UMH Properties Reports Strong Growth Amid Challenges

UMH Properties ((UMH)) has held its Q2 earnings call. Read on for the main highlights of the call.

UMH Properties’ recent earnings call painted a picture of robust growth tempered by some challenges. The company reported significant increases in funds from operations (FFO), dividends, and revenue, alongside record sales of manufactured homes and a rise in community value. However, these positive developments were somewhat offset by the adverse effects of higher interest rates on earnings per share, a slight dip in rental home occupancy, and increased community operating expenses.

Normalized FFO Growth

UMH Properties reported a 16% increase in normalized funds from operations (FFO), rising from $16.8 million in the second quarter of 2024 to $19.5 million in the same period of 2025. This growth underscores the company’s strong financial performance and its ability to generate cash flow, which is crucial for sustaining operations and funding future investments.

Dividend Increase

The company announced a 4.7% increase in its quarterly common stock dividend, moving from $0.215 per share to $0.225 per share. This adjustment reflects an annual dividend rate of $0.90 per share, signaling the company’s commitment to returning value to its shareholders and confidence in its financial health.

Revenue Growth

UMH Properties experienced a 10% increase in total revenue, climbing from $60.3 million in the second quarter of last year to $66.6 million this year. This growth is indicative of the company’s successful strategies in expanding its market presence and enhancing its revenue streams.

Strong Sales of Manufactured Homes

The quarter saw record gross sales of manufactured homes, totaling $10.5 million, with a 19% increase compared to the previous year. This surge in sales highlights the growing demand for manufactured homes and UMH’s effective sales strategies.

Community Appraisal Value Increase

UMH refinanced ten communities for $101.4 million, with an appraised value of $164 million, reflecting a value creation of $97 million. This significant increase in community value demonstrates the company’s strategic investments and successful management of its property portfolio.

Occupancy and Revenue Growth

The company reported an increase of 251 units in same-property occupancy over the previous year, with same-property rental and related income rising by 8%. This growth in occupancy and income underscores UMH’s effective property management and its ability to attract and retain tenants.

Interest Rate Impact

Earnings per share were affected by the issuance of $101.4 million in new GSE debt at a 5.855% interest rate. This highlights the challenges posed by rising interest rates, which can impact profitability and financial planning.

Rental Home Occupancy Decline

Rental home occupancy slightly declined to 94.4% from 95% last year. While still maintaining a high occupancy rate, this decline suggests potential areas for improvement in tenant retention strategies.

Higher Community Operating Expenses

Community operating expenses increased by 7% during the quarter, driven by factors such as higher payroll costs and real estate taxes. This rise in expenses highlights the need for cost management strategies to maintain profitability.

Forward-Looking Guidance

Looking ahead, UMH Properties remains optimistic about its growth prospects. The company reported a normalized FFO of $0.23 per share for both the second quarters of 2024 and 2025, with a notable increase in total revenue and rental income. The successful conversion of new homes to revenue-generating rental units and strategic investments in energy-rich regions are expected to continue yielding substantial returns.

In summary, UMH Properties’ earnings call revealed a strong financial performance with significant growth in key areas, despite some challenges. The company’s strategic initiatives and commitment to shareholder value position it well for future growth, making it an attractive prospect for investors.