UMH PROPERTIES INC

Previous wording

The Company is a Maryland corporation that operates as a self-administered, self-managed REIT with headquarters in Freehold, New Jersey. The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured home spaces on an annual or month-to-month basis to residents. The Company also leases manufactured homes to residents and, through its wholly-owned taxable REIT subsidiary, S&F, sells and finances the sale of manufactured homes to residents and prospective residents of our communities and for placement on customers’ privately-owned land. During 2022, the Company also formed an opportunity zone fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The Company currently holds a 77% percentage interest in the opportunity zone fund.

Current wording

The Company is incorporated in Maryland and operates as a self-administered, self-managed REIT with its headquarters in Freehold, New Jersey. The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured home spaces on an annual or month-to-month basis to residents. The Company also leases manufactured homes to residents and, through its wholly-owned taxable REIT subsidiary, S&F, sells and finances the sale of manufactured homes to residents and prospective residents of our communities and for placement on customers’ privately-owned land. During 2022, the Company also formed an opportunity zone fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The Company holds a 77% interest in its OZ Fund.

Previous wording

As of December 31, 2023, we owned and operated 135 manufactured home communities (including two communities acquired through the opportunity zone fund) containing approximately 25,800 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. UMH has continued to execute our growth strategy of purchasing well-located communities in our target markets, including the energy-rich Marcellus and Utica Shale regions. During the year ended December 31, 2023, we purchased one community located in Georgia, for an aggregate purchase price of $3.7 million, through our opportunity zone fund. This acquisition added 118 developed homesites to our portfolio. The Company also operates two communities in Florida owned by the Company’s joint venture with Nuveen Real Estate that was originally formed in December 2021. On November 30, 2023, the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new joint venture entity focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. As with the original 2021 joint venture entity, UMH has a 40% stake in the new joint venture entity and serves as the managing member, developer and operating member. The Honey Brook community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres.

Current wording

As of December 31, 2024, we operated 139 manufactured home communities, 137 of which are communities in which we own either a 100% or majority interest, containing a total of approximately 26,300 developed homesites, on which approximately 10,300 Company-owned rental homes are situated. The 139 communities include (i) 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), (ii) two communities in Tennessee, the Countryside Village expansion (Duck River Estates) and the Allentown expansion (River Bluff Estates), that were previously part of other Company-owned communities but are now considered separate communities, and (iii) two communities acquired through the Company’s OZ Fund. These 139 communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, South Carolina, Florida and Georgia. UMH has continued to execute our growth strategy of purchasing well-located communities in our target markets, including the energy-rich Marcellus and Utica Shale regions. On November 30, 2023, the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new joint venture entity focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. As with the original 2021 joint venture entity, UMH has a 40% stake in the new joint venture entity and serves as the managing member, developer and operating member. The Honey Brook community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. This community is expected to open at the end of the second quarter of 2025 with our first two homes on order currently.

Previous wording

The Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of manufactured homes, the sale and finance of manufactured homes and the brokering of home sales, self-storage leases, oil and gas leases, cable service agreements and from appreciation in the values of the manufactured home communities and vacant land owned by the Company. In addition, the Company receives property management and other fees from its joint venture arrangements with Nuveen and from its opportunity zone fund. Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources.

Current wording

The Company earns income from the operation of its manufactured home communities which includes leasing of manufactured homesites, the rental of manufactured homes, the sale and finance of manufactured homes, the brokering of third party home sales, self-storage leases, oil and gas leases, cable service agreements and from appreciation in the values of the manufactured home communities and vacant land owned by the Company. In addition, the Company receives property management and other fees from its joint venture arrangements with Nuveen and from its opportunity zone fund. Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources.

Previous wording

Occupancy in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2023, total income increased 13% from the prior year due to the acquisition and rental programs, rent increases and the growth of our sales business. Community NOI (as defined below) increased 14% from the prior year. Overall occupancy increased 210 basis points from 84.6% as of December 31, 2022 to 86.7% as of December 31, 2023. Overall occupancy includes communities acquired in 2023 and 2022 with an average occupancy of 60%. Same property occupancy, which includes communities owned and operated as of January 1, 2022, increased 230 basis points from 86.2% as of December 31, 2022 to 88.5% as of December 31, 2023. (Unless expressly indicated, information in this report with respect to the Company’s properties, including financial and operating results for the year ended December 31, 2023, does not include the properties owned by the Company’s joint venture with Nuveen.)

Current wording

Occupancy in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2024, total income increased 9% from the prior year due to our rental program, rent increases and the growth of our sales business. Community NOI (as defined below) increased 10% from the prior year. Overall occupancy increased 60 basis points from 86.7% as of December 31, 2023 to 87.3% as of December 31, 2024. Same property occupancy, which includes communities owned and operated as of January 1, 2023, increased 70 basis points from 87.1% as of December 31, 2023 to 87.8% as of December 31, 2024. (Unless expressly indicated, information in this report with respect to the Company’s properties, including financial and operating results for the year ended December 31, 2024, does not include the properties owned by the Company’s joint venture with Nuveen.)

Previous wording

The macro-economic environment and current housing fundamentals continue to favor home rentals. Due to climbing mortgage rates, 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. During 2023, our portfolio of rental homes increased by 871 homes, net. Occupied rental homes represent approximately 42.0% of total occupied sites. Occupancy in rental homes continues to be strong and was at 94.0% as of December 31, 2023. We 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. According to the National Association of Realtors, reported sales of existing homes fell to 4.06 million in 2024, the lowest level in nearly 30 years. We believe 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. During 2024, our portfolio of rental homes increased by 364 homes, net of rental home sales. Occupied rental homes represent approximately 43.0% of total occupied sites. Occupancy in rental homes continues to be strong and registered at 94.0% as of December 31, 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 holds a portfolio of marketable equity securities of other REITs with a fair value of $34.5 million as of December 31, 2023, representing 1.9% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio provides the Company with additional diversification, liquidity and income. As of December 31, 2023, 99% consisted of REIT common stocks and 1% of the Company’s portfolio consisted of REIT preferred stocks. The Company does not intend to increase its investment in the REIT securities portfolio.

Current wording

The Company holds a portfolio of marketable equity securities of other REITs with a fair value of $31.9 million as of December 31, 2024, representing 1.6% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio provides the Company with additional diversification, liquidity and income. As of December 31, 2024, 99% consisted of REIT common stocks and 1% of the Company’s portfolio consisted of REIT preferred stocks. The Company does not intend to increase its investment in the REIT securities portfolio.

Previous wording

The Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The Company’s weighted average yield on the securities portfolio was approximately 6.7% at December 31, 2023. At December 31, 2023, the Company had unrealized losses of $39.7 million in its REIT securities portfolio. During 2023, the Company sold positions in securities, generating a net realized gain of $183,000.

Current wording

The Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The Company’s weighted average yield on the securities portfolio was approximately 4.5% at December 31, 2024. At December 31, 2024, the Company had unrealized losses of $38.5 million in its REIT securities portfolio. During 2024, the Company sold positions in securities, generating a net realized loss of $3.8 million.

Previous wording

The Company continues to strengthen its balance sheet. During the year ended December 31, 2023, through an At-the-Market Sale Program for our Common Stock that was established in April 2023 (the “2023 Common ATM Program”) and a prior At-the-Market Sale Program established in 2022, the Company issued and sold a total of 9.4 million shares of our Common Stock, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses. Additionally, during 2023 the Company raised approximately $9.0 million in new capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”).

Current wording

The Company continues to strengthen its balance sheet. During the year ended December 31, 2024, through an at-the-market sale program for our Common Stock that was established in March 2024 (the “March 2024 Common ATM Program”), an at-the-market sale program for our Common Stock that was established in September 2024 (the “September 2024 Common ATM Program”) and a prior at-the-market sale program for our Common Stock established in 2023 (collectively, the “Common ATM Programs”), the Company issued and sold a total of 12.5 million shares of our Common Stock, generating gross proceeds of $224.5 million and net proceeds of $220.6 million, after offering expenses. Additionally, during 2024 the Company raised approximately $10.2 million in new capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”).

Previous wording

During the year ended December 31, 2023, through an At-the-Market Sale Program for our Preferred Stock that was established in January 2023 (the “2023 Preferred ATM Program”) and a prior At-the-Market Sale Program established in 2020, the Company issued and sold a total of approximately 2.6 million shares of our Series D Preferred Stock, generating gross proceeds of $56.7 million and net proceeds of $55.7 million, after offering expenses.

Current wording

During the year ended December 31, 2024, through an at-the-market sale program for our Preferred Stock that was established in January 2023 (the “2023 Preferred ATM Program,” and together with the Common ATM Programs, the “At-the-Market Sale Programs”), the Company issued and sold a total of approximately 1.2 million shares of our Series D Preferred Stock, generating gross proceeds of $28.5 million and net proceeds of $28.0 million, after offering expenses.

Previous wording

The Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained through the issuance of common and preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

Current wording

The Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained through the issuance of common stock, preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

Previous wording

On December 31, 2023, the Company had approximately $57.3 million in cash and cash equivalents and $110 million available on our credit facility, with an additional $400 million potentially available pursuant to an accordion feature. We also had $143.5 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory and $55 million available on our lines of credit secured by rental homes and rental homes leases. Subsequent to year end, the Company paid down approximately $20 million on its credit facility (see Note 17).

Current wording

On December 31, 2024, the Company had approximately $99.7 million in cash and cash equivalents and $260 million available on our credit facility. We also had $138 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory and $55 million available on our lines of credit secured by rental homes and rental home leases.

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 investing in physical improvements, including adding rental homes onto otherwise vacant sites. In 2022 and 2023, we added a total of eight manufactured home communities to our portfolio, encompassing approximately 1,600 developed sites. These manufactured home communities were acquired with an average occupancy rate of 60%. The Company will utilize the rental home program to increase occupancy rates and improve operating results at these communities. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through 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. There is no guarantee that acquisition opportunities will continue to materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of the joint venture with Nuveen will depend on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties.

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. As part of this plan, we intend to seek opportunities, through our OZ Fund, to acquire communities that require substantial capital investment and are located in qualified opportunity zones. 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. There is no guarantee that any of these additional opportunities will continue to materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of the joint venture depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made.

Previous wording

In addition to the acquisitions shown above, in November 2023, 61 acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million, was contributed to an entity formed under our joint venture with Nuveen for the purpose of developing a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company was reimbursed by Nuveen for 60% of the carrying value of this land.

Current wording

In addition, in November 2023, 61 acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million, was contributed to an entity formed under our joint venture with Nuveen for the purpose of developing a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company was reimbursed by Nuveen for 60% of the carrying value of this land. This community is expected to open at the end of the second quarter of 2025 with our first two homes currently on order.

Previous wording

Rental and related income increased from $170.4 million for the year ended December 31, 2022 to $189.7 million for the year ended December 31, 2023, or 11%. This increase was primarily due to the acquisitions made during 2022, as well as increases in rental rates, same property occupancy and additional rental homes. During 2023, the Company raised rental rates by 5% to 6% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 86.7% and 84.6% at December 31, 2023 and 2022, respectively. Overall occupancy includes communities acquired in 2023 and 2022 which had an average occupancy of 60%, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2023, we had approximately 10,000 rental homes with an occupancy rate of 94.0%. We continue to evaluate the demand for rental homes and will invest in additional homes as demand dictates.

Current wording

Rental and related income increased from $189.7 million for the year ended December 31, 2023 to $207.0 million for the year ended December 31, 2024, or 9%. This increase was due to increases in rental rates, same property occupancy and additional rental homes. During 2024, the Company raised rental rates by 5% to 6% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 87.3% and 86.7% at December 31, 2024 and 2023, respectively. Demand for rental homes continues to be strong. As of December 31, 2024, we had approximately 10,300 rental homes with an occupancy rate of 94.0%. We continue to evaluate the demand for rental homes and will invest in additional homes as demand dictates.

Previous wording

Community NOI increased from $94.8 million for the year ended December 31, 2022 to $108.4 million for the year ended December 31, 2023, or 14%. This increase was primarily due to the acquisitions during 2022, and an increase in rental rates, occupancy and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) improved 150 basis points from 44.4% in 2022 to 42.9% for 2023. 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 from $108.4 million for the year ended December 31, 2023 to $119.7 million for the year ended December 31, 2024, or 10%. This increase was primarily due to the increases in rental rates, occupancy and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) improved 70 basis points from 42.9% in 2023 to 42.2% for 2024. 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 from $25.3 million for the year ended December 31, 2022 to $31.2 million for the year ended December 31, 2023, or 23%. The total number of homes sold increased from 301 homes in 2022 to 341 homes in 2023. There were a 14% increase in new homes sold from 144 new homes sold in 2022 to 164 new homes sold in 2023. The Company’s average sales price increased 8% in 2023 and was approximately $91,000 for the year ended December 31, 2023 and $84,000 for the year ended December 31, 2022. Cost of sales of manufactured homes increased from $17.6 million for the year ended December 31, 2022 to $21.1 million for the year ended December 31, 2023, or 20%. The gross profit percentage was 32% and 31% for 2023 and 2022, respectively. Selling expenses increased from $5.3 million for the year ended December 31, 2022 to $6.9 million for the year ended December 31, 2023, or 32%. Gain from the sales operations, excluding interest on the financing of inventory, increased 24% and amounted to a gain of $3.1 million and $2.5 million for the year ended December 31, 2023 and 2022, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed. Despite an increase in mortgage rates, home prices have continued their rise as fewer sellers are listing homes and inventories decline resulting in the inherent relative affordability of our property type becoming more and more apparent, which should result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the fundamental need for affordable housing. The Company believes that sales of new homes produce new rental revenue and represent an investment in the upgrading of our communities.

Current wording

Sales of manufactured homes increased from $31.2 million for the year ended December 31, 2023 to $33.5 million for the year ended December 31, 2024, or 8%. The total number of homes sold increased 16% from 341 homes in 2023 to 394 homes in 2024. Cost of sales of manufactured homes increased from $21.1 million for the year ended December 31, 2023 to $21.9 million for the year ended December 31, 2024, or 4%. The gross profit percentage was 35% and 32% for the years ended December 31, 2024 and 2023, respectively. Selling expenses remained relatively stable for the years ended December 31, 2023 and 2024. Gain from the sales operations, excluding interest on the financing of inventory, increased 53% and amounted to a gain of $4.8 million and $3.1 million for the years ended December 31, 2024 and 2023, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed. Despite high mortgage rates, home prices have continued to rise as fewer sellers are listing homes and inventories decline resulting in the inherent relative affordability of our property type becoming more and more apparent, which should result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the fundamental need for affordable housing. The Company believes that sales of new homes produce new rental revenue and represent an investment in the upgrading of our communities.

Previous wording

Depreciation expense increased from $45.1 million for the year ended December 31, 2021 to $48.8 million for the year ended December 31, 2022, or 8%. This increase was primarily due to the acquisitions and the increase in rental homes during 2022 and 2021.

Current wording

Depreciation expense increased from $55.7 million for the year ended December 31, 2023 to $60.2 million for the year ended December 31, 2024, or 8%. This increase was primarily due to the increases in rental homes during 2024 and 2023.

Previous wording

Interest income increased from $3.4 million for the year ended December 31, 2021 to $4.1 million for the year ended December 31, 2022, or 22%. This increase was primarily due to an increase in the average balance of notes receivable from $48.6 million for the year ended December 31, 2021 to $58.6 million for the year ended December 31, 2022.

Current wording

Interest income increased from $5.0 million for the year ended December 31, 2023 to $7.1 million for the year ended December 31, 2024, or 43%. This increase was primarily due to an increase in the average balance of notes receivable from $71.5 million for the year ended December 31, 2023 to $83.9 million for the year ended December 31, 2024 and interest earned on excess cash during 2024. The weighted average interest rate earned on notes receivables increased 10 basis points and was 7.1% and 7.0% as of December 31, 2024 and 2023, respectively.

Previous wording

Dividend income decreased from $5.1 million for the year ended December 31, 2021 to $2.9 million for the year ended December 31, 2022, or 43%. This decrease was primarily due to reduced dividends from the reduction of our securities holdings. Dividends received from our marketable securities investments were at a weighted average yield of approximately 7.1% and 4.4% as of December 31, 2022 and 2021, respectively.

Current wording

Dividend income decreased from $2.3 million for the year ended December 31, 2023 to $1.5 million for the year ended December 31, 2024, or 37%. This decrease was due to reduced dividends from a combination of our smaller securities portfolio and the weighted average yield on our dividends received from our marketable securities investments. The weighted average yield decreased 220 basis points from 6.7% in 2023 to 4.5% in 2024.

Previous wording

The Company recognized a net gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022, primarily as a result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The Company recognized a gain on sales of marketable securities of $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair value of marketable securities decreased from an increase of $25.1 million for the year ended December 31, 2021 to a decrease of $21.8 million for the year ended December 31, 2022. As of December 31, 2022, the Company had total net unrealized losses of $36.1 million in its REIT securities portfolio.

Current wording

The Company recognized a realized loss on sales of marketable securities of $3.8 million for the year ended December 31, 2024. The Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The increase (decrease) in fair value of marketable securities amounted to an increase of $1.2 million and a decrease of $3.6 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had total net unrealized losses of $38.5 million in its REIT securities portfolio.

Previous wording

Rental and related income increased from $159.0 million for the year ended December 31, 2021 to $170.4 million for the year ended December 31, 2022, or 7%. This increase was due to the acquisitions during 2021 and 2022, as well as an increase in rental rates and additional rental homes. During 2022, the Company raised rental rates by 4% to 5% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 84.6% and 86.0% at December 31, 2022 and 2021, respectively. Overall occupancy includes communities acquired in 2022 and 2021, which had an average occupancy of 66% and 59%, respectively, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2022, we had approximately 9,100 rental homes with an occupancy rate of 93.3%.

Current wording

Rental and related income increased from $170.4 million for the year ended December 31, 2022 to $189.7 million for the year ended December 31, 2023, or 11%. This increase was primarily due to the acquisitions made during 2022, as well as increases in rental rates, same property occupancy and additional rental homes. During 2023, the Company raised rental rates by 5% to 6% at most communities. Overall occupancy was 86.7% and 84.6% at December 31, 2023 and 2022, respectively. Overall occupancy includes communities acquired in 2023 and 2022 which had an average occupancy of 60%, at the time of acquisition. As of December 31, 2023, we had approximately 10,000 rental homes with an occupancy rate of 94.0%.

Previous wording

Community NOI increased from $91.0 million for the year ended December 31, 2021 to $94.8 million for the year ended December 31, 2022, or 4%. This increase was primarily due to the acquisitions during 2021 and 2022 and an increase in rental rates and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) was 42.8% in 2021 compared to 44.4% for 2022.

Current wording

Community NOI increased from $94.8 million for the year ended December 31, 2022 to $108.4 million for the year ended December 31, 2023, or 14%. This increase was primarily due to the acquisitions during 2022, and an increase in rental rates, occupancy and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) improved 150 basis points from 44.4% in 2022 to 42.9% for 2023.

Previous wording

Sales of manufactured homes decreased from $27.1 million for the year ended December 31, 2021 to $25.3 million for the year ended December 31, 2022, or 6%. The total number of homes sold in 2022 was 301 homes as compared to 370 homes in 2021. There were 144 new homes sold in 2022 as compared to 182 in 2021. The Company’s average sales price was approximately $84,000 and $73,000 for the years ended December 31, 2022 and 2021, respectively. Cost of sales of manufactured homes decreased from $20.1 million for the year ended December 31, 2021 to $17.6 million for the year ended December 31, 2022, or 13%. The gross profit percentage was 31% and 26% for 2022 and 2021, respectively. Selling expenses increased from $4.8 million for the year ended December 31, 2021 to $5.3 million for the year ended December 31, 2022, or 10%. 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 a gain of $2.0 million for the year ended December 31, 2022 and 2021, respectively.

Current wording

Sales of manufactured homes increased from $25.3 million for the year ended December 31, 2022 to $31.2 million for the year ended December 31, 2023, or 23%. The total number of homes sold increased from 301 homes in 2022 to 341 homes in 2023. There was a 14% increase in new homes sold from 144 new homes sold in 2022 to 164 new homes sold in 2023. The Company’s average sales price increased 8% in 2023 and was approximately $91,000 for the year ended December 31, 2023 and $84,000 for the year ended December 31, 2022. Cost of sales of manufactured homes increased from $17.6 million for the year ended December 31, 2022 to $21.1 million for the year ended December 31, 2023, or 20%. The gross profit percentage was 32% and 31% for 2023 and 2022, respectively. Selling expenses increased from $5.3 million for the year ended December 31, 2022 to $6.9 million for the year ended December 31, 2023, or 32%. Gain from the sales operations, excluding interest on the financing of inventory, increased 24% and amounted to a gain of $3.1 million and $2.5 million for the years ended December 31, 2023 and 2022, respectively.

Previous wording

The Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The Company recognized a realized gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022 primarily as a result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The decrease in fair value of marketable securities amounted to $3.6 million and $21.8 million for the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had total net unrealized losses of $39.7 million in its REIT securities portfolio.

Current wording

The Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The Company recognized a realized gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022 primarily as a result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The decrease in fair value of marketable securities amounted to $3.6 million and $21.8 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had total net unrealized losses of $39.7 million in its REIT securities portfolio.

Previous wording

The Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions, capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the DRIP, and access to the capital markets, including through its Common and Preferred ATM Programs. 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, the Company implemented a new 2023 Preferred ATM Program on January 10, 2023 that allows the Company to offer and sell shares of the Company’s 6.375% Series D Cumulative Redeemable Preferred Stock having an aggregate sales price of up to $100 million from time to time through its sales agent, B. Riley Securities, Inc. In addition, on April 4, 2023, the Company implemented a new 2023 Common ATM Program that 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 for the 2023 Common ATM Program. Additionally, the Company amended its unsecured line of credit to expand available borrowing capacity from $100 million to $180 million and expanded/obtained new loans and lines of credit secured by rental homes, rental homes leases and notes receivable.

Current wording

The Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions, capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the DRIP, and access to the capital markets, including sales of Common Stock and Series D Preferred Stock through its At-the-Market Sale Programs. 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 At-the-Market Sale Programs. In order to provide continued financial flexibility to opportunistically access the capital markets, on March 12, 2024, the Company implemented its March 2024 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 the use of its successful March 2024 Common ATM Program and implemented a new September 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, 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 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. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through our joint venture relationship 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. There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of our joint venture will depend on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made.

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. As part of this plan, we intend to continue to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in qualified opportunity zones. In addition, on behalf of our joint venture with Nuveen Real Estate, we will continue to seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of our joint venture depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made.

Previous wording

The Company continues to strengthen its capital and liquidity positions. During the year ended December 31, 2023, the Company issued and sold 9.4 million shares of Common Stock through our Common ATM Programs at a weighted average price of $15.81 per share, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses.

Current wording

The Company continues to strengthen its capital and liquidity positions. During the year ended December 31, 2024, the Company issued and sold 12.5 million shares of Common Stock through our Common ATM Programs at a weighted average price of $17.92 per share, generating gross proceeds of $224.5 million and net proceeds of $220.6 million, after offering expenses.

Previous wording

Through our Preferred ATM Programs, the Company issued and sold a total of 2.6 million shares of our Series D Preferred Stock generating gross proceeds of $56.7 million and net proceeds after offering expenses of $55.7 million during the year ended December 31, 2023.

Current wording

Through our 2023 Preferred ATM Program, the Company issued and sold a total of 1.2 million shares of our Series D Preferred Stock generating gross proceeds of $28.5 million and net proceeds after offering expenses of $28.0 million during the year ended December 31, 2024.

Previous wording

As of December 31, 2023, $37.0 million of Common Stock remained available for sale under the 2023 Common ATM Program and $46.1 million in shares of Series D Preferred Stock remained available for sale under the 2023 Preferred ATM Program. Subsequent to year end, the Company issued and sold 1.2 million shares of Common Stock under the 2023 Common ATM Program for gross proceeds of $19.2 million. Subsequent to year end, the Company issued and sold a total of 121,000 shares of Preferred Stock under the 2023 Preferred ATM Program for gross proceeds of $2.8 million.

Current wording

As of December 31, 2024, $89.8 million of Common Stock remained available for sale under the September 2024 Common ATM Program and $17.6 million in shares of Series D Preferred Stock remained available for sale under the 2023 Preferred ATM Program. Subsequent to year end, the Company issued and sold 270,000 shares of Common Stock under the September 2024 Common ATM Program for gross proceeds of $4.9 million. Subsequent to year end, the Company issued and sold a total of 49,000 shares of Preferred Stock under the 2023 Preferred ATM Program for gross proceeds of $1.1 million.

Previous wording

In addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price of approximately 95% of market. During 2023, amounts received under the DRIP, including dividends reinvested of $2.7 million, totaled $9.0 million. The Company issued a total of 612,000 shares under the DRIP during 2023.

Current wording

In addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price of approximately 95% of market. During 2024, amounts received under the DRIP, including dividends reinvested of $3.2 million, totaled $10.2 million. The Company issued a total of 623,000 shares under the DRIP during 2024.

Previous wording

The Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $35 million revolving line of credit for the financing of homes that was not utilized at December 31, 2023, revolving credit facilities totaling $108.5 million to finance inventory purchases, that were not utilized at December 31, 2023 and $55.0 million available on our lines of credit secured by rental homes and rental homes leases.

Current wording

The Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $35 million revolving line of credit for the financing of homes that was not utilized at December 31, 2024, revolving credit facilities totaling $103.0 million to finance inventory purchases, that were not utilized at December 31, 2024 and $55.0 million available on our lines of credit secured by rental homes and rental homes leases.

Previous wording

As of December 31, 2023, the Company had $57.3 million of cash and cash equivalents and marketable securities of $34.5 million. The Company owned 135 communities (including two communities acquired through the opportunity zone fund) of which 48 are unencumbered. The Company’s non-mortgaged properties and marketable securities provide us with additional liquidity. As of December 31, 2023, the Company also held a 40% equity interest in the entities formed under its joint venture with Nuveen Real Estate, which own two newly developed communities that are unencumbered and one community in the process of being developed. The Company believes that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available on the lines of credit, together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations over the next several years.

Current wording

As of December 31, 2024, the Company had $99.7 million of cash and cash equivalents and marketable securities of $31.9 million. The Company operated 139 communities (including 137 communities in which the Company owned either a 100% interest or a majority interest and 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

The Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through mortgages. During 2023, total investment property, including rental homes, increased 11% or $147.5 million. The Company acquired one manufactured home community totaling 118 developed sites at a purchase price of $3.7 million through the Company’s opportunity zone fund. See Note 3 of the Notes to Consolidated Financial Statements for additional information on our acquisitions and Note 7 of the Notes to Consolidated Financial Statements for related debt transactions. The Company continues to evaluate acquisition opportunities. The funds for these acquisitions (including the Company’s 40% share of acquisition costs that may be incurred pursuant to its joint venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the DRIP, and private placements or public offerings of debt, Common Stock or Preferred Stock, including under the Common ATM Program or the Preferred ATM Program. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.

Current wording

The Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through mortgages. During 2024, total investment property, including rental homes, increased 8% or $130.1 million. We have also expanded three communities for a total of 190 additional home sites. See Note 3 of the Notes to Consolidated Financial Statements for additional information on our acquisitions and Note 7 of the Notes to Consolidated Financial Statements for related debt transactions. The Company continues to evaluate acquisition opportunities. The funds for these acquisitions (including the Company’s 40% share of acquisition costs that may be incurred pursuant to its joint venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the DRIP, and private placements or public offerings of debt, Common Stock or Preferred Stock, including under the September 2024 Common ATM Program or the 2023 Preferred ATM Program or any other at-the-market sale programs that the Company may commence. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.

Previous wording

The Company owned approximately 10,000 rental homes, or approximately 39% of our total homesites as of December 31, 2023. During 2023, our rental home portfolio increased by 871 homes, net of rental home sales, or $93.7 million. The Company markets these rental homes for sale to existing residents. The Company estimates that in 2024 it will order approximately 800 to 900 manufactured homes to use as rental units at its properties for a total invoice cost of approximately $60 million to $65 million. Rental home rates on new homes range from approximately $790 to $2,000 per month, including lot rent, depending on size, location and market conditions. During 2023, the Company also invested approximately $30 million in other improvements to its communities.

Current wording

The Company owned approximately 10,300 rental homes, or approximately 40% of our total homesites as of December 31, 2024. During 2024, our rental home portfolio increased by 565 homes and we sold 201 rental homes, representing a net increase of $49.8 million. The Company markets these rental homes for sale to existing residents. The Company estimates that in 2025 it will order approximately 700 to 800 manufactured homes to use as rental units at its properties for a total invoice cost of approximately $55 million to $60 million. Rental home rates on new homes range from approximately $850 to $2,000 per month, including lot rent, depending on size, location and market conditions. During 2024, the Company also invested approximately $42 million in other improvements to its communities.

Previous wording

Net cash provided by (used in) operating activities increased by $127.3 million in 2023 primarily due to a decrease in inventory. Net cash provided by (used in) operating activities decreased by $72.4 million in 2022 primarily due to an increase in inventory.

Current wording

Net cash provided by (used in) operating activities decreased by $38.5 million in 2024 primarily due to an increase in Community NOI and an increase in inventory. Net cash provided by (used in) operating activities increased by $127.3 million in 2023 primarily due to a decrease in inventory.

Previous wording

Net cash used in investing activities increased by $40.7 million in 2023, primarily due to the purchase of investment property and equipment and additions to land development. Net cash used in investing activities increased by $30.5 million in 2022, primarily due to the purchase of manufactured home communities and investment property and equipment, partially offset by the proceeds from sales of marketable securities.

Current wording

Net cash used in investing activities decreased by $25.7 million in 2024, primarily due to the decrease in purchase of investment property and equipment. Net cash used in investing activities increased by $40.7 million in 2023, primarily due to the purchase of investment property and equipment and additions to land development and the decrease in proceeds from sales of marketable securities.

Previous wording

Net cash provided by financing activities decreased by $77.6 million in 2022 to $48.0 million. The Company obtained new debt financing totaling $238.9 million, net of principal repayments and financing costs, through mortgages, short-term borrowings and the issuance in Israel of our Series A Bonds. The Company issued and sold 5.0 million shares of its Common Stock during 2022 through the Common ATM Programs, raising net proceeds of approximately $100.8 million. The Company also received $7.8 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 406,000 shares of its Series D Preferred Stock during 2022 through the 2020 Preferred ATM Program, raising net proceeds of approximately $9.1 million. During 2022, the Company redeemed all 9.9 million issued and outstanding shares of its 6.75% Series C Preferred Stock for $247.1 million. During 2022, the Company distributed to our common shareholders a total of $43.4 million, including dividends reinvested. In addition, the Company also paid $24.6 million in preferred dividends during 2022.

Current wording

Net cash provided by financing activities increased by $33.6 million in 2024 to $102.6 million. The Company issued and sold 12.5 million shares of its Common Stock during 2024 through the Common ATM Programs, raising net proceeds of approximately $220.6 million. The Company also received $10.2 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 1.2 million shares of its Series D Preferred Stock during 2024 through the 2023 Preferred ATM Program, raising net proceeds of approximately $28.0 million. During 2024, the Company distributed to our common shareholders a total of $62.3 million, including dividends reinvested. In addition, the Company also paid $19.2 million in preferred dividends during 2024. The Company also made principal payments on its mortgages and loans, net of new debt financing, totaling $77.7 million.

Previous wording

Net cash provided by financing activities increased by $21.1 million in 2023 to $69.1 million. The Company issued and sold 9.4 million shares of its Common Stock during 2023 through the Common ATM Programs, raising net proceeds of approximately $145.8 million. The Company also received $9.0 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.6 million shares of its Series D Preferred Stock during 2023 through the Preferred ATM Programs, raising net proceeds of approximately $55.7 million. During 2023, the Company distributed to our common shareholders a total of $51.7 million, including dividends reinvested. In addition, the Company also paid $16.7 million in preferred dividends during 2023. The Company also made principal payments on its mortgages and loans, net of new debt financing, totaling $73.8 million.

Current wording

Net cash provided by financing activities increased by $21.1 million in 2023 to $69.1 million. The Company issued and sold 9.4 million shares of its Common Stock during 2023 through its then-current Common Stock at-the-market sale programs, raising net proceeds of approximately $145.8 million. The Company also received $9.0 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.6 million shares of its Series D Preferred Stock during 2023 through the 2023 Preferred ATM Program, raising net proceeds of approximately $55.7 million. During 2023, the Company distributed to our common shareholders a total of $51.7 million, including dividends reinvested. In addition, the Company also paid $16.7 million in preferred dividends during 2023. The Company also made principal payments on its mortgages and loans, net of new debt financing, totaling $73.8 million.

Previous wording

Cash flows were primarily used for purchases of manufactured home communities, capital improvements, payment of dividends, purchase of inventory and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing communities. The Company meets maturing mortgage obligations by using a combination of positive cash flows and refinancing. The dividend payments were primarily made from cash flows from operations.

Current wording

Cash flows were primarily used for capital improvements, payment of dividends, purchase of inventory and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing communities. The Company meets maturing mortgage obligations by using a combination of positive cash flows and refinancing. The dividend payments were primarily made from cash flows from operations.

Previous wording

Cash flows used for capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured home communities that provide water or sewer service. Excluding expansions and rental home purchases, the Company is budgeting approximately $20 to $30 million in capital improvements for 2024.

Current wording

Excluding expansions and rental home purchases, the Company is budgeting approximately $20 to $30 million in capital improvements for 2025.