UMH PROPERTIES INC

Previous wording

As of June 30, 2024, the Company owned and operated 136 manufactured home communities containing approximately 25,800 developed homesites, including the Countryside Village expansion (Duck River Estates) in Tennessee, which is now considered a separate community, and two communities acquired through the Company’s qualified opportunity zone fund. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, South Carolina and Georgia.

Current wording

As of September 30, 2024, the Company owns and operates 139 manufactured home communities containing approximately 26,200 developed homesites, of which approximately 10,300 are rental homes that we own. The 139 communities include two communities in central Florida owned through a joint venture with Nuveen Real Estate in which the Company has a 40% interest (Sebring Square and Rum Runner), the Countryside Village expansion (Duck River Estates) and the Allentown expansion (River Bluff Estates) in Tennessee, which are now considered separate communities, and also include two communities acquired through the Company’s qualified opportunity zone fund (See Note 5). These 139 communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, South Carolina, Florida and Georgia.

Previous wording

The Company is in preliminary discussions with a leading national homebuilder regarding the potential formation of a joint venture to develop approximately 131 acres of undeveloped land adjacent to one of the Company’s existing manufactured home communities in southern New Jersey. If necessary governmental approvals can be obtained, the purpose of the joint venture would be to construct roads, infrastructure and other site improvements on the property and then sell the improved lots to an affiliate of the Company’s joint venture partner, which would construct luxury single family residential homes to sell to purchasers. It is envisioned that the joint venture partner would fully fund the costs of required site improvements and obtaining all approvals. The Company would contribute the real property to the joint venture and receive a percentage of the sale price of each home. If the parties elect to proceed, it is anticipated that the joint venture partner would seek preliminary subdivision and site plan approvals over the next two years and, if these approvals are obtained, the joint venture would then be formally established. Pursuit of this project would be contingent upon execution of definitive documentation setting forth the terms of an agreement between the parties and a 90-day due diligence review period for the benefit of the joint venture partner. There can be no assurance that the Company and its potential joint venture partner will reach agreement or proceed with this arrangement or that required governmental approvals can be obtained.

Current wording

The Company is in preliminary discussions with a leading national homebuilder regarding the potential formation of a joint venture to develop approximately 131 acres of undeveloped land adjacent to one of the Company’s existing manufactured home communities in southern New Jersey. If necessary governmental approvals can be obtained, the purpose of the joint venture would be to construct roads, infrastructure and other site improvements on the property and then sell the improved lots to an affiliate of the Company’s joint venture partner, which would construct luxury single family residential homes to sell to purchasers. It is envisioned that the joint venture partner would fully fund the costs of required site improvements and obtain all approvals. The Company would contribute the real property to the joint venture and receive a percentage of the sale price of each home. If the parties elect to proceed, it is anticipated that the joint venture partner would seek preliminary subdivision and site plan approvals over the next two years and, if these approvals are obtained, the joint venture would then be formally established. Pursuit of this project would be contingent upon execution of definitive documentation setting forth the terms of an agreement between the parties and a 90-day due diligence review period for the benefit of the joint venture partner. There can be no assurance that the Company and its potential joint venture partner will reach agreement or proceed with this arrangement or that required governmental approvals can be obtained.

Previous wording

The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. This has resulted in increased occupancy rates and improved operating results. For the three and six months ended June 30, 2024, rental and related income increased 9% and 10%, respectively, from the prior year periods and Community Net Operating Income (“NOI”), as defined below, increased 11% and 13%, respectively. Same property NOI, which includes communities owned and operated as of January 1, 2023 (excluding Memphis Blues and Duck River Estates), increased 11% and 13% for the three and six months ended June 30, 2024, respectively, over the prior year period driven by a 130 basis point increase in occupancy, to 87.7%, and rental rate increase of 4.9%. We have been positioning ourselves for future growth and will continue to seek opportunistic investments. In addition, on behalf of our joint venture arrangement with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. We will also seek additional opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones.

Current wording

The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. This has resulted in increased occupancy rates and improved operating results. For the three and nine months ended September 30, 2024, rental and related income increased 8% and 9%, respectively, from the prior year periods and Community Net Operating Income (“NOI”), as defined below, increased 7% and 11%, respectively. Same property NOI, which includes communities owned and operated as of January 1, 2023 (excluding Memphis Blues, Duck River Estates and River Bluff Estates), increased 7% and 11% for the three and nine months ended September 30, 2024, respectively, over the prior year period driven by a 70 basis point increase in occupancy, to 87.7%, and a rental rate increase of 4.5%. We have been positioning ourselves for future growth and will continue to seek opportunistic investments. In addition, on behalf of our joint venture arrangement with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. We will also seek additional opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in qualified opportunity zones.

Previous wording

For the three and six months ended June 30, 2024, sales of manufactured homes increased 7% and 4%, respectively from the prior year periods. Demand for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that should result in increased demand.

Current wording

For the three and nine months ended September 30, 2024, sales of manufactured homes increased 10% and 6%, respectively from the prior year periods. Demand for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that should result in increased demand.

Previous wording

The macro-economic environment and current housing fundamentals continue to favor home rentals. Due to high mortgage rates and lack of inventory, the higher cost of buying a home versus renting one is at its most extreme since 1996. Rental homes in a manufactured home community allow the resident to obtain the efficiencies of factory-built housing and the amenities of community living for less than the cost of other forms of affordable housing. We continue to see strong demand for rental homes. We have added an additional 167 rental homes during the first six months of 2024, net of home sales. This brought the total number of rental homes to approximately 10,100 rental homes, or 39.3% of total sites. Occupied rental homes represented approximately 42.8% of total occupied sites at quarter end. Occupancy in rental homes continues to be strong and was at 95.0% as of June 30, 2024. Our manufactured home communities compare favorably with other types of rental housing, including apartments, and we will continue to allocate capital to rental home purchases, as demand dictates.

Current wording

The macro-economic environment and current housing fundamentals continue to favor home rentals. Due to high mortgage rates and lack of inventory, the higher cost of buying a home versus renting one is at its most extreme since 1996. Despite mortgage rates hitting a two-year low this past September as they moved toward 6%, rates are still too high for many buyers and according to the National Association of Realtors, sales of existing homes are on track for their worst year since 1995 for the second year in a row. Even if this year’s sales slightly exceed last year’s level, sales are still on track for the worst two-year period since the mid-1990s, when the country’s population was considerably smaller. Rental homes in a manufactured home community allow the resident to obtain the efficiencies of factory-built housing and the amenities of community living for less than the cost of other forms of affordable housing. We continue to see strong demand for rental homes. We have added an additional 284 rental homes during the first nine months of 2024, net of home sales. This brought the total number of rental homes to approximately 10,300 rental homes, or 39.7% of total sites. Occupied rental homes represented approximately 42.9% of total occupied sites at quarter end. Occupancy in rental homes continues to be strong and was at 94.4% as of September 30, 2024. Our manufactured home communities compare favorably with other types of rental housing, including apartments, and we will continue to allocate capital to rental home purchases, as demand dictates.

Previous wording

The Company’s Community NOI for the three and six months ended June 30, 2024 and 2023 is calculated as follows*(in thousands)*:

Current wording

The Company’s Community NOI for the three and nine months ended September 30, 2024 and 2023 is calculated as follows*(in thousands)*:

Previous wording

The Company’s FFO and Normalized FFO attributable to common shareholders for the three and six months ended June 30, 2024 and 2023 are calculated as follows*(in thousands)*:

Current wording

The Company’s FFO and Normalized FFO attributable to common shareholders for the three and nine months ended September 30, 2024 and 2023 are calculated as follows*(in thousands)*:

Previous wording

The following are the cash flows provided by (used in) operating, investing and financing activities for the six months ended June 30, 2024 and 2023*(in thousands)*:

Current wording

The following are the cash flows provided by (used in) operating, investing and financing activities for the nine months ended September 30, 2024 and 2023*(in thousands)*:

Previous wording

Rental and related income increased 9% from $47.1 million for the three months ended June 30, 2023 to $51.5 million for the three months ended June 30, 2024. Rental and related income increased 10% from $92.4 million for the six months ended June 30, 2023 to $101.8 million for the six months ended June 30, 2024. This increase was due to increases in rental rates and same property occupancy and additional rental homes. The Company has been raising rental rates by approximately 5% to 6% annually at most communities. Same property occupancy has increased 130 basis points from 86.4% as of June 30, 2023 to 87.7% at June 30, 2024. Occupied rental homes increased 6% from approximately 9,000 homes at June 30, 2023 to 9,600 homes at June 30, 2024.

Current wording

Rental and related income increased 8% from $48.1 million for the three months ended September 30, 2023 to $51.9 million for the three months ended September 30, 2024. Rental and related income increased 9% from $140.5 million for the nine months ended September 30, 2023 to $153.8 million for the nine months ended September 30, 2024. This increase was due to increases in rental rates and same property occupancy and additional rental homes. The Company has been raising rental rates by approximately 5% to 6% annually at most communities. Same property occupancy has increased 70 basis points from 87.0% as of September 30, 2023 to 87.7% at September 30, 2024. Occupied rental homes increased 4% from approximately 9,300 homes at September 30, 2023 to 9,700 homes at September 30, 2024.

Previous wording

Community operating expenses increased 8% from $20.0 million for the three months ended June 30, 2023 to $21.6 million for the three months ended June 30, 2024. Community operating expenses increased 6% from $40.1 million for the six months ended June 30, 2023 to $42.7 million for the six months ended June 30, 2024. These increases were due to an increase in payroll costs, real estate taxes and rental home expenses.

Current wording

Community operating expenses increased 9% from $20.7 million for the three months ended September 30, 2023 to $22.5 million for the three months ended September 30, 2024. Community operating expenses increased 7% from $60.8 million for the nine months ended September 30, 2023 to $65.2 million for the nine months ended September 30, 2024. These increases were due to an increase in payroll costs, real estate taxes, rental home expenses and storm cleanup.

Previous wording

Community NOI increased 11% from $27.0 million for the three months ended June 30, 2023 to $29.9 million for the three months ended June 30, 2024. Community NOI increased 13% from $52.2 million for the six months ended June 30, 2023 to $59.1 million for the six months ended June 30, 2024. These increases were primarily due to increases in rental rates, occupancy and rental homes. The Company’s operating expense ratio (defined as community operating expenses divided by rental and related income) was 41.9% for the three and six months ended June 30, 2024 and 42.6% and 43.4% for the three and six months ended June 30, 2023, respectively. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership. Since most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue to improve. Due to the Company’s ability to increase its rental rates annually (subject to limitations on rent increases in certain jurisdictions), increasing costs due to inflation and changing prices have generally not had a material effect on revenue and income from continuing operations.

Current wording

Community NOI increased 7% from $27.5 million for the three months ended September 30, 2023 to $29.4 million for the three months ended September 30, 2024. Community NOI increased 11% from $79.7 million for the nine months ended September 30, 2023 to $88.6 million for the nine months ended September 30, 2024. These increases were primarily due to increases in rental rates, occupancy and rental homes. The Company’s operating expense ratio (defined as community operating expenses divided by rental and related income) was 43.3% and 42.4% for the three and nine months ended September 30, 2024 and 42.9% and 43.3% for the three and nine months ended September 30, 2023, respectively. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership. Since most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue to improve. Due to the Company’s ability to increase its rental rates annually (subject to limitations on rent increases in certain jurisdictions), increasing costs due to inflation and changing prices have generally not had a material effect on revenue and income from continuing operations.

Previous wording

Sales of manufactured homes increased 7% from $8.2 million, or 91 homes, for the three months ended June 30, 2023 to $8.8 million, or 105 homes, for the three months ended June 30, 2024. Sales of manufactured homes increased 4% from $15.5 million, or 174 homes, for the six months ended June 30, 2023 to $16.2 million, or 200 homes, for the six months ended June 30, 2024. Cost of sales of manufactured homes amounted to $5.5 million and $5.7 million for the three months ended June 30, 2024 and 2023, respectively. Cost of sales of manufactured homes amounted to $11.0 million and $10.7 million for the six months ended June 30, 2024 and 2023, respectively. The gross profit percentage was 38% and 30% for the three months ended June 30, 2024 and 2023, respectively, and 32% and 31% for the six months ended June 30, 2024 and 2023, respectively. Selling expenses, which includes salaries, commissions, advertising and other miscellaneous expenses, amounted to $1.7 million for the three months ended June 30, 2024 and 2023, and $3.4 million and $3.5 million for the six months ended June 30, 2024 and 2023, respectively. Gain from the sales operations (defined as sales of manufactured homes, less cost of sales of manufactured homes, less selling expenses, less interest on the financing of inventory) amounted to $1.4 million or 16% of total sales and $665,000 or 8% of total sales for the three months ended June 30, 2024 and 2023, respectively. Gain from the sales operations amounted to $1.4 million or 9% of total sales and $901,000 or 6% of total sales for the six months ended June 30, 2024 and 2023, respectively. Gain from the sales operations, excluding interest on the financing of inventory, amounted to $1.6 million or 18% of total sales and $822,000 or 10% of total sales for the three months ended June 30, 2024 and 2023, respectively. Gain from the sales operations, excluding interest on the financing of inventory, amounted to $1.8 million or 11% of total sales and $1.3 million or 9% of total sales for the six months ended June 30, 2024 and 2023, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed.

Current wording

Sales of manufactured homes increased 10% from $7.9 million, or 90 homes, for the three months ended September 30, 2023 to $8.7 million, or 100 homes, for the three months ended September 30, 2024. Sales of manufactured homes increased 6% from $23.4 million, or 264 homes, for the nine months ended September 30, 2023 to $24.9 million, or 300 homes, for the nine months ended September 30, 2024. Cost of sales of manufactured homes amounted to $5.4 million and $5.3 million for the three months ended September 30, 2024 and 2023, respectively. Cost of sales of manufactured homes amounted to $16.5 million and $16.1 million for the nine months ended September 30, 2024 and 2023, respectively. The gross profit percentage was 38% and 33% for the three months ended September 30, 2024 and 2023, respectively, and 34% and 31% for the nine months ended September 30, 2024 and 2023, respectively. Selling expenses, which includes salaries, commissions, advertising and other miscellaneous expenses, amounted to $1.8 million for the three months ended September 30, 2024 and 2023, and $5.2 million and $5.3 million for the nine months ended September 30, 2024 and 2023, respectively. Gain from the sales operations (defined as sales of manufactured homes, less cost of sales of manufactured homes, less selling expenses), excluding interest on the financing of inventory, amounted to $1.5 million or 17% of total sales and $783,000 or 10% of total sales for the three months ended September 30, 2024 and 2023, respectively. Gain from the sales operations, excluding interest on the financing of inventory, amounted to $3.3 million or 13% of total sales and $2.1 million or 9% of total sales for the nine months ended September 30, 2024 and 2023, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed.

Previous wording

General and administrative expenses increased 6% from $5.2 million for the three months ended June 30, 2023 to $5.5 million for the three months ended June 30, 2024. General and administrative expenses increased 7% from $10.2 million for the six months ended June 30, 2023 to $10.9 million for the six months ended June 30, 2024. General and administrative expenses increased primarily due to an increase in meeting costs as a result of our biennial in-person employee training meeting (which was not held last year) and an increase in payroll and related personnel cost. General and administrative expenses as a percentage of gross revenue (total income plus interest, dividends and other income) was 8.8% and 8.9% for the three and six months ended June 30, 2024, respectively, as compared to 9.0% and 9.1% for the three and six months ended June 30, 2023, respectively.

Current wording

General and administrative expenses remained relatively stable from the three months ended September 30, 2023 to September 30, 2024. General and administrative expenses increased 5% from $14.7 million for the nine months ended September 30, 2023 to $15.3 million for the nine months ended September 30, 2024, primarily due to an increase in meeting costs as a result of our biennial in-person employee training meeting (which was not held last year) and an increase in payroll and related personnel cost. Although general and administrative expenses increased for the nine months, general and administrative expenses as a percentage of gross revenue (total income plus interest, dividends and other income) was down for both the three and the nine months ended September 30, 2024 as compared to same periods ended September 30, 2023. These percentages were 7.1% and 8.3% for the three and nine months ended September 30, 2024, respectively, as compared to 7.7% and 8.6% for the three and nine months ended September 30, 2023, respectively.

Previous wording

Depreciation expense increased 9% from $13.8 million for the three months ended June 30, 2023 to $15.0 million for the three months ended June 30, 2024. Depreciation expense increased 10% from $27.1 million for the six months ended June 30, 2023 to $29.7 million for the six months ended June 30, 2024. This increase was primarily due to the increase in rental homes during 2023 and 2024.

Current wording

Depreciation expense increased 4% from $14.1 million for the three months ended September 30, 2023 to $14.7 million for the three months ended September 30, 2024. Depreciation expense increased 8% from $41.3 million for the nine months ended September 30, 2023 to $44.4 million for the nine months ended September 30, 2024. This increase was primarily due to the increase in rental homes during 2023 and 2024.

Previous wording

Interest income increased 23% from $1.2 million for the three months ended June 30, 2023 to $1.5 million for the three months ended June 30, 2024. Interest income increased 30% from $2.4 million for the six months ended June 30, 2023 to $3.1 million for the six months ended June 30, 2024. This increase was primarily due to an increase in the average balance of notes receivable from $65.1 million at June 30, 2023 to $78.1 million at June 30, 2024. The weighted average interest rate earned on these notes receivable increased 20 basis points and were approximately 7.0% and 6.8% as of June 30, 2024 and 2023, respectively.

Current wording

Interest income increased 39% from $1.3 million for the three months ended September 30, 2023 to $1.8 million for the three months ended September 30, 2024. Interest income increased 33% from $3.7 million for the nine months ended September 30, 2023 to $4.9 million for the nine months ended September 30, 2024. This increase was primarily due to an increase in the average balance of notes receivable from $68.9 million at September 30, 2023 to $79.2 million at September 30, 2024. The weighted average interest rate earned on these notes receivable increased 20 basis points and were approximately 7.1% and 6.9% as of September 30, 2024 and 2023, respectively.

Previous wording

Dividend income decreased 32% from $531,000 for the three months ended June 30, 2023 to $362,000 for the three months ended June 30, 2024. Dividend income decreased 42% from $1.2 million for the six months ended June 30, 2023 to $722,000 for the six months ended June 30, 2024. This decrease was due to reduced dividends as a result of our smaller securities portfolio and dividend cuts. The weighted average yield on our dividends received from our marketable securities investments decreased 140 basis points and were approximately 5.1% and 6.5% at June 30, 2024 and 2023, respectively.

Current wording

Dividend income decreased 30% from $508,000 for the three months ended September 30, 2023 to $357,000 for the three months ended September 30, 2024. Dividend income decreased 38% from $1.7 million for the nine months ended September 30, 2023 to $1.1 million for the nine months ended September 30, 2024. This decrease was due to reduced dividends as a result of our smaller securities portfolio and dividend cuts. The weighted average yield on our dividends received from our marketable securities investments decreased 330 basis points and were approximately 4.3% and 7.6% at September 30, 2024 and 2023, respectively.

Previous wording

The Company recognized a loss on sales of marketable securities of $3.8 million for the three and six months ended June 30, 2024. The Company recognized a loss on sales of marketable securities of $43,000 for the six months ended June 30, 2023. The increase (decrease) in fair value of marketable securities amounted to an increase of $3.3 million and a decrease of $2.5 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in fair value of marketable securities amounted to $2.0 million and $4.9 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, the Company had total net unrealized losses of $41.7 million in its REIT securities portfolio.

Current wording

The Company recognized a loss on sales of marketable securities of $3.8 million for the nine months ended September 30, 2024. The Company recognized a gain on sales of marketable securities of $226,000 and $183,000 for the three and nine months ended September 30, 2023, respectively. The increase (decrease) in fair value of marketable securities amounted to an increase of $5.5 million and a decrease of $5.5 million for the three months ended September 30, 2024 and 2023, respectively. The increase (decrease) in fair value of marketable securities amounted to an increase of $3.5 million and a decrease of $10.4 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company had total net unrealized losses of $36.2 million in its REIT securities portfolio.

Previous wording

Interest expense, including amortization of financing costs, decreased 15% from $8.6 million for the three months ended June 30, 2023 to $7.4 million for the three months ended June 30, 2024. Interest expense, including amortization of financing costs, decreased 13% from $17.0 million for the six months ended June 30, 2023 to $14.8 million for the six months ended June 30, 2024. This decrease was due to a decrease in the average balance of mortgages and loans from $644.9 million at June 30, 2023 to $579.2 million at June 30, 2024. In addition, the balance under our floorplan inventory financing revolving lines of credit decreased from approximately $38.8 million as of June 30, 2023 to $4.5 million as of June 30, 2024.

Current wording

Interest expense, including amortization of financing costs, decreased 15% from $7.7 million for the three months ended September 30, 2023 to $6.5 million for the three months ended September 30, 2024. Interest expense, including amortization of financing costs, decreased 13% from $24.7 million for the nine months ended September 30, 2023 to $21.4 million for the nine months ended September 30, 2024. This decrease was due to a decrease in the average balance of mortgages and loans from $624.6 million at September 30, 2023 to $552.1 million at September 30, 2024. The weighted average interest rate on our total debt decreased from 4.7% at September 30, 2023 to 4.4% at September 30, 2024, respectively.

Previous wording

Total investment property increased 2% or $35.2 million during the six months ended June 30, 2024. In addition to adding 167 rental homes, net of 105 rental homes sold, to its communities during the six months ended June 30, 2024, the Company is preparing sites for additional homes to be added during the year. Occupied rentals increased by 257 rental homes from December 31, 2023 to June 30, 2024. The Company’s occupancy rate on its rental homes portfolio increased 100 basis points and was 95.0% at June 30, 2024 as compared to 94.0% at December 31, 2023.

Current wording

Total investment property increased 4% or $58.0 million during the nine months ended September 30, 2024. In addition to adding 284 rental homes, net of 202 rental homes sold to its communities during the nine months ended September 30, 2024, the Company is preparing sites for additional homes to be added during the year. Occupied rentals increased by 310 rental homes from December 31, 2023 to September 30, 2024. The Company’s occupancy rate on its rental homes portfolio increased 40 basis points and was 94.4% at September 30, 2024 as compared to 94.0% at December 31, 2023.

Previous wording

Marketable securities decreased 17% or $5.8 million during the six months ended June 30, 2024. This decrease was due to sales of securities with a cost basis of $3.8 million and a net decrease in the fair value of $2.0 million.

Current wording

Marketable securities decreased 1% or $328,000 during the nine months ended September 30, 2024. This decrease was due to sales of securities with a cost basis of $3.8 million offset by a net increase in the fair value of $3.5 million.

Previous wording

Mortgages payable, net of unamortized debt issuance costs, decreased 1% or $5.5 million during the six months ended June 30, 2024 due to principal payments.

Current wording

Mortgages payable, net of unamortized debt issuance costs, decreased 2% or $8.2 million during the nine months ended September 30, 2024 due to principal payments.

Previous wording

Loans payable, net of unamortized debt issuance costs, decreased 17% or $16.1 million during the six months ended June 30, 2024. This decrease was due to a decrease of $20 million on our unsecured line of credit offset by an increase of $4.5 million on our revolving lines of credit for the purchase of inventory.

Current wording

Loans payable, net of unamortized debt issuance costs, decreased 72% or $67.5 million during the nine months ended September 30, 2024. This decrease was due to a decrease of $70 million on our unsecured line of credit offset by an increase of $3.1 million on our revolving lines of credit for the purchase of inventory.

Previous wording

In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including acquisitions. The Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit facility or lines of credit, incur other indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital markets, including through the Company’s ATM Programs. In order to provide financial flexibility to opportunistically access the capital markets, on March 12, 2024, the Company implemented a new 2024 Common ATM Program which allows the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million from time to time through the Distribution Agents. Additionally, the Company expanded the borrowing capacity on its unsecured revolving credit facility from $180 million in available borrowings to $260 million in available borrowings.

Current wording

In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including acquisitions. The Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit facility or lines of credit, incur other indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital markets, including through the Company’s ATM Programs. In order to provide financial flexibility to opportunistically access the capital markets, on March 12, 2024, the Company implemented its 2024 March Common ATM Program which allowed the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million, from time to time through the Distribution Agents. In addition, on September 16, 2024, the Company terminated its successful 2024 March Common ATM Program and implemented a new 2024 September Common ATM Program which allows the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million, from time to time through the Distribution Agents. Additionally, during 2024 the Company expanded the borrowing capacity on its unsecured revolving credit facility from $180 million in available borrowings to $260 million in available borrowings.

Previous wording

The Company continues to strengthen its capital and liquidity positions. During the six months ended June 30, 2024, the Company issued and sold 3.7 million shares of Common Stock through our Common ATM Programs, at a weighted average price of $15.44 per share, generating gross proceeds of $57.6 million and net proceeds of $56.5 million, after offering expenses. Subsequent to quarter end, the Company issued and sold an additional 765,000 shares of its Common Stock under the 2024 Common ATM Program at a weighted average price of $16.94 per share, generating net proceeds of $12.8 million, after offering expenses.

Current wording

The Company continues to strengthen its capital and liquidity positions. During the nine months ended September 30, 2024, the Company issued and sold 9.4 million shares of Common Stock through our Common ATM Programs, at a weighted average price of $17.55 per share, generating gross proceeds of $166.0 million and net proceeds of $163.2 million, after offering expenses. Subsequent to quarter end, the Company issued and sold an additional 170,000 shares of its Common Stock under the 2024 September Common ATM Program at a weighted average price of $18.92 per share, generating net proceeds of $3.2 million, after offering expenses.

Previous wording

In addition, during the six months ended June 30, 2024, the Company issued and sold 223,000 shares of Series D Preferred Stock through our 2023 Preferred ATM Program, at a weighted average price of $23.04 per share, generating gross and net proceeds, after offering expenses, of $5.1 million. Subsequent to quarter end, the Company issued and sold an additional 150,000 shares of its Series D Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $23.01 per share, generating net proceeds of $3.4 million, after offering expenses.

Current wording

In addition, during the nine months ended September 30, 2024, the Company issued and sold 664,000 shares of Series D Preferred Stock through our 2023 Preferred ATM Program, at a weighted average price of $23.35 per share, generating gross proceeds of $15.5 million and net proceeds of $15.3 million, after offering expenses. Subsequent to quarter end, the Company issued and sold an additional 247,000 shares of its Series D Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $23.90 per share, generating net proceeds of $5.8 million, after offering expenses.

Previous wording

The Company also raised $5.0 million from the issuance of common stock in the DRIP during the six months ended June 30, 2024, which included dividend reinvestments of $1.5 million. Dividends paid on the common stock for the six months ended June 30, 2024 were $29.4 million, of which $1.5 million were reinvested. Dividends paid on the Series D Preferred Stock for the six months ended June 30, 2024 totaled $9.4 million.

Current wording

The Company also raised $7.6 million from the issuance of common stock in the DRIP during the nine months ended September 30, 2024, which included dividend reinvestments of $2.4 million. Dividends paid on the common stock for the nine months ended September 30, 2024 were $45.3 million, of which $2.4 million were reinvested. Dividends paid on the Series D Preferred Stock for the nine months ended September 30, 2024 totaled $14.2 million.

Previous wording

Net cash provided by operating activities amounted to $37.6 million and $53.0 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, the Company had cash and cash equivalents of $39.5 million, marketable securities of $28.7 million and $210 million available on our credit facility. We also had approximately $139 million available on our revolving lines of credit for the financing of home sales and purchases of inventory and $55 million available on our line of credit secured by rental homes and rental homes leases.

Current wording

Net cash provided by operating activities amounted to $54.3 million and $91.1 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company had cash and cash equivalents of $66.7 million, marketable securities of $34.2 million and $260 million available on our credit facility. We also had approximately $147 million available on our revolving lines of credit for the financing of home sales and purchases of inventory and $55 million available on our line of credit secured by rental homes and rental homes leases.

Previous wording

The Company owns 136 communities, of which 49 are unencumbered. Except for communities in the borrowing base for our unsecured credit facility, these unencumbered communities can be used to raise additional funds. Our marketable securities, unencumbered properties, and lines of credit provide the Company with additional liquidity. The Company also holds a 40% equity interest in the entities formed under its joint venture with Nuveen, which owns two newly developed communities that are unencumbered and one community in the process of being developed that is also unencumbered.

Current wording

The Company owns and operates 139 communities (including two communities owned by the Company’s joint venture with Nuveen), of which 52 are unencumbered. Except for communities in the borrowing base for our unsecured credit facility, these unencumbered communities can be used to raise additional funds. Our marketable securities, unencumbered properties, and lines of credit provide the Company with additional liquidity. The Company holds a 40% equity interest in the entities formed under its joint venture with Nuveen, which owns two newly developed communities that are unencumbered and one community in the process of being developed that is also unencumbered.

Previous wording

As of June 30, 2024, the Company had total assets of $1.4 billion and total liabilities of $697.3 million. The Company’s net debt (net of unamortized debt issuance costs and cash and cash equivalents) to total market capitalization as of June 30, 2024 was approximately 30% and the Company’s net debt, less securities to total market capitalization as of June 30, 2024 was approximately 28%. As of June 30, 2024, the Company had ten mortgages totaling $46.6 million due within the next 12 months and twenty-three mortgages totaling $117.0 million within the next 18 months. The Company believes that it has the ability to meet its obligations and to generate funds for new investments.

Current wording

As of September 30, 2024, the Company had total assets of $1.5 billion and total liabilities of $643.1 million. The Company’s net debt (net of unamortized debt issuance costs and cash and cash equivalents) to total market capitalization as of September 30, 2024 was approximately 22% and the Company’s net debt, less securities to total market capitalization as of September 30, 2024 was approximately 21%. As of September 30, 2024, the Company had eighteen mortgages totaling $84.4 million due within the next 12 months and twenty-four mortgages totaling $120.8 million within the next 18 months. The Company believes that it has the ability to meet its obligations and to generate funds for new investments.