year.
Anna Chew: The weighted average interest rate on our short term borrowings was 79 basis points lower at 647% at the current quarter end as compared to 7.26% at quarter end last year.
Anna Chew: In total, the weighted average interest rate on our total debt was 35 basis points lower at 4.36% at the current quarter end compared to 4.71% at quarter end last year.
Anna Chew: In total the weighted average interest rate on our total debt was 35 basis points lower at $4 three 6% as the current quarter and compared to $4, 71% at quarter end last year.
Anna Chew: In 2025, we have approximately $116 million in community mortgages maturing. Approximately $46 million of these mature by April 1, 2025. As we have demonstrated through our previous refinancings, our communities have increased in value substantially. In some cases, they have doubled in value. We are in the early stages of refinancing these communities, but anticipate proceeds will be well in excess of the maturing principal balances. Proceeds will be impacted by interest rates and coverage ratios at the time of refinancing.
Anna Chew: In 2025, we have approximately $116 million in community mortgages maturing.
Anna Chew: Approximately $46 million.
Anna Chew: These mature by April 1st 2025.
Anna Chew: As we have demonstrated through our previous refinancings at communities has increased in value substantially.
Anna Chew: In some cases they have doubled in value.
Anna Chew: We are in the early stages of refinancing these can be underneath but anticipate proceeds will be well in excess of the maturing principal balances.
Anna Chew: Proceeds will be impacted by interest rates and coverage ratios at the time of refinancing.
Anna Chew: At quarter end, UMH had a total of $307 million in perpetual preferred equity. Our preferred stock, combined with an equity market capitalization of over $1.5 billion and our $615 million in debt, results in a total market capitalization of approximately $2.5 billion at quarter end, as compared to $1.9 billion last year, representing an increase of 30%. During the quarter, we issued and sold 5.7 million shares of common stock throughout common ATM programs, generating net proceeds of approximately $107 million. The company also received $2.4 million, including dividends reinvested, through the DRIP. In addition, we issued and sold 441,000 shares of our Series D Preferred stock during the third quarter of 2024 through the Preferred ATM program, generating net proceeds of approximately $10 million.
Anna Chew: At quarter end UMH had a total of $307 million in.
Anna Chew: Actual preferred equity.
Anna Chew: Our preferred stock combined with an equity market capitalization of over one $5 billion and now $615 million in debt results in a total market capitalization of approximately $2 5 billion at quarter end as compared to one nine.
Anna Chew: Billion last year, representing an increase of 30%.
Anna Chew: During the quarter, we issued and sold five 7 million shares of common stock through our common ATM programs generating net proceeds of approximately $107 million.
Anna Chew: The company also received $2 $4 million, including dividends reinvested through the drip.
Anna Chew: In addition, we issued and sold 441000 shares of our series D preferred stock during the third quarter of 2024, who is the preferred ATM program generating net proceeds of approximately $10 million. The capital raise was invested in our rental home program.
Anna Chew: The capital raised was invested in our rental home program, capital improvements, financing of notes, and to pay down our short-term line of credit. Subsequent to quarter end, we issued 170,000 shares of common stock through our common ATM program, generating net proceeds of approximately $3.2 million. In addition, we issue 247,000 shares of our Series D Preferred stock through our Preferred ATM program, generating net proceeds of approximately $5.8 million.
Anna Chew: <unk> capital improvements financing of notes and to pay down our short term line of credit.
Anna Chew: Subsequent to quarter end, we issued 170000 shares of common stock through our common ATM program generating net proceeds of approximately $3 $2 million.
Anna Chew: In addition, we issued 247000 shares of our series D preferred stock through our preferred ATM program.
Anna Chew: Generating net proceeds of approximately $5 $8 million.
Anna Chew: We also close on the acquisition of a 246-unit self-storage facility adjacent to one of our communities located in Anderson, Indiana. We are proud to now own over 1,000 self-storage units in close proximity or directly adjacent to our communities that serve the storage needs of our residents and the surrounding area. From a credit standpoint, we ended the quarter with net debt to total market capitalization of 22.2 percent. Net debt plus securities to total market capitalization of 20.8 percent. Net Debt to Adjusted EBITDA of 4.9 times and Net Debtless Securities to Adjusted EBITDA of 4.6 times. Interest coverage was 3.3 times and fixed charge coverage was 2.1 times.
Anna Chew: We also closed on the acquisition of a 246 unit self storage facility adjacent to one of our communities located in Anderson, Indiana.
Anna Chew: We are proud to now own over 1000 self storage units in close proximity or directly adjacent to our communities that serves the storage needs of our residents and the surrounding area.
Anna Chew: From a credit standpoint, we ended the quarter with net debt to total market capitalization of 22, 2% net debt less securities to total market capitalization of 28%.
Anna Chew: Net debt to adjusted EBITDA of four nine times and net debt less securities to adjusted EBITDA of four six times.
Anna Chew: Interest coverage was three three times and fixed charge coverage was two one times.
Anna Chew: All metrics indicate a very strong balance.
Anna Chew: All metrics indicate a very strong balance sheet.
Anna Chew: From a liquidity standpoint, we ended the quarter with $66.7 million in cash and cash equivalents and $260 million available on our unsecured revolving credits facility. We also had $202 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes. This liquidity positions the company with the ability to execute a long-term business plan and potentially grow externally as attractive growth opportunities become available.
Anna Chew: From a liquidity standpoint, we ended the quarter with $66 $7 million in cash and cash equivalents and $260 million available on our unsecured revolving credit facility.
Anna Chew: We also had $202 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes.
Anna Chew: This liquidity positions the company with the ability to execute our long term business plan and potentially grow externally at the attractive growth opportunities become available.
Anna Chew: In 2024, 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 syndicated with three banks. BML Capital Markets, JPMorgan Chase, and Wells Fargo as joint arrangers and joint book runners.
Anna Chew: In 2024, we expanded the borrowing capacity of our unsecured revolving credit facility from $180 million in available borrowings to $260 million in available borrowings.
Anna Chew: This facility is indicated with three banks.
Anna Chew: With capital market J P. Morgan Chase and Wells Fargo as joined to ranges and joint book runners.
Anna Chew: Additionally, we had $34.2 million in our REIT securities portfolio, all of which is unencumbered. This portfolio represents only approximately 1.7% of our undepreciated assets. We are committed to not increasing our investments in our REIT securities portfolio, and have in fact continued to sell certain positions.
Anna Chew: Additionally, we had $34 $2 million in our REIT securities portfolio, all of which is unencumbered.
Anna Chew: This portfolio represents only approximately one 7% of our underappreciated assets.
Anna Chew: We are committed to not increasing our investments in our REIT securities portfolio and have in fact continued to sell certain positions.
Anna Chew: We are well positioned to continue to grow the company internally and externally.
Anna Chew: We are well positioned to continue to grow the company internally and externally.
Anna Chew: We are also updating our 2024 guidance, which previously was normalized FFO in a range of $0.91 to $0.95 per diluted share for the full year, or $0.93 at the midpoint. We are tightening this range to 92 cents to 94 cents. This represents approximately 8% annual normalized FFO growth at the midpoint of a full year 2023 normalized FFO of $0.86 per diluted share.
Anna Chew: We are also updating our 2024 guidance, which previously with normalized <unk> in a range of 91 to.
Anna Chew: To <unk> 95 per diluted share for the full year or <unk> 93 at the midpoint.
Anna Chew: We are tightening this range to <unk> 92 to 94 cents.
Anna Chew: This represents approximately 8% annual normalized <unk> growth at the midpoint over full year 2023 normalized <unk> of 86 cents per diluted share.
Anna Chew: We plan to issue full year 2025 guidance concurrent with our fourth quarter and year-end results.
Anna Chew: We plan to issue full year 2025 guidance concurrent with that fourth quarter and year end results.
Eugene Landy: And now, let me turn it over to Gene before we open it up for questions. UMH has a mission to provide the nation with high quality affordable housing. We have successfully built one of the best portfolios of manufactured housing communities in the country. We have a platform with a demonstrated ability to turn around and improve older communities, thereby increasing the supply of quality affordable housing in the markets we operate in. Our platform has also expanded our existing communities and developed new communities, further increasing the supply of affordable housing. While we have done a lot to help solve the housing crisis, there is still a tremendous amount of work to be done.
Gene: And now let me turn it over to gene before we open it up for questions.
Gene: UMH has a mission to provide the nation with high quality affordable housing.
Gene: We have successfully built one of the best portfolios of manufactured housing communities in the country.
Gene: We have a platform with a demonstrated ability to turn around and improve older communities, thereby increasing the supply of quality affordable housing and the markets we operate in.
Gene: Our platform has also expanded our existing communities and develop new communities.
Gene: We're increasing the supply of affordable housing.
Gene: While we have done a lot to help solve the housing crisis. There was still a tremendous amount of work to be done.
Eugene Landy: Our work and our communities have put a spotlight on the benefits provided by the manufactured housing. We anticipate government programs that should encourage further growth in our industry and our company. While politicians are incredibly divided, they all agree that we need to work together to increase the supply of affordable housing. UMH is a sustainable investment. 100% of our income is considered social because rents are affordable in each of the markets we operate in. Additionally, we have been working with GAF on a program to have solar shingles installed at the factory. We are in the early stages of a pilot program, and we have ordered our first 20 homes, which should be delivered later this year.
Speaker Change: Work in our communities have put a spotlight on the benefits provided by the manufactured housing we anticipate government programs that should encourage further growth in our industry and our company. While politicians are incredibly divided they all agree that we need to work together to increase the supply of affordable.
Gene: Housing.
Gene: Makers of sustainable investment.
Gene: Percentage of our income is considered social because rents are affordable in the each of the markets we operate in.
Gene: Definitely we have been working with Jeff on a program to have solar shingles installed at the factory. We are in the early stages of a pilot program and we have ordered our first plenty homes, which should be delivered later this year.
Eugene Landy: We anticipate the solar shingles will reduce our tenants' electricity costs, further decreasing the cost of housing. UMH is well positioned for future growth. We have acquired 3,300 vacant sites and 2,200 acres of vacant land through our acquisitions over the years. Our rental homes provide us with a key to rapidly filling these vacant sites. We anticipate 800 new rental homes per year until we reach full occupancy and the development of 300 to 400 expansion sites annually. Our business plan has given us the ability to continue to grow earnings and earnings per share without the need for external growth opportunities.
Gene: We anticipate the solvers singles will reduce tennant's electricity cost further decreasing the cost of housing.
Gene: UMH is well positioned for future growth, we acquired 3300 vacant sites in 2200 acres of vacant land.
Gene: Acquisitions over the years.
Gene: Rental homes provide us with a key to rapidly filling these vacant sites we.
Gene: We anticipate 800, new rental homes per year until we reach full occupancy and the development of 300 to 400 expansion sites annually.
Gene: Our business plan has given us the ability to configure to grow earnings and earnings per share without the need for external growth opportunities that being said, we are well capitalized and ready to execute on acquisition opportunities as they become available at attractive prices.
Eugene Landy: That being said, we are well capitalized and ready to execute on acquisition opportunities as they become available at attractive prices. We are well positioned with a strong balance sheet to continue to grow internally and externally. I am incredibly proud of our team of devoted employees for positioning UMH as leaders in the manufactured housing industry. We have made tremendous progress increasing the supply of affordable housing by upgrading older communities and developing expansions and new communities. In addition, I am proud of the progress we have made with respect to the Opportunity Zone laws. the HUD approval of duplex manufactured housing, and the installation of solar shingles on our homes.
Gene: We're well positioned with a strong balance sheet to continue to grow internally and externally.
Gene: I am incredibly proud of our team of devoted employees for positioning UMH as leaders in the manufactured housing industry. We have made tremendous progress increasing the supply of affordable housing by upgrading older communities in developing expansions and new communities.
Gene: Additionally, I am proud of the progress we have made with respect to the opportunity zone laws. The HUD approval of duplex manufactured housing and the installation of solar shingles on at home.
Eugene Landy: These are all major developments that should impact our and the industry's ability to develop more affordable housing in the future.
Gene: All major developments that should impact our and the industry's ability to develop more affordable housing in the future.
Operator: We would now be happy to take any questions.
Speaker Change: We would now be happy to take any questions.
Operator: We will now begin the question-and-answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two we will pause.
Operator: We will pause momentarily to assemble our report.
Speaker Change: Momentarily to assemble our roster.
Rob Stevenson: Our first question comes from Rob Stevenson of Cheney.
Speaker Change: Our first question comes from Rob Stevenson of Janney.
Speaker Change: Please go ahead.
Samuel Landy: Good morning guys. Sam, how is the acquisition pipeline today and the overall transaction environment versus a quarter or two ago? Well, in a sense, nothing's changed in terms of the pending deals in Maryland are still the pending deals. On the other hand, I have a lot of reason to believe more communities will come on the market and there's less competition to buy them. So at this exact moment, there's there's nothing new in the pipeline.
Speaker Change: Hi, Good morning, guys, Sam how is the acquisition pipeline today, and the overall transaction environment versus a quarter or two to go.
Samuel Landy: Well in a sense nothing has changed in terms of the pending deals and Maryland are still depending deals on the other hand.
Samuel Landy: I have a lot of reason to believe.
Speaker Change: We're communities will come on the market and.
Speaker Change: There is less competition to buy them. So at this exact moment, there's nothing new in the pipeline, but I am optimistic that more communities are going to become available.
Samuel Landy: But I am optimistic that more communities are going to become a Just to touch on Maryland real quick, those properties, they're making a lot of progress completing the upgrades that need to be done before we can close on the deal. We're probably looking at a first quarter of 2025.
Speaker Change: And just I'll touch on Maryland, real quick, though those properties. They are making a lot of progress completing the upgrades that need to be done before we can close on the deal we're probably looking at a first quarter of 2025 closing.
Rob Stevenson: All right, that's helpful, Brett. Thank you.
Brian: Alright, that's helpful. Brian Thank you.
Brett Taft: Self-storage, was that just a unique opportunity in the quarter? Are there real synergies that would make sense to own storage units peripheral to a number of your other communities at this point? Right, almost all of our self-storage directly joins our existing communities, you know, quite a bit of it came with the communities when we acquired them. We've built a little bit of self-storage on adjoining vacant land. We want to continue to do more. We use our same community manager, the same manager managing the community and the same maintenance staff manages the self-storage. So we're a more efficient operator than the seller because we don't have labor costs.
Speaker Change: Self storage was that just a unique opportunity in the quarter are the real synergies that would make sense to own storage units peripheral to a number of your other communities at this point.
Speaker Change: Right almost all of our self storage directly joined our existing communities quite a bit of it came with the communities when we acquired them.
Speaker Change: Built a little bit of self storage on joining vacant land, we want to continue to do more we use our same community manager the same manager managing the community in the same maintenance staff.
Speaker Change: Manages the self storage so we're in a more efficient operator, and the seller because we don't have labor costs and our residents want to self storage they need to self storage.
Brett Taft: And our residents want the self-storage, they need the self-storage. And so it's just a natural fit. We look at our vacant land all the time and we will continue to build additional self-storage adjoining.
Speaker Change: And so it's just a natural fit.
Speaker Change: We look at our vacant land all the time and we will continue to build additional self storage of joining our communities.
Brett Taft: Okay.
Brett Taft: And then what are you guys paying today for new rental units and how much upward cost pressure is there on the part of the manufacturers in terms of cost inflation today? Yeah, we haven't seen too much. I mean, obviously, prices are going up a little bit. We'll see where it goes over the next few months. But, you know, we're still for a single wide unit fully set up at our communities in the $70,000 to $75,000 range, double wides being a little bit higher than that, obviously. You know, we're buying high quality rental homes, we're upgrading the components that we generally see the most damage in.
Speaker Change: Okay and then.
Speaker Change: What are you guys paying today for new rental units and how much upward cost pressure is there on the part of the manufacturers and to.
Speaker Change: Cost inflation today.
Speaker Change: Yes, we haven't seen too much I mean, obviously prices are going up a little bit we will see where it goes over the next few months, but we.
Speaker Change: We're still for a single wide unit fully set up at our communities in the 70% to $75000 range double wides being a little bit higher than that obviously.
Speaker Change: We're buying high quality rental homes, we're upgrading the components that we generally see the most damaging so and I'm just pointing out that our rentals are a little bit more expensive than some of our competitors, but we think that that's why we see lower turnover costs and a lower lower overall cost per unit on the expense side.
Brett Taft: So, you know, I'm just pointing out that our rentals are a little bit more expensive than some of our competitors, but we think that that's why we see lower turnover costs and lower overall cost per unit on the expense side.
Brett Taft: Okay, Brett, I mean, I guess on that, I guess, obviously, single wide, double wide makes a difference. But it seems like a huge gap versus the $151,000 per home on the 98 new home sales in the third quarter. Anything else other than wholesale versus retail pricing coming into play here in terms of that gap versus what it would cost you for those homes or people increasing, you know, optionality when they buy at $151,000 per home?
Speaker Change: Okay, Brent I mean, I guess on that I guess, obviously single-wide double-wide makes a difference but it.
Speaker Change: It seems like a huge gap versus the 151000 per home on the 98, new home sales in the third quarter anything else other than wholesale versus retail pricing coming into play here in terms of that gap versus what it would cost you.
Speaker Change: For those homes or people.
Speaker Change: Increasing optionality when they buy it 151000 per home can you talk a little bit about that.
Samuel Landy: Can you talk a little bit about that? So we have expansions coming available in great locations. We're probably better positioned than we've ever been to increase sales at new locations. from, you know, expansions we've built, next phases we're building. We ran out of lots at Holiday Village, which was a top performer last year, and they're just getting those lots opened right at this moment. So everything looks really good to increase sales.
Speaker Change: So we have expansions coming available in great locations.
Speaker Change: Probably better positioned than we've ever been to increase sales at.
Speaker Change: At new locations from from expansions. We've built next phases. We're building we ran out of lots at <unk>.
Speaker Change: <unk> village, which was a top performer last year and they're just getting those lots opened right at this moment, so everything looks really good to increase sales.
Samuel Landy: Many of our sales take Cinnamon Woods, where your buyers are 55 and older, they're going to be custom order homes. And we're working on an absolute minimum markup of 30%, and you know, it could be 100%. This is all location-based and, you know, the more expensive the home, the more we make. And building these new 300 to 400 lots per year could, just by themselves, result in sales profits of $50,000 to $100,000 per house.
Speaker Change: Many of our sales take cinema woods.
Speaker Change: What are your buyers are 55 and older.
Speaker Change: Gonna be custom order homes, and we're working on an absolute minimum markup of 30% and.
Speaker Change: It could be 100% so.
Speaker Change: Neutral location based.
Speaker Change: <unk>.
Speaker Change: The more expensive the home the more we make and.
Speaker Change: Building these new 300 to 400 lots per year.
Speaker Change: Could just by themselves.
Speaker Change: Results in sales profits of 50000 to $100000 per house.
Speaker Change: Can I add one thing advance standpoints it out frequently.
Speaker Change: Rental homes that we're buying and setting up for 70 to 75000, we went and saw that rental home for that amount that if it were a new home sale would be in the 90 to $100000 range in some markets even in excess of that.
Samuel Landy: Okay, and then last one for me. Sam, you talked about that the New Jersey JV with the homebuilder is making progress. If that comes to fruition, is that a first half 25, second half 25 type of deal?
Samuel Landy: Okay, and then last one for me Sam.
Samuel Landy: Sam you talked about that the.
Speaker Change: New Jersey, JV with the homebuilders, making progress if that comes to fruition is that a first half 'twenty five second half 'twenty five.
Speaker Change: Type of deal how would you sort of.
Samuel Landy: How would you sort of handicap the timing there when we should expect additional news? Yeah, the minimum time it would take would be one year for the home builder to get all the approvals and then another year to build it. So, you know, the minimum before we're we're getting any money from You know, you're in three years from today, and that's a minimum, it could take longer than that.
Speaker Change: Handicap, the timing there and when we should expect additional news.
Speaker Change: Yes, the minimum time, it would take would be one year for the homebuilders to get all the approvals and in another year to build it so the minimum before we're getting any money from this as you were in three years from today and that's a minimum it could take longer than that but but whats a that's exciting because youre talking.
Samuel Landy: But what's, you know, A, that's exciting because you're talking about a significant number of homes that are going to, you know, potentially sell for a million dollars apiece, so potentially 150 homes, potentially $150 million, and potentially we get 20% of that. But in addition to that, we're working in Carlisle, Pennsylvania, on 29 subdivided lots. Superior will use what they call a cross mod, it's a, you know, it's a bigger, more expensive than a standard HUD code home, built to the local building code, but it's factory built. And then we're going to put it on a superior wall system, so you get, you know, basically a two-story house, and we're going to retail those out, and there'll be about 29 of those in Carlisle, Pennsylvania, hopefully next year.
Speaker Change: About.
Speaker Change: A significant number of homes that are going to.
Speaker Change: Potentially sell for $1 million, a piece of potentially 150 homes potentially.
Speaker Change: $150 million and potentially we get 20% of that but in addition to that we're working in.
Speaker Change: Carlisle, Pennsylvania on 29 subdivided lots, where we'll use.
Speaker Change: What they call a cross mod.
Speaker Change: It's a bigger more expensive than a standard HUD code home built to the local building code, but it's factory built and then we're going to put it on a superior wall system. So you get.
Speaker Change: Basically a two story house and we're going to retail those out and it'll be about 29 of those in Carlisle, Pennsylvania, Hopefully next year and we're going to continue to work on our <unk>.
Samuel Landy: And we're going to continue to work on our, you know, 2200 acres of vacant land, and how to maximize income from it.
Speaker Change: <unk> thousand 200 acres of vacant land and how to maximize income from it.
Rob Stevenson: Okay, that's helpful. Thank you guys.
Speaker Change: Okay. That's helpful. Thank you guys. Appreciate the time this morning.
Rob Stevenson: I appreciate the time this morning.
Gaurav Mehta: Our next question comes from Gaurav Mehta of Alliance Global Partners. Please go ahead. Thank you. Good morning. I wanted to ask you on your rental homes, you said you're looking to add 800 rental homes next year. And I think this year you said you added 284, excluding the used home sales.
Speaker Change: Our next question comes from Gaurav Mehta of Alliance Global Partners. Please go ahead. Thanks.
Speaker Change: Thank you good morning.
Speaker Change: I wanted to ask you on your rental homes.
Speaker Change: You said you are looking to add 800 rental homes next year.
Speaker Change: And I think this year you said you added 284, excluding the used home sales so.
Brett Taft: So that 800 number for next year, what's the comparable number for 2024 to compare to that 800 number? So, go ahead, but there's 800 homes ordered for 2024, and we believe we'll order 800 homes for 2025. There's an obsolescence factor so that when we add 800 homes, we don't go forward 800 homes as we remove older homes, but many of those homes that are ordered are not delivered, not set up yet. But go ahead, Brett.
Speaker Change: That 800 number for next year, what's the comparable number.
Speaker Change: For 2024 compared to that number.
Speaker Change: So go ahead, but Theres 800 homes ordered for 2024, and we believe will order 800 homes for 2025, there is an obsolescence factor so that when we add 800 homes. We don't go forward 800 homes as we remove older homes, but many of those homes that are ordered or not delivered not set up yet but go ahead.
Brett Taft: Yeah, sure. So first of all, we have converted 443 new homes from inventory to revenue-producing rental homes. So that's 443 new homes added to our portfolio of rentals. The net number you're referring to is the 284, which includes some older homes that we have sold out of that rental home portfolio this year. We have about 300 homes in our communities that are in various stages of setup, but about 200 of those are just about ready for occupancy. So not saying we'll fill all 200 of those homes that are ready this year, but we have a potential to do that.
Speaker Change: Yes sure.
Speaker Change: So first of all we have converted 443, new homes from inventory to revenue producing rental home. So that's 443, new homes added to our portfolio of rentals. The net number you're referring to is the 284, which includes some older homes that we have sold out of that rental home.
Speaker Change: Portfolio. This year, we have about 300 homes in our communities that are in various stages of setup, but about 200 of those are just about ready for occupancy. So I'm not saying, we will fill all 200 of those homes that are ready this year, but we have a potential to do that.
Brett Taft: Assuming that occurs, or again, we're at 443 for the first nine months of the year, I think that we should be able to get into the 600, 650 range of actual converted homes from inventory to revenue-producing sites. And then going into next year, we've got another 200-plus homes that are on order that will be delivered to our communities. So that gives us a good amount of inventory going into the first quarter. And given that demand is strong throughout the portfolio, we see no reason why we can't order, set up, and install 800 homes next year, which we've done in previous years.
Speaker Change: Assuming that occurs or again, we're at 443 for the first nine months of the year.
Speaker Change: I think that we should be able to get into the 600 650 range of actual converted homes from inventory to revenue producing sites and then going into next year. We've got another 200 plus homes that are on order that will be delivered to our communities.
Speaker Change: That gives us a good amount of inventory going into the first quarter and given that demand is strong throughout the portfolio. We see no reason why we can't order set up an install 800 homes next year, which we've done in previous years.
Gaurav Mehta: Okay, that's helpful.
Speaker Change: Okay. That's helpful.
Gaurav Mehta: I also wanted to ask you on your comments around self-storage, just to clarify the self-storage units that you talked about, are those units for UMH residents only or are they open to anybody? Almost all of them are open to anybody, the exception is in Vineland, New Jersey, approximately 50 units that are exclusively for our residents. That was the condition of the approval process.
Speaker Change: I also wanted to ask you on your comments around self storage just to clarify that.
Speaker Change: The self storage units that you've talked about are those units far you admit residents only or are they open.
Speaker Change: Anybody.
Speaker Change: Almost all of them are open to anybody the exception is in Vineland, New Jersey, approximately 50 units that are exclusively for our residents that was the.
Speaker Change: Condition of the approval process.
Speaker Change: Okay. Thank you that's all I had.
Gaurav Mehta: That's all I had.
Rich Anderson: The next question comes from Rich Anderson of Wedbush. Please go ahead. Thanks and good morning. I think there was mentioned storm costs. Did you quantify that number for the quarter?
Rich Anderson: The next question comes from Rich Anderson of Wedbush.
Speaker Change: Please go ahead.
Speaker Change: Thanks, and good morning.
Speaker Change: I think there was mentioned storm costs.
Speaker Change: Did you quantify that number for the quarter.
Brett Taft: We didn't, but I can touch on that a little bit, and I just want to start by pointing out that the number for the quarter that was impacted, it wasn't the hurricanes in Florida. It was some other high wind storms in the Midwest and impacted our communities in Indiana, Ohio, and Pennsylvania. It was largely limited to tree removal, cleanup, a few roofs that needed to be fixed, and some skirting issues. The tree removal was up about $140,000, our R&M for the quarter was up about $100,000.
Speaker Change: We didn't but I can touch on that a little bit.
Speaker Change: And I just want to start by pointing out that the number for the quarter that was impacted it wasn't the hurricanes in Florida with some other highway.
Speaker Change: Hi, wind storms in the Midwest and impacted our communities in Indiana, Ohio, and Pennsylvania. It was largely limited to tree removal clean up a few rooms that needed to be fixed and some <unk> issues. The.
Speaker Change: The tree removal was up about 140000 or an app with R&M for the quarter was up about 100000, so not substantial but when youre looking at an increase in expenses of 200 basis points over last year those numbers do start to add up.
Brett Taft: So not substantial, but when you're looking at an increase in expenses of 200 basis points over the last year, those numbers do start to add up.
Brett Taft: Then just pivoting to the Florida storms, our properties performed very well. We're proud of the product we have. We had a lot of shingle damage, but nothing major, $1,000, $2,000 a home, and it looks like our damages were limited to about $100,000.
Speaker Change: And then just pivoting to the Florida storms.
Speaker Change: Our properties performed very well, we're proud of the product. We have we had a lot of shingled damage, but nothing major thousand $2000, a home and it looks like our damages were limited to about $100000 down there.
Brett Taft: Okay, and so if you were to remove those costs, would that have sprung you over into double-digit NOI growth territory for the quarter, or would you still have been, you know, some think the magic number here is double-digit, same-store NOI growth, so I'm wondering if there's a return to that, you know, next quarter and down the line. Yeah, we think we can get back to double digits, same property, NOI growth, those two numbers alone would not have gotten us there. It would have gotten us very close into the 9% range.
Speaker Change: And so if you were to remove those those costs would you would that have sprung you over into double digit NOI growth territory for the quarter or would you still been some.
Speaker Change: Some think the magic number here is double digit same store NOI growth. So I'm wondering if there is a return to that.
Speaker Change: Next quarter and deadline.
Speaker Change: Yes, we think we can get back to double digit same property NOI growth. So those two numbers alone would not have gotten us there. It would have got yes, very close into the 9% range. There were some other one time charges that impacted our overall operating expenses and if I were to add those back in it would've been in the nine five to 10 and a half range, but that.
Brett Taft: There were some other one-time charges that impacted our overall operating expenses. And if I were to add those back in, it would have been in, you know, the 9.5 to 10.5 range. But that being said, we think that we're going to grow revenue faster, given that we will have more rental homes coming online. And we think our expenses will probably come down a little bit from this quarter. And we think we can be in that high single-digit, low double-digit range going forward.
Speaker Change: Being said, we think that we're going to grow revenue faster given that we will have more final homes coming online and we think our expenses will probably come down a little bit from this quarter and we think we can't can be in that high single digit low double digit.
Brett Taft: And I just want to point out that for the year, we're still, NOI growth was still 11.2%. It was $9 million in total increased NOI for the nine months, which annualizes at $12 million. And again, we're still very happy with that number.
Speaker Change: Range going forward and I, just want to point out that for the year. We're still NOI growth was still a 11, 2%. It was $9 million in total increased NOI for the nine months, which annualized is a $12 million and again, we're still very happy with that number. This is just a blip up one quarter as far as I'm concerned.
Brett Taft: This is just, you know, a blip of one quarter as far as online.
Rich Anderson: Fair enough. Noticed at the same store level, you had flat occupancy sequentially at 87.7%. And, you know, we've talked in the past about what's the optimal occupancy to carry so that you have availability to grow.
Speaker Change: Fair enough.
Speaker Change: Set the same store level, you had flat occupancy sequentially at 80 787, 7%.
Speaker Change: And we've talked in the past, but what's the optimal occupancy to carry so that you have availability to grow.
Brett Taft: I'm just wondering, is there a number in mind or do you just, are you driving towards 100% occupancy, you know, muscling through or is, you know, so low 90s, high 80s, sort of the optimal level, anything to read in from that flat occupancy sequential growth? In our presentations, we show you the region-by-region occupancy. So Ohio, we have 87.57% occupancy, and with the likelihood that Marcellus and Utica shale drilling increases, the likelihood of getting to 100% occupancy in that area is pretty strong. Eastern New York, 94.21. Western New York, 77.91. I don't know when they'll allow drilling in Western New York, but that is a Marcellus and Utica shale area, so that could grow.
Speaker Change: I'm just wondering is there a number in mind or do you just are you driving towards a 100% occupancy.
Speaker Change: Muscling through or is sort of the low low ninety's high eighty's sort of the optimal level, but anything to read in from that flat occupancy sequential growth.
Speaker Change: In our presentation, we show you.
Speaker Change: The region by region occupancy so yes.
Speaker Change: Ohio, we have 80, 757% occupancy and with the likelihood that Marcellus and Utica shale drilling increases the likelihood of getting to a 100% occupancy in that area is pretty strong.
Speaker Change: Eastern New York 94 to one Western New York 70, 791, I don't know when they'll allow drilling in Western New York, but that is the Marcellus and Utica shale area. So that could grow, Tennessee, 94, 3% occupancy, Indiana, $88, six 9% Eastern Pennsylvania and 91.
Brett Taft: Tennessee, 94.23% occupancy. Indiana, 88.69%. Eastern Pennsylvania, 91.36. Maryland, 89.86. Western PA, 84.33. New Jersey, 96.36. Michigan, 84.3.
Speaker Change: 136%, Maryland, 80, 986, Western PVA $84 three three New Jersey, 90, 636, Michigan 84, three and then its the new communities to bring the number down.
Brett Taft: And then it's the new communities that bring the number down. Alabama, 44.82. Georgia, 11.86. And South Carolina, 65.22. So we need time to fill Alabama, Georgia, South Carolina.
Speaker Change: Alabama, $44 eight to Georgia 11, eight six.
Speaker Change: South Carolina is 65 to two so we need time to fill Alabama, Georgia South Carolina.
Brett Taft: You know, we have to build our 300 to 400 expansion lots, but, you know, the likelihood is the existing portfolio, with the exception of Alabama, Georgia, South Carolina, will be pretty close to 100% occupied in a year. And I guess just commenting on the sequential growth in occupancy, not everything occurs in a straight line here. But if you look year over year, occupancy was up 220 sites. You know, our inventory always ups and flows, and there's always going to be some turnover of our rental homes, which we experienced later in the third quarter. That being said, I'm very comfortable with where occupancy rate on the rentals is.
Speaker Change: We have to build our 300 to 400 expansion.
Speaker Change: Lots, but the likelihood is the existing portfolio with the exception of.
Speaker Change: <unk>, Alabama, Georgia, South Carolina will be pretty close to a 100% occupied in a year.
Speaker Change: Yeah.
Speaker Change: Commenting on the sequential growth in occupancy not everything occurred then it's straight line here, but if you look year over year occupancy was up 220 sites.
Speaker Change: And our inventory always ebbs and flows and theres always going to be some turnover of our rental homes, which we experienced later in the third quarter that being said I'm very comfortable with where occupancy rate on the rentals is it's actually a bit stronger than it was this time last year and again, we do have inventory coming into the right locations and our team is experienced.
Brett Taft: It's actually a little bit stronger than it was this time last year. And again, we do have inventory coming in at the right locations and our team is experiencing strong demand to fill those rentals. So we do expect continued occupancy growth going forward. Great, great color.
Speaker Change: <unk> strong demand to fill those rentals. So we do expect continued occupancy growth going forward.
Speaker Change: Great Great color last question for me of the 10089 rental homes in the portfolio today.
Rich Anderson: Last question for me of the 10,089 rental homes in the portfolio today. When you look at that, what percentage of that would you say is obsolete? And and will you know when the when a day comes that there's a vacancy that you'll have to replace it? And you know what percentage it can carry on either through a home sale or or re rental? So I believe there's 10,300 vacancies. It's the same store. Same store. OK. So UMH has a total of 10,300 rental units. OK, sure. We only started buying rental homes in 2011. And then we only bought 100 homes that year, 300 the next, 500 the next, and then started going to 800 a year.
Speaker Change: When you look at that.
Speaker Change: What percentage of that would you say is obsolete and will you know when the when the day comes that there is a vacancy that youll have to replace it and what percentage it can carry on either through a home sale or re rental.
Speaker Change: So I believe there's 10300 vacancies.
Speaker Change: Same store same so okay. So yes, assuming a total of 10300 rental you guys sure.
Speaker Change: We only started buying rental homes in 2011 so.
Speaker Change: And then we only bought 100 homes at year 300 next 500. The next and then started going to 800, a year. So virtually none of our homes are obsolete, but as they become 10 years old.
Brett Taft: So virtually none of our homes are obsolete. But as they become 10 years old, it The Vice President. tax credit for first-time homebuyers comes to be. But potentially, you could sell those 10-year-old homes and potentially make $20,000, $30,000 per house. And, you know, Dodd-Frank, Safe Act, Truth in Lending, the Consumer Finance Protection Bureau, all those things that came to be in 2009 basically tied both hands behind our back and we found a way to get around it by renting homes. But if things get changed so that people earning $40,000 to $80,000 a year can qualify for financing, selling those older 10-year-old homes can be very profitable for us and very beneficial to the person who buys them because then they only receive the lot rent increase, not the increase on the value of the home plus the lot rent.
Speaker Change: It would have been great if we and there's still a possibility exist that the vice president.
Speaker Change: The vice President's.
Speaker Change: Tax credit for first time homebuyers comes debate, but potentially you could sell those 10 year old homes and potentially make 20 $30000 per house.
Speaker Change: <unk>.
Speaker Change: Dodd, Frank Safe Act truth in lending.
Speaker Change: Consumer Finance Protection Bureau, all of those things that came to be in 2009, basically tied both hands behind our back and we found a way to get around it by renting homes, but if things get changed so that people, earning 40 to 80000, a year can qualify for financing selling those older 10 year old Ho.
Speaker Change: <unk> can be very profitable for us and very beneficial to the person who buys them. Because then they only received a lot rent increase not the increase on the value of the home plus the lot rent.
Brett Taft: And so they build equity in their house. They could sell their house for a profit. Could be very beneficial to them and to us. And maybe that will still occur.
Speaker Change: And so they build equity in their house, they could sell their house for a profit could.
Speaker Change: Could be very beneficial to them and to us and maybe that will still occur.
Brett Taft: Okay, great, great stuff.
Speaker Change: Okay, great stuff, thanks very much.
Brett Taft: Thanks very much.
Craig Kucera: The next question comes from Craig Kucera of Lucid Capital Markets. Thank you. Yeah, hey, good morning, guys. I have another follow up on the rental home deployments.
Speaker Change: The next question comes from Craig Kuchera Lucid capital markets. Please go ahead.
Speaker Change: Yeah, Hey, good morning, guys.
Speaker Change: I have another follow up on the rental home deployments.
Brett Taft: I'm just trying to understand if you're deploying 800, let's say in 2025, should we expect Somewhat of a programmatic sale, and so maybe you don't have a net $800 added to the rental pool, or I think we're just trying to figure out, you know, how much growth are you going to have in the rental pool if you're starting to sell out of it, which I don't, I don't think you've done too much of in the past. Now, we don't have any desire to sell the rental homes. We look at it as the finance business. We look at, you know, Jim Clayton became a billionaire selling Clayton Homes to Warren Buffett and Warren Buffett bought it for the finance business and the rental homes are really the finance business.
Speaker Change: I'm just trying to understand if youre deploying.
Speaker Change: 800, let's say in 2025 should we expect.
Speaker Change: Somewhat of a programmatic sale and so maybe you don't have a net 800 added to the rental pool or I.
Speaker Change: We're just trying to figure out how much growth are you going to have in a rental pool, if you're starting to sell out of it which I don't I don't think you've done too much of in the past.
Speaker Change: No we don't have any desire to sell the rental homes. We look at is the finance business. We look at Jim Clayton became a $1 billion or selling Clayton homes to Warren Buffett and Warren Buffett bought it for the finance business and the rental homes are really the finance business. So why do we want to sell them, but at the same time I say that had.
Brett Taft: So why do we want to sell them? But at the same time, I say that had, you know, if this tax credit for first-time home buyers comes to be, and we can sell those 10-year-old rental homes at a significant profit or we're also looking at a government program for down payment, a government grant that pays people's down payment. If those things occur, you know, and we can make $30,000 per unit selling 10-year-old rental homes.
Speaker Change: If this tax credit for first time homebuyers comes to be and we can sell those 10 year old rental homes at a significant profit or where we're also looking at a government program for down payment government Grant paid peoples downpayment, if those things occur.
Speaker Change: And we can make $30000 per unit selling 10 year old rental homes. It becomes a good idea. So that's not there yet but the potential exists.
Unknown Attendee: Unknown Attendee, Gaurav Mehta, Craig Koster, Jeffrey Walkenhorst, Unknown Attendee, Gaurav Mehta, Brett Taft, Craig Koster, Jeffrey Walkenhorst, Unknown Attendee, Gaurav Mehta, Brett Taft, Okay, appreciate the color there.
Speaker Change: Okay I appreciate the color there.
Brett Taft: Um, you know, big quarter from an equity issuance perspective, and you paid down the line of credit, but should we anticipate that you may pay down the loans payable that remain because I think they are still the highest cost remaining debt. I think the only loans payable we have is the term loan on our rental homes, and that's not due for another couple of years, and that's only $20-something million. But on an annual basis, we need between $120 to $150 million.
Speaker Change: A big quarter from an equity issuance perspective, and you pay down the line of credit, but should we anticipate that you may pay down the loans payable that remained because I think they are still the highest cost remaining debt that you have or is it somehow cost prohibitive to do that.
Speaker Change: I think the only loans payable we have as a term loan.
Speaker Change: Our rental homes and that's not due for another couple of years and that's only 20 something million dollars, but.
Speaker Change: And annual base, if we need between $120 million to $150 million. So therefore, we are April.
Brett Taft: So therefore, we are able, with our ATM issuance this quarter, we are all set in order to execute our business plan next year, as well as anticipating any acquisitions that may come about. I apologize for my voice. That's all right, I understood you quite clearly.
Speaker Change: With our ATM issuance. This quarter, we are all set in order to execute our business plan next year as well as anticipating any acquisitions that may come about.
Speaker Change: I apologize for my voice.
Speaker Change: Yes.
Speaker Change: That's all right I understood you quite clearly.
Brett Taft: Just one more from me. You know, there was a nice reduction in G&A. I know you had the last special bonus related to the Fannie Mae financing recognized last quarter, but how should we think about cash G&A going forward? Do you know, is there any need to add more people? In terms of more people, you know, that all depends on what happens on the acquisition front. As we are with our, you know, properties to be developed, adding our rental units, you know, any increase in G&A will be minor, it's nothing, you know, nothing significant. You know, if we find a large enough acquisition, there'll be increase in administrative but that will be balanced by the new income from the acquisition.
Speaker Change: One more for me you know there was a nice reduction in G&A I know you had the last of the special bonus related to the Fannie Mae financing recognized last quarter, but how should we think about cash G&A going forward G&A was there any need to add more people.
Speaker Change: In terms of.
Speaker Change: More people.
Speaker Change: All depends on what happens on the acquisition front.
Speaker Change: As we are with our properties to be developed adding a rental unit.
Speaker Change: Any increase in G&A will be minor it's nothing.
Speaker Change: Nothing significant.
Speaker Change: If we find a large enough acquisition there'll be increased and administrative but that will be balanced by the new income from the acquisition.
Eugene Landy: Well, this is Gene Landy, the Chairman. We have geared up the company to expand it because the nation needs additional housing and we're talking about we're doing 100,000 units a year in manufactured housing, we should be doing 200,000 and we really want to build additional communities. And we know that the opportunities exist because we're doing it. We've been doing it. We've been successfully building parks, renovating parks. And we could do much more. And we're staffed, hopefully, for the Opportunity Zone law changes. But for whatever way we can expand the company, we're staffed to do much, much more than we're doing now.
Gene Landy: As gene Landy Chairman.
Speaker Change: You get up to the company.
Speaker Change: To expand it because the nation needs.
Speaker Change: As shown on housing here, we're talking about.
Speaker Change: We're doing 100000 units a year in manufactured housing we should be doing 200000.
Speaker Change: And we really wanted to build additional communities.
Speaker Change: And we know that the opportunities exist because we're doing it we've been doing it we've been through.
Speaker Change: Firstly.
Speaker Change: Building products.
Speaker Change: <unk> products.
Speaker Change: And we could do much more and we're staffed hopefully poorly.
Speaker Change: Opportunities zone law changes, but whatever way, we can expand the company with staff to do much much more than we're doing now and why it as we speak we are working on the opportunity zone amendments, which will give us.
Eugene Landy: And right as we speak, we're working on the Opportunity Zone amendments, which will give us the ability to get the zoning. Zoning is a big problem in building manufactured homes. We have 2,000 acres. But over the years, it's been only partially successful in rezoning them for manufactured housing. The nation needs 4 million homes. That means you need 4 million lots. And the building for conventional homes and million-dollar mansions, the towns are very anxious to do that. And there's no opposition to it. So our lots are going to be very valuable.
Speaker Change: The ability to get the zoning zoning, so big traveled and building manufactured home homes.
Speaker Change: We have 2000 acres, but we have over the years.
Speaker Change: But only partially successful rezoning them for manufactured housing.
Speaker Change: The nation needs 4 million homes that means you need 4 million lats and.
Speaker Change: The ability to put conventional homes that million dollar mansion. So towns are very anxious to do that and there is no opposition to it. So a lots is going to be very valuable, but we wanted to also build the affordable housing.
Eugene Landy: But we want to also build the affordable housing. So I guess what I'm trying to tell you is that I'd like to see the company much bigger. The people are our best asset. We have tremendous people working for us. And we're working on tremendous new ideas. We were the pioneer on the duplex unit. Duplex unit is simply taking a single wide unit and cutting it in half and have two 550-square-foot units on one lot. And that really creates an opportunity for affordable housing. And we envision building whole communities with duplex units. And that's in its infancy.
Speaker Change: So I guess, what I'm trying to tell you is that I would like to see the company much bigger.
Speaker Change: The people our best asset.
Speaker Change: There's people working for us and we're working tremendous new ideas.
Speaker Change: We were the pioneers.
Speaker Change: On the.
Speaker Change: Duplex duplex unit is simply taking a single wide unit and cutting in half and half to 550 square foot units on one lot and that we.
Speaker Change: It creates an opportunity for affordable housing and we envision building whole communities duplex units and that's in its infancy, but you have to go find the labs you'd get it resolved.
Eugene Landy: But you have to go find the land. You get it rezoned. We were successful in getting HUD to approve the concept. But we have to engineer it. And frankly, we've got to understand the market. We've never been in the duplex business. So please don't look at our administration expenses based on a fixed company. You're looking at administration expenses for a company that wants a substantially increase in size and grow to fill the needs.
Speaker Change: We were successful in getting hard to prove the concept, but we have to engineer it and frankly, we've got to understand the market well.
Speaker Change: Never bet on the duplex business. So please don't look at other administration expenses based on a fixed company looking at administrative expenses for the company that wants to substantially increase in size and grow to fill the needs.
Eugene Landy: Okay, thanks for the call.
Speaker Change: Okay. Thanks for the color.
John Massocca: Our next question comes from John Massocca of B. Reilly Securities. Please go ahead. Good morning. So maybe touching on external growth a little bit more, you seemed a little more optimistic that there might be, you know, opportunities out there that may be the bid-ask spread between buyers and sellers of communities. has narrowed.
Speaker Change: Our next question comes from John Masako, B Riley Securities.
Speaker Change: Please go ahead.
Speaker Change: Good morning.
Speaker Change: So maybe touching on external growth a little bit more you seemed a little more optimistic there might be opportunities out there that maybe the bid ask spread between buyers and sellers of communities.
Samuel Landy: I was wondering if there's any color you give on on what's driving that or any specific kind of, you know, operators in the market that are kind of even more likely to single now than they were three to six months ago. I, you know. The other publicly held manufactured housing REITs had a significant advantage over us in terms of cost of capital, but as our stock price has risen, our cost of equity capital has gone down. So, you know, that advantage is dwindling. And then on the private side, you know, we have access to the markets.
Speaker Change: As narrowed I was just wondering if theres any color you have on what's driving that or any specific kind of.
Speaker Change: Op.
Speaker Change: Operators in the market that are kind of you maybe more likely to single now than they were three to six months ago.
Speaker Change: Well you know.
Speaker Change: The other publicly held manufactured housing Reits had a significant advantage at vantage over us in terms of cost of capital, but as our stock price has risen our cost of equity capital has gone down so.
Speaker Change: That advantages dwindling and then on the <unk>.
Speaker Change: Private side, you know we have access to the markets. We have access to preferred access to common we have plenty of debt available. So we're in a better position than most people to acquire communities at this moment.
Samuel Landy: We have access to preferred, access to common. Plenty of debt available. So we're in a better position than most people to acquire communities at this moment. You know, I don't know what will come for sale, but if communities come for sale. We're able to pay more than we could pay in the past on a per lot basis because the yield spread is in our favor. We look at acquisitions. based on duration and compounding. And we look at the return we're going to get over 10-12 years. Other people look at the return they're going to get next year.
Speaker Change: So I don't I don't know what will come for sale, but if <unk> come for sale.
Speaker Change: We're able to pay more than we could pay in the past on a per lot basis, because the yield spread is in our favor.
Speaker Change: We look at acquisitions.
Speaker Change: Based on duration and compounding and we look at the return we're going to get over 10 12 years. Other people look at the return they're going to get next year so that.
Samuel Landy: So that we think we have foresight to... know that we're going to get some valuable and profitable acquisitions where other people who are just looking at what they're going to make a year, two years from now are turning them down.
Speaker Change: We think we have four sites too.
Speaker Change: Though that we're going to get some valuable.
Speaker Change: I thought about acquisitions, where other people who are just looking at what they are going to make a year two years from now.
Speaker Change: Turning them down and if you look at what we've done with our existing portfolio.
Samuel Landy: And if you look at what we've done with our existing portfolio, our business plan has worked and we think it will work in the future.
Speaker Change: Our business plan has worked and we think it will work in the future.
Samuel Landy: Okay. I mean, with that in mind, I mean, how are you thinking about kind of your current leverage levels? They've obviously come down pretty significantly over the last couple of quarters. I mean, is that more leaving you, you know, kind of a coiled spring to do more investments? Or do you kind of feel like all else being equal from a cost of capital perspective, you'd like to stay at this level going forward? No, I mean, we have no, you know, minimal, minimal debt right now, but the object is You know, let's see what interest rates do.
Speaker Change: Okay and with that in mind I mean, how are you thinking about kind of your current leverage levels, they've obviously come down pretty significantly over the last couple of quarters. I mean is that more leaving you.
Speaker Change: Kind of a coiled spring to do more investments or do you kind of feel like all else being equal from a cost of capital perspective, you'd like to stay at this level going forward.
Speaker Change: I mean, we have no.
Speaker Change: Minimal debt right now, but the object is.
Speaker Change: Let's see what interest rates do if they go down the preferred becomes the most attractive use of capital.
Samuel Landy: If they go down, the preferred becomes the most attractive use. And, you know, if interest rates go up, stay the same, you know, the combination of 50% debt, 50% common is attractive. So we have all of the options available to us, including the $118 million in properties that get refinanced next year. Correct. $116 million. $116 million in properties get refinanced next year, and we think they've doubled in value so we could take twice as much money out of those properties as is currently.
Speaker Change: And if interest rates go up stay the same the.
Speaker Change: Combination of 50% debt, 50% common is attractive. So we have all of the options available to us, including the $118 million of properties that get refinanced next year, correct $115 million to $116 million of properties get refinanced next year, and we think they've doubled in value. So we could take twice.
Speaker Change: As much money out of those properties.
Speaker Change: As currently available.
Samuel Landy: If I can add one more thing. There should be a better appreciation of the government-sponsored entities that we've borrowed from in the past. This money is long-term, and it is lower cost than from other sources, and the government is very interested in financing affordable housing, and we plan to utilize government-sponsored entities to finance our acquisitions, to finance our expansions, and our greenfield developments. And that is a an area that other REITs and other businesses don't have. But on top of that, if you see the three banks we have – we have the top banks of the counties on our line – and we believe we have access to capital.
Speaker Change: If I can add one more thing.
Speaker Change: This should be a better appreciation of the government sponsored entities that we borrowed from in the past.
Speaker Change: This one is long term.
Speaker Change: It is lower cost from other sources and the government is very interested in financing affordable housing.
Speaker Change: And we plan to utilize government sponsored entities to finance, our acquisitions to finance, our expansion and our Greenfield development and that is a.
Speaker Change: An area that other Reits and other businesses don't have but on top of that if you see the three banks. We have we have the top banks in the countries on that line and.
Speaker Change: We believe we have access to capital and.
Samuel Landy: compared to the potential gains because the housing has been one of the best investments over the past four years and we think it's going to continue to be a great investment.
Speaker Change: Compared to the potential gains because.
Speaker Change: Housing has been one of the best investments over the past four years.
Speaker Change: And we think it's going to continue to be a great investment. So we plan to grow the company is using various capital forms.
Brett Taft: So we plan to grow the company using various capital forms. Switching gears just a little bit for the last one for me on the self-storage.
Speaker Change: Switching gears, just a little bit last one for me.
Speaker Change: Self storage.
Brett Taft: Units. I mean, you know, you talked about them being kind of additive to kind of existing and potential future communities.
Speaker Change: Units.
Speaker Change: I know you talked about them being kind of additive to kind of existing and potential future communities is there a scenario, where you would develop kind of on a more.
Brett Taft: Is there a scenario where you would develop kind of on a more You know, on a basis that's a little bit less tied to your kind of manufactured housing communities, just given it's maybe a higher and better use for some of the land you have in the portfolio or zoning reasons, or do you think it, you know, future development of that kind of asset class is going to be really tied to to kind of community growth? Manufactured Housing Community Group. A, we want to be 100% focused on strictly being quality, affordable housing through homes for sale and rent.
Speaker Change: Yes.
Speaker Change: The basis, that's a little bit less tied to your kind of manufactured housing communities just given it's maybe a higher and better use for some of the land you have in the portfolio or rezoning reasons or do you think future development of that kind of asset class is going to be really tied to kind of community growth.
Speaker Change: In fact, Chicago community growth.
Speaker Change: And we want to be 100% focused on strictly being <unk>.
Speaker Change: Quality affordable housing through homes for sale and rent we see the self storage is a necessary assessors use our residents need self storage. So.
Brett Taft: We see the self-storage as a necessary accessory use. Our residents need self-storage, so us owning self-storage, adjoining the communities, benefits their experience of living in the community. There's, you know, some, and it's not a lot, but some vacant land adjoining our communities where we're more likely to get approval in the Vineland case for very expensive homes. In the Carlisle case, it's 29, one acre lot. They'd let us build eight homes per acre of manufactured housing. I'd prefer that. But it's not likely to happen. So we'll take the 29 one-acre lots. We'll use a factory-built home, which is called a cross-mod, and use the superior wall systems. And then we'll retail out the final product of a house on a subdivided lot.
Speaker Change: US owning self storage joining the communities benefits their experience of living in the communities.
Speaker Change: Some of it is not a lot, but some vacant land adjoining our communities, where we're more likely to get approvals and the vineland case for a very expensive homes Carlyle case, it's 29, one acre lots.
Speaker Change: Let us build eight homes per acre of manufactured housing I'd prefer that but it's not likely to happen. So we'll take the 29, one acre lot will use of factory built homes, which is called across months and use the superior wall systems, and then we will retail out to final product of <unk>.
Speaker Change: House on a subdivided lots, but thats going to be a minimal part of what we do it's done in our taxable REIT subsidiary.
Brett Taft: But that's going to be a minimal part of what we do. It's done in our taxable REIT subsidiary.
Brett Taft: But our giant focus is just keep doing what we're doing, provide what HUD defines and what Sustainalytics defines as affordable housing through our communities, getting us that great social designation, which reduces our cost of capital from the government-sponsored entities. It's just beneficial.
Speaker Change: Our giant focus is just keep doing what we're doing.
Speaker Change: Provide what HUD defined and with sustained Olympics defined as affordable housing through our communities.
Speaker Change: Getting us that great social designation, which reduces our cost of capital.
Speaker Change: The government sponsored entities and it's just beneficial.
Brett Taft: Okay. I appreciate the color.
Speaker Change: Okay.
Brett Taft: That's it for me.
Speaker Change: Appreciate the color that's it for me thank you very much.
Speaker Change: Thank you.
Rich Anderson: Our next question is from Rich Anderson of what Thanks. Just a quick follow-up on same-store methodology. I know your same-stores calculate at the community level. You've excluded some for various reasons in the same-store pool, but let's say a community in the same-store pool has been expanded via your expansion site process. Are those new expansion units included in the pool such that it could weigh down the optics of growth initially before you start seeing sites getting cash paying, or do you exclude the expansion component from the same-store calculation until a full year has passed? They are included if the community itself was included.
Speaker Change: Our next question is from Rich Anderson of Wedbush.
Speaker Change: Please go ahead.
Rich Anderson: Yes. Thanks, just a quick follow up on it on same store methodology. So let's I know your same store is calculated at the community level you've excluded some for various reasons in the same store pool, but lets say community in the same store pool has been expanded via your expansion site process are those new expansion units included in the pool.
Rich Anderson: Such that it could weigh down the optics of growth initially before you start seeing units get our sites getting cash paying or do you exclude the expansion component from the same store calculation until a full year's past.
Speaker Change: They are included.
Speaker Change: If the community itself was included so it is included in our same store numbers.
Brett Taft: So it is included in our same store numbers.
Brett Taft: Okay.
Brett Taft: Does it play a material role in your growth, or is it sort of a very rounding area? Right. It hasn't been that material, so that's why we just leave it in there. Okay.
Speaker Change: Okay. It does it play a material role in your growth or is it sort of very rounding arena right. It hasn't been that material. So that's why we just leave it isn't there.
Rich Anderson: Thanks. Thanks for that. That's all I got.
Speaker Change: Hey, thanks, Thanks for that.
Operator: This concludes the question and answer session.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Samuel Landy for any closing remarks.
Samuel Landy: I'd like to turn the conference back over to Samuel Landy for any 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.
Samuel Landy: Thank you operator, I would like to thank the participants on this call for their continued support and interest in our company and as always gene Anna Brett and I are available for any follow up questions. We look forward to reporting back to you in February with our fourth quarter and year end 2024 results. Thank you.
Operator: We look forward to reporting back to you in February with our fourth quarter and year-end 2024 results. Thank you.
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