UMH's Q3 2025 Earnings Call: Contradictions Emerge on 2025 Guidance, Acquisition Strategy, and Rent Growth

Date of Call: None provided

Financials Results

• Revenue: $66.9M for Q3 2025, up 10% YOY (from $60.7M)
• EPS: Normalized FFO per diluted share $0.25, up 4% YOY and up 9% sequentially (annualizes to $1.00)

Guidance:

• Surpass $250M total income in 2025.
• Add 700–800 new rental homes by end of 2025.
• Achieve a 5% annual rent increase, projected to generate ~$11M additional revenue.
• Rent 800 new rental homes expected to generate ~$10M in revenue.
• Expect FFO per share growth in the next few quarters.
• Deploy $80M Series B bonds accretively; capital needs ~$120–150M annually.

Business Commentary:

* Revenue and Income Growth: - UMH Properties reported total revenue of $66.9 million in Q3 2025, up 10% from the previous year, with total income for 9 months ending September 30, $194.8 million, showing a 9% increase. - This growth was driven by increased occupancy, sales, and higher rental rates, as well as acquisitions that added revenue-generating properties.

• Normalized FFO and Shareholder Value Increase:
• Normalized FFO per diluted share increased to $0.25 for Q3 2025, representing a 4% year-over-year increase and a 9% sequential increase from $0.23 in Q2.

• This improvement was attributed to increased occupancy, sales, and strategic acquisitions. The company also highlighted increased property values and a focus on shareholder value by increasing its dividend.

• Capital Investment and Financial Strategy:

• The company invested $120 million to $150 million annually in capital improvements, new rental homes, expansions, and financing of home sales.

• UMH shifted debt to equity use, reducing reliance on its common ATM and increasing debt issuance, aiming to repay debt over time and enhance shareholder value. The company also increased its share repurchase authorization to $100 million.

• Acquisitions and Expansion:

• UMH acquired communities in Maryland and Georgia, with a combined total purchase price of $16.8 million.
• These acquisitions are part of the company's strategy to expand its portfolio and increase occupancy through value-add investments, focusing on vacant sites and rental home programs.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly framed results and outlook as constructive: “we are incredibly optimistic,” “on track to surpass $250 million in total income in 2025,” and expects “FFO per share growth in the next few quarters.” Operational metrics (occupancy, same‑property NOI) cited as improving.

Q&A:

• Question from Gaurav Mehta (Alliance Global Partners): I wanted to ask you on your 4Q acquisition in Georgia. Can you provide some color on the occupancy upside there and it also looks like the average monthly home rent is lower than your other property in Georgia. Just hoping to get some more color on that property.
  Response: Albany, GA (130 sites, ~30% occupied) is a value‑add; expect to improve infrastructure, bring in homes, target rents ~$1,000–$1,200/month and roughly ~30 new rented units per year with significant upside.

• Question from Gaurav Mehta (Alliance Global Partners): In September, you increased your share repurchase size to $100 million from $25 million. How do share repurchases fit in your capital allocation plan going forward?
  Response: Priority is funding growth via asset sales, preferred issuance and debt; share repurchases remain a potential use of capital once growth and financing plans are executed.

• Question from Gaurav Mehta (Alliance Global Partners): You talked about seeing more interest in oil and gas rights. Can you provide more details on how big that opportunity set is?
  Response: Opportunity exists but size is uncertain; management is receiving increasing inquiries and notes strengthening values on ~4,000 acres in Marcellus/Utica areas.

• Question from Craig Kucera (Lucid Capital Markets): There was a pretty meaningful decline in G&A from the last 3 quarters. Is there anything else we should be thinking about?
  Response: G&A decline is primarily seasonal and timing‑related; expect Q3 year‑to‑date run rate to be indicative for Q4 on average.

• Question from Craig Kucera (Lucid Capital Markets): I just wanted to confirm the one‑time legal and professional expenses were booked as property operating expenses.
  Response: Yes — the one‑time legal and professional fees were recorded as property operating expenses.

• Question from Craig Kucera (Lucid Capital Markets): The Albany purchase price (~$20k/site) is well below typical — will it require materially more CapEx than usual?
  Response: No — Albany fits the typical value‑add playbook; not expected to require atypical CapEx and presents substantial upside from implementing UMH's standard improvements.

• Question from Craig Kucera (Lucid Capital Markets): Is the new Georgia community fully entitled/approved or do you expect delays?
  Response: The community is fully entitled and management expects no permitting delays; plan is to proceed at full speed.

• Question from Craig Kucera (Lucid Capital Markets): How meaningful is the remaining pool of used homes for sale — is it getting closer to being complete or will you continue selling a healthy number?
  Response: Sale cadence depends on financing availability; if lending eases, management expects significant sales of ~15‑year‑old rentals, which would reduce cash needs for new units.

• Question from John Massocca (Ladenburg Thalmann): Any update on manufactured home sales quarter‑to‑date and seasonal expectations for Q4 — could increased portfolio size offset seasonality?
  Response: Sales pipeline ~ $3M and growing; October activity strong—Q4 typically slower but they expect a strong Q4 and are positioned to beat last year's record.

• Question from Unknown Analyst (Unknown Firm): On the rental side: are the ~100 homes on site counted as vacancy today, timing for renting the 100 ready homes and the 300 available to set up, and how does that interact with Q4 seasonality?
  Response: Inventory homes on site are not included in occupancy/rental pool until first rental; ordering + setup typically ~6 months from order to ready-for‑rent.

• Question from Unknown Analyst (Unknown Firm): Are the ~100 homes on site and ready for occupancy contributing to the rental pool vacancy?
  Response: No — homes remain out of the rental pool until they are rented for the first time.

Contradiction Point 1

Guidance for 2025

It involves changes in financial forecasts, specifically regarding guidance for 2025, which are critical indicators for investors and analysts.

Is the 2025 guidance still valid or has it been withdrawn, and can you outline the factors supporting confidence in the guidance's lower bound? - Gaurav Mehta (Alliance Global Partners)

20251104-2025 Q3: The low end of the prior guidance should hold. The confidence in the low end of the guidance is based on current results. The growth in earnings per share in the third and fourth quarter is expected to help achieve this. The potential growth in sales from improved retail financing could lead to even higher results. - Samuel A. Landy(CEO)

Is the 2025 guidance still valid? What factors support the low end of the guidance? - Gaurav Mehta (Alliance Global Partners)

2025Q2: The growth in earnings per share in the third and fourth quarter is expected to help achieve this. The potential growth in sales from improved retail financing could lead to even higher results. - Samuel A. Landy(CEO)

Contradiction Point 2

Acquisition Growth Strategy

It reflects a shift in the company's strategic approach to acquisitions and growth, which could impact investor expectations and financial projections.

How do share repurchases fit into your capital allocation plan? - Gaurav Mehta (Alliance Global Partners)

20251104-2025 Q3: The company aims to fund growth with assets, preferred stock, and potentially repurchase stock. - Samuel A. Landy(CEO)

What are the key factors that led to the high versus low end of your 2025 guidance range? - Rob Stevenson (Janney)

2024Q4: The big two factors are home sales and acquisitions. The high end of the guidance assumes more than the four acquisitions discussed and more home sales than in 2024. - Unidentified Company Representative

Contradiction Point 3

Home Sales and Rental Strategy

It involves the company's sales and rental strategy, which directly impacts revenue and occupancy rates, crucial for investor assessments.

Provide an update on manufactured home sales quarter-to-date and expectations for Q4? - John Massocca (Ladenburg Thalmann)

20251104-2025 Q3: The sales pipeline remains strong, with significant demand for new homes. The company anticipates a strong 4Q, aiming to surpass last year's sales record. - Brett Taft(COO)

If some of the 800 homes don't rent, could they be sold? - Rich Anderson (Wedbush)

2024Q4: There's a good chance that some homes could be sold, especially with expansions opening. UMH hopes to sell about 200 new homes in 2025. - Brett Taft(COO)

Contradiction Point 4

Rent Growth Expectations

It involves the company's expectations for rent growth, which is a key indicator of revenue and financial performance.

Can you explain the occupancy upside for the Q4 Georgia acquisition, given its lower average monthly rent compared to other Georgia properties? - Gaurav Mehta (Alliance Global Partners)

20251104-2025 Q3: The property in Albany, Georgia is 130 sites, 30% occupied. Value-add strategy includes infrastructure improvements and amenities. Rental rates expected to reach $1,000-$1,200 initially, with potential 30 units per year in new occupancy. - Brett Taft(COO)

Are you still expecting 5% rent growth this year? - Gaurav Mehta (Alliance Global Partners)

2025Q1: Yes, we are still planning for 5% rent increases as we go throughout the year. We are seeing strong demand at our properties, which supports this expectation. - Samuel Landy(CEO)