UMH Properties, Inc. Stock

Good morning and welcome to UMH Properties Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel.

Thank you very much, operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited second quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.reit.

We would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties.

Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's second quarter 2026 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

In addition, during today's call, we will be discussing non-GAAP financial metrics. Reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as the explanatory and cautioning language are included in our earnings release, our supplemental information and our historical SEC filings.

Having said that, I would like to introduce management with us today: Eugene Landy, Founder and Chairman; Samuel Landy, President and Chief Executive Officer; Kevin Miller, Executive Vice President and Chief Financial Officer; Brett Taft, Executive Vice President and Chief Operating Officer; Jim Lykins, Vice President of Capital Markets; and Daniel Landy, Executive Vice President.

It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you, Craig, and good morning, everyone. We are pleased to report another strong quarter that was highlighted by operational performance and growing normalized FFO per share.

Normalized FFO per share for the second quarter of 2026 was $0.25 per share as compared to $0.23 per share last year, representing an increase of 9%. Our performance is a testament to the foundation we have laid over the past few years. Investments that we have made in value-add acquisitions and expansions are starting to positively impact the bottom line. We anticipate continued earnings growth throughout the remainder of the year.

We are maintaining our normalized FFO guidance range at $0.98 to $1.04 per share, keeping our midpoint at $1.01 per share.

I want to begin by telling you that since at least 1987, there have been three things we have always worked on.

Number one, managing inventory of vacant lots, so we could grow sales income and rental income. We do this by: A, acquiring old homes in our communities and replacing them with new homes; B, obtaining approvals to build additional loss on vacant land; C, acquiring communities with vacancies and filling the sites with rentals or homes for sale.

The stock market values UMH based primarily on our FFO, and I believe doing so fails to value something we have spent almost 40 years building, which is our pipeline of vacant and fully approved lots. This is a significant part of UMH that cannot be valued based on current income.

Two, the financing of homes for our retail customers. This, reached a nadir in 2009, which required us to pivot to a rental home model in order to continue to grow revenue and occupancy. The ROAD to Housing Act dramatically improves the potential for financing sales for our customers' homes, which should dramatically increase home sales.

Three, improvements in the product. The ROAD to Housing Act will result in major improvements to manufactured homes, including the removal of the chassis, which will allow the construction of two-story HUD code homes that UMH, along with one of our home suppliers, Champion Homes, will have on display at the Innovative Housing Showcase at the National Mall in Washington, D.C. on September 22 to September 24. We invite you all to attend and tour these homes in person so you can experience how beautiful these homes are.

I want shareholders to fully understand these three points that don't show up anywhere in a financial statement but are of great value. Some people correctly recognize that our stock price does not reflect our asset value. From a stock price viewpoint, it's an easy truth statement to make that the parts are worth more than the stock price. I unequivocally believe that everything we have done for the past 58 years is for the purpose of creating a whole whose value greatly exceeds the value of its parts, and we understand our obligation to not only say that, but to prove it as well.

And we believe that this quarter's results are a strong step forward, but only a modest step in proving it. Bigger steps are expected. Yes, the value of the parts exceeds the stock price, but more importantly is that even though the current stock price does not reflect it, the value of the whole greatly exceeds the value of the parts.

As we continue to fill rental homes and generate increased sales profits, our earnings should continue to increase in the quarters and years to come. UMH continues to experience strong demand throughout our portfolio of quality manufactured housing communities. This demand is being translated into increased occupancy rates and improved community operating results.

During the quarter, rental and related income grew to $61.1 million, representing a 9% increase over last year. Same-property NOI grew by 9% and home sales revenue broke another quarterly record. Overall, occupancy improved by 97 units to 89%. For the first half of the year, overall occupancy increased by 268 units and increased 631 units since June 30 of last year.

Additionally, sales of manufactured homes broke another quarterly record and increased by 10% to $11.5 million for the quarter. This increase in sales includes the sales at Honey Ridge, which is owned through our joint venture with Nuveen. We continue to execute our long-term strategy of driving organic growth across our high-quality manufactured home communities. This organic growth translates to increased property values and increased earnings.

Our same-property results continue to demonstrate the effectiveness of our long-term business plan. In the second quarter of 2026, we delivered same-property revenue growth of 8% or $4.5 million and same-property NOI growth of 9% or $3 million. This growth in same-property revenue and same-property NOI was driven by site rent increases of 5% and the increase in occupancy of 437 units over last year. This increase in community NOI substantially increases the value of our communities and our portfolio.

Our occupancy gains continue to be driven by the successful implementation of our rental home program. During the quarter, we added and rented 193 new homes across our portfolio, including those in our joint venture communities, bringing our total rental home inventory to approximately 11,200 units with a 95.3% occupancy rate.

Our home rental program continues to operate efficiently with an annual turnover rate of approximately 20%. Our expenses per unit per year are approximately $400. Our capitalized turnover costs vary, but we are generally able to increase rents to earn 10% on any additional investment in rental homes. We are well positioned to fill 800 or more new rental homes this year. We currently have 150 homes on site and ready for occupancy, 300 homes being set up and 330 homes on order.

Our development pace is set by our success in selling and renting homes on newly developed lots. Over the past 4 years, we have developed an average of approximately 200 sites per year. We currently have approximately 500 vacant expansion sites that have been developed over the past few years. These sites have been paid for, so each site we occupy will increase revenue with limited additional investments.

Operating expenses, including interest expense related to those unoccupied completed sites are already being expensed. Therefore, filling those sites with revenue-generating homes will substantially improve our earnings. Expansions greatly increase the value of our existing communities. A larger asset generally operates with better margins as a result of economies of scale. These sites will allow us to grow home sales revenue and community operating income.

Additionally, these expansion sites are well located and have the potential to greatly increase our sales and sales profits. As we fill our recently developed sites, our earnings can grow substantially. We can increase the number of lots we develop each year as the ROAD to Housing Act enables us to improve our fill rate.

UMH is well positioned to continue to grow earnings and increase the value of our manufactured housing portfolio through our capital improvements, investment in rental homes, growth in sales and expansion of our existing communities. We believe we can continue to grow short-term earnings while generating long-term value while simultaneously continue to build a best-in-class portfolio of manufactured housing communities.

We aim to provide the highest quality affordable housing at the best price point in the markets we serve. We accomplished this goal while being fair to our tenants and satisfying the needs of our shareholders. We have an important social mission that should position UMH and the industry for future growth as the federal government works to tackle our nation's housing challenges. Our communities are well positioned, our balance sheet is solid, and our team continues to perform at a high level.

Finally, I want to take this opportunity to acknowledge and thank our former Chief Financial Officer, Anna Chew, who after 35 years of service has retired from her role as CFO on June 1. I'm incredibly grateful to Anna for her many contributions to UMH during her more than 3-decade career with us, including her integral part in growing UMH. Anna will remain as an employee in an advisory role to support a smooth transition of the CFO responsibilities and she will also remain a member of our Board of Directors.

Kevin Miller has been named by our Board as Anna's successor as CFO. Kevin has been serving as the CFO of our OZ Fund since October 2022. Prior to joining UMH, Kevin served as the CFO of Monmouth Real Estate Investment Corporation for 10 years. We are fortunate to have Kevin as our CFO and look forward to working with him to continue to grow the company.

And now I'll turn the call over to Kevin to review our financial results for the quarter in more detail.

Net income attributable to common shareholders amounted to $4.4 million or $0.05 per diluted share for the quarter ended June 30, 2026, as compared to net income attributable to common shareholders of $2.5 million or $0.03 per diluted share for the quarter ended June 30, 2025, representing a 75% increase on a dollar basis and a 67% increase on a per diluted share basis.

Normalized FFO, which excludes amortization and nonrecurring items, was $21.5 million or $0.25 per diluted share for the quarter ended June 30, 2026. As compared to $19.5 million or $0.23 per diluted share for the quarter ended June 30, 2025, representing an 11% increase on a dollar basis and a 9% increase on a per diluted share basis.

Rental and related income for the quarter was $61.1 million compared to $56.2 million a year ago, representing an increase of 9%. This increase was primarily due to acquisitions made in 2025, an increase in same-property occupancy, the addition of rental homes and an increase in rental rates.

Community operating expenses increased 10% during the quarter. This increase was mainly due to an increase in payroll and related costs, real estate taxes, insurance and water and sewer expenses. Our community net operating income or NOI, which is our rental and related income less our community operating expenses increased 8%.

Our same-property results continue to meet our expectations. Same-property income increased by 8% for the quarter and same-property operating expenses increased 7%, resulting in our same-property NOI increasing 9% for the quarter from $34.2 million in 2025 to $37.2 million in 2026.

During the quarter, in May, we expanded and extended our $260 million unsecured revolving credit facility with a $340 million accordion feature, bringing the total potential availability up to $600 million. The new facility extends the maturity date to May 2030 with a further 1-year extension available at our option.

Availability is based on 60% of the value of a pool of unencumbered communities. The value of these unencumbered communities was increased through the reduction of the capitalization rate used to value these communities from 6.5% to now 6% being applied to the net operating income generated by these unencumbered communities.

The interest rate charged on draws from this facility is based on our overall leverage ratio and has been reduced by approximately 35 to 40 basis points depending on our overall leverage ratio, and is now based on SOFR plus 1.3% to 1.9% or prime plus 0.3% to 0.9%. The interest rate on draws made as of the quarter end is 4.92%.

As we turn to our capital structure, at quarter end, we had approximately $789 million in debt, of which $545 million was community-level mortgage debt, $66 million was loans payable, $102 million was our 4.72% Series A bonds and $76 million was our 5.85% Series B bonds. Our total debt at quarter end has a weighted average interest rate of 4.92%. And 94% of our total debt is at a fixed rate. The weighted average interest rate on our mortgage debt was 4.75% at quarter end compared to 4.52% at quarter end last year. The weighted average maturity on our mortgage debt was 5.7 years at quarter end and 5.4 years at quarter end last year. In this volatile interest rate environment, the weighted average interest rate on our short-term borrowings was 94 basis points lower at 5.5% at the current quarter end as compared to 6.44% at quarter end last year.

At quarter end, UMH had a total of $333 million in perpetual preferred equity. Our preferred stock, combined with an equity market capitalization of just under $1.3 billion and our $789 million in debt, results in a total market capitalization of just over $2.4 billion at quarter end.

During the quarter, we issued and sold 353,000 shares of Series E preferred stock under our preferred stock ATM program at a weighted average price of $21.61 per share, which generated net proceeds after offering costs of $7.2 million. The company also received $2.2 million, including dividends reinvested through our DRIP.

During the quarter, we did not sell any shares of our common stock under our ATM program. In fact, we have not sold any shares under the common ATM program since early September 2025, which is over 10 months ago.

From a credit standpoint, we ended the quarter with net debt to total market capitalization of 31.5%, net debt less securities to total market capitalization of 30.3%, net debt to adjusted EBITDA of 5.6x and net debt less securities to adjusted EBITDA of 5.4x. Interest coverage was 3.1x and fixed charge coverage was 2.1x.

From a liquidity standpoint, we ended the quarter with $28.6 million in cash and cash equivalents and $220 million available on our unsecured revolving credit facility with a potential total availability of up to $600 million pursuant to an accordion feature. We also had $184 million available on our other lines of credit for financing of home sales and the purchase of inventory and rental homes.

Additionally, we had $29.7 million in our REIT securities portfolio, all of which is unencumbered. This portfolio represents only 1.3% of our undepreciated assets. We are committed to not increasing our investments in our REIT securities portfolio and have, in fact, continued to sell certain positions. We are well positioned to continue to grow the company internally and externally.

And now let me turn it over to Gene before we open it up for questions.

We have built one of the best portfolios of manufactured housing communities in the country. We have acquired value-add communities, expanded communities, built new communities and have adopted to market conditions during every point in each economic cycle to ensure our success.

UMH has well-located communities that are experiencing strong demand, which should result in an increased occupancy, revenue and sales. Our communities in the Marcellus and Utica Shale area continue to experience strong tailwinds as a result of the additional investments in these areas. We have built a best-in-class operating platform that continues to produce industry-leading results year after year.

With 3,200 vacant sites and 2,400 acres of vacant land, we are well positioned to grow earnings through the infill of our vacant sites and the development of our vacant land. UMH and the manufactured housing industry are in an exciting time with many possibilities. We have established relationships with state and federal lawmakers, which we believe will benefit UMH and the industry. We anticipate positive developments stemming from the recently passed U.S. ROAD to Housing legislation. This legislation should encourage the development of more manufactured home communities, improve tenant access to financing and allow manufacturers more design flexibility such as the development of two-story homes. We are proud to have launched a new lending program for our nation's veterans through our third-party loan origination program with Triad Financial. So that veterans can experience the affordability of manufactured homes and the benefits of living in manufactured housing communities. UMH's mission is to provide affordable quality housing to the nation. Great progress is being accomplished by our team.

Thank you again for joining us today. Operator, we are now ready to take questions.

[Operator Instructions] The first question today comes from Craig Kucera with Lucid Capital Markets.

I know it's only been a month since you launched the program, but how has the uptake then in the new zero down payment lending program for veterans?

Yes, Brett Taft here. Again, it's only been a month, but so far, we're getting a lot of positive feedback. I think it's something that really allows veterans to experience manufactured housing, for whatever reason, historically, manufactured homes and land lease communities have been excluded from that program. So we're really making a step forward to hopefully show veterans, how great community living is. We've successfully closed a handful of deals and we've got more in the pipeline. I think it's a little bit too early to tell exactly what volume is being driven from that program. But so far, it's been successful.

And I think most importantly, UMH began the program on our own with our own money and our own program. Subsequently, we received a phone call from the Head of VA lending and they're considering instituting the program with their money, which would be a major benefit to the industry.

That's good news. Again, another thing that's happened recently the ROAD to Housing Act being passed. I believe states have a year to certify that their laws accept chassis-free homes. Have you seen any state-level legislation moving through the process in that direction or any positives in that regard?

So we believe the ROAD to Housing Act does away with the requirement that the homes have chassis. We believe each state that has a manufactured home community will be required because they're preempted by HUD to allow two-story houses. So the removing of the chassis means that if you're in an area such as Eatontown, New Jersey; Jackson, New Jersey, where there's a dramatic shortage of housing, people need more bedrooms, we are going to be able to put two-story homes on those lots and the municipality can't say no because these are HUD-code homes, and that preempts the municipality from any say in what type of house goes on a lot.

Great. And you mentioned that you were going to be showcasing or along with Clayton Home showcasing a two-story manufactured home. Can you talk about like the cost for those relative to kind of what you traditionally sold?

Well, at this moment, that's an unknown, but what I would guess is this, we pay, not what the customer pays, what we pay is $70 per square foot. And the second story is not going to have a kitchen, probably has a bathroom, but it could cost less than $70 per square foot for the second story. So one story house is currently single 1,000 square foot. It will be 2 floors, it will be 2,000 square foot, multi-section, currently 2,000 square foot, it will be 4,000 square foot. So that should cost us again, I don't know the exact numbers, but somewhere around $280,000, $320,000, somewhere in that area. And our historic minimal markup on sales is 30%. And in some places, it's much higher. And that's what we talk about. The value of these vacant lots we have and the vacant land.

It's the housing market that determines what homes sell for and how quickly they sell. We have the advantage of a great factory-built product that is priced to us based on the factory's cost plus a markup. But we are able to sell that house at local market, which can have a much stronger profit margins than 30%.

That's helpful. Changing gears, I think you mentioned you had 100 homes on-site and 300 being set up. Can you give us a sense of what you think the net rental additions will be in the back half of the year?

Yes, sure. So for the first half of the year, we did 360 new rental homes, which is generally in line with our goal of hitting 800 homes for the year. the 150 homes that are ready. We've got very strong demand for the 305 homes that are on site. We're making a good amount of progress getting them set up and rented. So I think we will be at that 800 number with the potential to exceed it.

Great. And same-store operating expenses have been running a little hotter than usual year-to-date. I think they're up about 7.5%. I think you traditionally kind of budget maybe in the 5% to 7%. Do you expect that to come down a bit in the second half? Or are you expecting it to be somewhat elevated?

The first quarter certainly elevated the expenses a little bit. The second quarter while still on the high end of that 5% to 7% range was just below 7%. So that's in line with expectations.

Looking into the third and fourth quarters, I mean, without any major weather events or any unforeseen circumstances, I do think we'll fall within that 5% to 7% range. So I think by the end of the year, we'll see expenses up somewhere in the 6% to 7% range, blending in the impact of the first half of the year.

The next question comes from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on your earnings, FFO per share guidance and maybe try to compare that to what you guys have done year-to-date. So year-to-date, we're at $0.48, which annualizes to $0.96, but the guidance is $0.98 to $1.04. So just wondering if you could help us understand some of the drivers behind the guidance and maybe some of the uptick you're expecting in the second half for earnings?

Yes, Gaurav. So a couple of things. First of all, we don't put out quarterly guidance, but what I can tell you is in our model for Q1, we had $0.23 built in, we had $0.25 for Q2. So we are exactly on plan for where we thought we would be this year. And as far as assumptions go, it's laid out in our investor presentation, 5% rent increases, 800 new rentals, $120 million to $150 million in capital raised. And one other thing that I can throw in is we have not modeled in any additional shares from the ATM. And that also assumes no acquisitions as well.

Okay. second question on, I guess, same-store NOI. I know in the past, you've talked about high single-digit same-store NOI growth expectation. Is that still a reasonable target for this year?

Yes, absolutely. I think especially looking at the second quarter results, same-property NOI was up 8.8%. And for the year, we're at 8%. I do expect same-property growth in the third and fourth quarters to be in line with where they were in the second quarter with the potential to outpace that a little bit. So we remain confident in that high single-digit NOI growth.

And I just wanted to point out also that sales in the second quarter were very strong, $11.4 million which was a new all-time quarterly sales record. It was 10% over the sales of the quarter a year ago. And I just wanted to point out that sales for July remained strong, they were about $1 million above where we were in July of last year. And we currently have a $5 million sales pipeline, which leads us to believe we'll have another strong sales quarter in the third quarter.

I'm going to use this as the opportunity to talk about low dollar amount loans. So since about 2009, the regulatory environment virtually did not allow low dollar amount loans because of origination fees, if you did lower dollar amount loans, it was basically considered predatory lending and most banks didn't want to be in the business.

The ROAD to Housing Act dramatically changes that. Low dollar amount loans will be allowed and encouraged and we can receive 3% for originating a loan. So the manufactured housing shipment world, which was 300,000 units per year in the 1990s , fell to a low of 40,000 in 2009 and has been stuck at about 100,000 units per year ever since, should change dramatically because the whole issue is the customer didn't qualify for the financing, which is why UMH rented out 11,000 homes from 2011 to date. And now if the ROAD to Housing Act encourages low dollar amount loans, every bank is going to want to be in that business. These are FHA Title I loans, government guaranteed 3% down. And again, we get 3% for originating a loan. So this is, to me, going to dramatically increase the demand for our vacant lots, for existing lots.

A state Senator's aid said to me yesterday, "Manufactured homes in communities are a step to building wealth for young people." And that's how it used to be, and that's how it should be. 80% of the homes we have ever sold appreciated in value. And so a person could buy a manufactured home in a community, even though they're renting a lot, realize appreciation plus building equity every time they make that monthly payment. And when people understand this and recognize this, it's going to increase the demand for our homes, all of which increases the lot rent we collect every year, our gross home sales, our net home sales, our loan income. So I don't know exactly which day this is all going to come into effect. It's going to be soon. And when it does, it's a major change in the dynamics of manufactured housing and manufactured home communities.

The next question comes from John Massocca with B. Riley.

This is Max stepping in for John. What is the outlook for home sales in 3Q? And how are things trending so far this quarter?

So first, we've been building expansions in great locations for years. In 2026 and '27, we'll create 500 new lots, we'll create 500 new lots the year after that. Again, this Title 1 lending, think of the number $7 per $1,000, a $100,000 cost somebody $700 per month. Our most expensive houses sell for $300,000. We are the incredible solution to the affordable housing crisis. People pay cash for our houses, people finance our houses. So we believe that the accessibility of financing will increase the fill rate for these communities, which will increase sales. We did, for the quarter, the sales were, again?

$11.4 million versus $10.5 million last year.

Yes, which annualizes over $44 million compared to about $36 million last year.

That's correct. The $36.2 million.

And we believe it's going to grow. Some of these expansions they're in the first phase. The first phase in any development is the most difficult. The last phase is the easiest. So you gain momentum, sales grow, and we see that happening for us.

Yes. And just to touch on where we are this quarter, our July sales were very strong. They were about $1 million ahead of where we were July a year ago. Our sales pipeline is about $5 million right now. So we're well positioned to grow sales year-over-year in the third quarter. And just to remind everybody sales last year in the third quarter were about $9.3 million. Again, we did $11.4 million this quarter with a pipeline that seems as strong as it was last quarter.

And are there any updates or further updates on vacant or unutilized land optimization?

Well, we're always working on the approval process end. And both the federal government -- all governments, federal, state and local, have been more favorable than I've ever seen it. The battles we faced in Coxsackie, New York, 360 lots, we're almost, I would say, 90% approved, and we do expect to get approvals this year for 360 lots, 18 miles south of Albany, we have the Saratoga project. So many places we're seeing favorable government reaction to our request to expand and build.

And apologies if this was discussed earlier, but why was total rental unit growth in 2Q, only 59 properties? Was that just a timing thing? And how does that impact your outlook on the occupancy of the 800 rental units underlying guidance?

Yes. The 59 units was a timing thing. That includes sale of rental units that includes some shuffling of unit types and the impact of selling those units. So that is the entire rental home portfolio and the change that happened there. But the 800 units that we're talking about is the installation in the rental of 800 brand-new units. So those are new homes we're ordered from the factories. We're putting them into our communities, and we're occupying them.

We did 360 units in the first half of the year, and with 150 homes on-site ready for occupancy, 300 homes currently being set up and another 300 on order. Given the demand we're seeing in the locations, we believe we'll hit our target of 800 new rental homes this year. which again will be offset by the sale of older homes.

And it's an important time to mention. We did the first rentals 15 years ago. They're 15 years old, we paid $40,000 a unit for them. We could sell them for $60,000 without the resident's monthly payment going up, same monthly payment. And that $60,000 could be those low dollar amount Title 1 loans, which is all cash to us. So we take something we bought for $40,000, rent it out profitably for 15 years, sell it for $60,000 cash by the replacement house for $75,000, $80,000 a this time needing only $15,000 or $20,000 new dollars to buy that home when we bought it originally. We needed the full $40,000. So it makes the rental program more profitable than ever while generating sales profits.

And we think that the resident buying that used home, managing it themselves, staying longer in that community and eventually, he will earn a profit on it, and that's important. We want the residents to be satisfied with our product.

The resident in a manufactured home community saves $10,000 a year as compared to living in apartment, which is smaller and less amenities and $10,000 a year to the people who live paycheck to paycheck, and it's a big segment of the population is a very significant amount and it's a story that has not gotten out when we talk about residents paying rent. They pay rent, but the rent is $10,000 a year, if they would pay if they paid rent in a 2-bedroom apartment.

The next question comes from Rich Anderson with Cantor Fitzgerald.

This is Jeffrey Carr on for Rich. Kind of shifting back to the ROAD to Housing Act and the expansion of tenant financing options to purchase their homes. Do you have a preference between the owned home model versus your rental home model going forward? And does easier financing kind of change that calculus?

Well, there's a significant part of the population that only sees themselves as needing housing 1 to 3 years. Those are your ideal rental tenants. And they're always going to be there, and many of them have never lived in a manufactured home community never experienced a manufactured home. So the rental is very beneficial in satisfying their need of educating people as to what our community is and just giving them experience.

So I don't think that's going to be reduced. I think we'll still do 800 rental homes per year. I think that sales have been artificially reduced since the year 2000 because financing wasn't available. And again, think how big the country was -- how big the country is today compared to how big it was 20 years ago, yet shipments have fallen from 300,000 units a year to 100,000 units per year.

And to me, there's only been two issues, lack of retail financing and lack of places to put the houses. The ROAD to Housing Act solves the lack of financing. The lack of places to put the houses, we have 3,000 vacant lots and 2,000 vacant acres to keep growing. So I think we're going from a world that was extremely difficult because it was extremely hard to sell houses to a world that's going to be completely in our favor, continue renting houses continue adding 800 rental homes per year and watch our sales grow.

And I don't even want to make a prediction as to how much they'll grow. But people used to get rich in this business. Anybody in this business was considered a success. Art Decio was featured on the cover of Time Magazine for bringing affordable housing to the masses. Warren Buffett made Jim Clayton a billionaire buying Clayton Homes, this was a great business, and it was the lack of retail financing and lack of places to put the homes that hurt it. UMH has been doing this for 58 years. We've managed to solve the problems for ourselves during those years by renting houses, but now things are changing and I think everything is going to be in our favor.

Okay. Yes. That makes sense. And then kind of shifting towards the development front. I know you're carrying a little over $60 million in land development costs on the balance sheet. And you talked about having a little over 3,200 vacant sites and about 2,400 acres to grow into. But can you give us kind of the sense of the expected pace of delivery over the next year or 2, whether we can expect kind of the same historical pace over the last few years or maybe a ramp-up? And kind of what yield are you underwriting on the development spend relative to kind of your current cost of capital?

Well, so first, in our presentation, there's a page with what we expect to happen in the ideal development where it costs $100,000 per lot to build the site and what happens when you sell the home and potentially earn that $100,000. And can you see what page that is? It's Page 18 of the presentation, potential economics of new lot development. So you can see that there -- the easy thing, right?

So the 5% rent increase, which we've done year after year is $10 million. The addition of 800 rentals -- addition of 800 rentals is $10 million. Sales were at $36 million with a strong potential to increase. So you can write that down as pretty easy what to be expected.

Then the giant question mark is how much can we grow sales beyond that? How quickly can we fill these vacant lots? We have available beyond that additional, we get finance income, we get brokerage income from selling homes. We get income from selling oil and gas leases and royalties. We get self-storage income, income from selling cable, insurance. So there's a lot of other sources of income that potentially could grow it further. But to be safe, each year, we get that 5%, $10 million, add the $810 million and grow sales. And that's where Jim Lykins' guidance comes from.

And over the past 5 years, we've averaged about 200 new expansion sites per year. We expect to start construction on about 315 sites total this year. We've already started on the construction of 111. We're about to start construction on another site in Marysville, Ohio of 98.

Going forward, I would think we'd be able to maintain 200 to 400 new expansion sites per year. If we have an $800 a month lot rent and the site cost us $100,000 to build, and we operate at 70% expense ratio once stabilized those communities yield 7%, not including the sales profit if we earn a $30,000 sales profit that increases that yield to about 10%, and the profits could be much greater than $30,000 per home.

Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Samuel Landy for any closing remarks.

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our company. As always, Gene, Kevin, Brett and I are available for any follow-up questions. We look forward to reporting back to you in early November with our third quarter 2026 results. Thank you.

The conference has now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately 1 hour. To access this replay, please dial U.S. toll-free 1 (855) 669-9658 or international (412) 317-0088. The conference access code is 4174590. Thank you, and please disconnect your lines.

Good morning, and welcome to UMH Properties First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel. Thank you. Mr. Koster, you may begin.

Thank you very much, operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited first quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.reit.

We would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved.

The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's first quarter 2026 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

In addition, during today's call, we will be discussing non-GAAP financial metrics. Reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as the explanatory and cautioning language are included in our earnings release, our supplemental information and our historical SEC filings.

Having said that, I would like to introduce management with us today: Eugene Landy, Founder and Chairman; Samuel Landy, President and Chief Executive Officer; Anna Chu, Executive Vice President and Chief Financial Officer; Brett Taft, Executive Vice President and Chief Operating Officer; Jim Lykins, Vice President of Capital Markets; and Daniel Andy, Executive Vice President. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you, Craig, and good morning, everyone. We are pleased to report solid operational results for the quarter, which we expect to continue to grow throughout the year. Normalized FFO for the first quarter of 2026 was $0.23 per share as compared to $0.23 per share last year. Our earnings per share were impacted by increased interest rates and increased investment in rental units and expansion lots, which are not yet occupied. Additionally, we faced seasonal headwinds, which impacted our sales volume and increased our community operating expenses.

During the quarter, occupancy improved meaningfully, same property NOI grew by 7% and home sales revenue was stable. These gains were partially offset by higher interest costs associated with refinancing debt, bringing expansion lots online, adding rental homes and the seasonal impact on home sales and operating expenses, which together moderated earnings per share growth.

Normalized FFO per share came in essentially in line with last year's first quarter, reflecting the strength of our core rental business, offset by those financing and seasonal pressures.

As we continue to fill rental homes and generate increased sales profits, our earnings should increase in the quarters to come. We have invested in rental homes, expansions and acquisitions for which we currently incur interest expense, but will later become accretive to earnings. The fundamentals of our business remain strong with growing occupancy and improving community operating results.

We are tightening our NFFO guidance range to $0.98 and to $1.04 per share or $1.01 per share at the midpoint compared to our previous guidance of $0.97 to $1.05 per share.

UMH continues to experience strong demand throughout our portfolio of quality manufactured housing communities. This demand is being translated into increased occupancy rates and improved community operating results.

During the quarter, overall occupancy improved by 184 units to approximately 88%. This increase was the result of the conversion of 166 homes from inventory to revenue-producing rental homes and an increase in occupancy of our existing rental homes. Additionally, sales of manufactured homes increased by 6% to $7.1 million for the quarter. This increase in sales includes the sales at Honeybridge, which is owned through our joint venture with Nuveen.

We continued to execute our long-term strategy of driving organic growth across our high-quality manufactured home communities. This organic growth translates to increased property values and over time, increased earnings.

Rental and related income grew to $59.5 million for the quarter, representing a 9% increase over last year. Sales for the quarter were $7.1 million, including the sales at Honey Ridge, representing a 6% increase over the first quarter of last year. Our same property results continue to demonstrate the effectiveness of our long-term business plan.

We generally acquire underperforming communities with vacancies and in need of capital improvements. Our team and our platform have proven time and time again that we can preserve and increase the supply of affordable housing while delivering solid and sustainable operating results.

In the first quarter of 2026, we delivered same-property revenue growth of 7.6% or $4.1 million and same property NOI growth of 7.1% or $2.3 million. This growth in same-property revenue and same property NOI was driven by site rent increases of 5% and the increase in occupancy of 412 units over last year. Our expenses were elevated as a result of the bad winter as well as an increase in real estate taxes. This increase in community NOI substantially increases the value of our communities and our portfolio.

We can realize this increase in value through our refinancing efforts, which generate additional capital to invest in our platform.

Our occupancy gains continue to be driven by the successful implementation of our rental home program. During the quarter, we added and rented 166 new homes across our portfolio, including those in our joint venture communities, bringing our total rental home inventory to approximately 11,200 units with a 94.6% occupancy rate. Our home rental program continues to operate efficiently with a turnover rate of approximately 20%.

Our expenses per unit per year are approximately $400. Our capitalized turnover costs vary, but we are generally able to increase rents to earn 10% on any additional investment in rental homes. We are well positioned to fill 800 or more new rental homes this year. We currently have 80 homes on site and ready for occupancy. 400 homes being set up and 160 homes on order. The 480 homes that are on site have already been paid for and once occupied, each home increases revenue and starts to earn our expected return on investment.

Our home sales business also performed well despite the challenging winter, generating a 6% increase from $6.7 million in gross sales in the first quarter of 2025 to $7.1 million for the current quarter, including contributions from our new Honey Ridge community in our joint venture with Nuveen Real Estate. During the quarter, we financed 63% of our home sales, including sales at Honey Ridge.

Our notes receivable portfolio continues to perform well. We have acquired and developed communities in strong locations, which should allow us to further increase our gross sales and sales profitability in the coming quarters. On the expansion and development front, we plan to develop 300 or more sites in 2026. Over the past 4 years, we have developed an average of approximately 200 sites per year. Expansions greatly increase the value of our existing communities a larger asset generally operates with better margins as a result of economies of scale.

We currently have $45 million invested in 600 vacant, well-located expansion sites that have been developed over the past few years. These sites will allow us to grow home sales revenue and community operating income. These sites have been paid for so each site we occupy will increase revenue with limited additional investments. The interest is already being expensed. Additionally, these expansion sites are well located and have the potential to greatly increase our sales and sales profits.

As we fill our recently developed sites, our earnings can grow substantially. Expansions and development require patient capital, but lead to strong returns over time. We will continue to work on expanding our existing communities in addition to exploring the highest and best uses of our vacant land.

UMH is well positioned to capitalize on the progress we have made on our investments over the past few years. We have well-located communities that are experiencing strong demand, which should result in increased occupancy, revenue and sales. Our communities in the Marcellus and Utica Shale areas continue to experience strong tailwinds as a result of the additional investment in these areas. Additionally, we are starting to see more interest in the leasing of our oil and gas rates, which can result in additional revenue.

We have built a best-in-class operating platform that continues to produce results year after year. The fundamentals of our business remain strong, there is pent-up demand for affordable housing and our product serves that need in each market that we operate in. Our quality income stream is derived from our 24,000 families that have chosen to make UMH communities their home. This income stream has proven resilient through all economic cycles.

As we move through the stronger spring and summer selling season, we remain confident in our ability to deliver full year normalized FFO per share growth in the mid-single-digit range, which, if coupled with our current dividend yield, can easily drive a double-digit total return for our investors. Our communities are well positioned, our balance sheet is solid and our team continues to perform at a high level. Overall, these accomplishments demonstrate the resilience and growth potential of our business model.

I'll now turn the call over to Anna Chew, our CFO, and to review our financial results in more detail.

Thank you, Sam. Normalized FFO, which excludes amortization and nonrecurring items, was $19.4 million or $0.23 per diluted share for the first quarter of 2026 compared to $18.8 million or $0.23 per diluted share for 2025, resulting in a 3% increase on a dollar basis and remaining flat on a diluted per share basis.

Rental and related income for the quarter was $59.5 million compared to $54.6 million a year ago, representing an increase of 9%. This increase was primarily due to acquisitions made in 2025 and increase in same-property occupancy, the addition of rental homes and an increase in rental rates.

Community operating expenses increased 10% during the quarter. This increase was mainly due to the acquisitions made in 2025, an increase in payroll and related costs, real estate taxes and water and sewer expenses.

Our community net operating income, or NOI, which is our rental and related income less our community operating expenses, increased 8%. Our same property results continue to meet our expectations. Same property income increased by 8% for the quarter, and despite the 8% increase in community operating expenses, community NOI increased by 7% for the quarter from $32.6 million in 2025 to $34.9 million in 2026.

As we turn to our capital structure, at quarter end, we had approximately $760 million in debt, of which $554 million was community-level mortgage debt, $28 million was loans payable, $102 million was our 4.72% Series A bonds and $76 million was our 5.85% Series B bonds.

Total debt was 99% fixed straight at quarter end with a weighted average interest rate of 4.92%. The weighted average interest rate on our mortgage debt was 4.75% at quarter end compared to 4.18% at quarter end last year. The weighted average maturity on our mortgage debt was 5.9 years at quarter end and 4.2 years at quarter end last year.

In this volatile interest rate environment, the weighted average interest rate on our short-term borrowings was 15 basis points lower at 6.35% at the current quarter's end as compared to 6.5% at quarter end last year. At quarter end, UMH had a total of $325 million in perpetual preferred equity. Our preferred stock, combined with an equity market capitalization of over $1.2 billion and our $760 million in debt results in a total market capitalization of approximately $2.3 billion at quarter end.

During the quarter, we issued and sold 66,000 shares of our Series D preferred stock under the 2025 preferred ATM program at a weighted average price of $22.51 per share, which generated growth and net proceeds after offering costs of $1.5 million. The company also received $2.4 million, including dividends we invested through our DRIP.

During the quarter, we did not sell any shares of our common stock under the September 2024 common ATM program.

From a credit standpoint, we ended the quarter with net debt to total market capitalization of 31.2%, net debt less securities to total market capitalization of 30.1%, net debt to adjusted EBITDA of 5.5x and net debt less securities to adjusted EBITDA of 5.3x. Interest coverage was 3.1x and [ fixed ] charge coverage was 2.1x.

From a liquidity standpoint, we ended the quarter with $37.4 million in cash and cash equivalents and $260 million available on our unsecured revolving credit facility with a potential total availability of up to $500 million pursuant to an accordion feature. Our unsecured revolving credit facility expires in November, and we are currently working on a renewal of this facility.

We also had $183 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes. Additionally, we had $26.4 million in our REIT securities portfolio, all of which is unencumbered. This portfolio represents only approximately 1.2% of our undepreciated assets. We are committed to not increasing our investments in our REIT securities portfolio and have, in fact, continued to sell certain positions.

We are tightening our NFFO guidance range to $0.98 to $1.04 per share or $1.01 per share at the midpoint compared to our previous guidance of $0.97 to $1.05 per share. We are well positioned to continue to grow the company internally and externally.

And now let me turn it over to Gene before we open it up for questions.

Thank you, Anna. UMH continues on our mission to provide the nation with high-quality affordable housing and doing so while generating strong and growing returns for our shareholders. We have made immense progress over the years building a great portfolio of manufactured housing communities that our existing tenants and our new tenants are proud to call home. We improve our communities by upgrading the collected community through infrastructure projects, the addition of amenities, security best practices and further through the expansion of our communities. We are proud to say that each asset we own is in better condition today than the day we bought it.

Over the company's history, we have experienced several economic cycles across our portfolio. And the manufactured housing industry has performed well throughout all of them. Our communities have strong demand in times of economic prosperity and in times of recession. While interest rates have fluctuated over the past few years, our communities still experienced strong demand, have experienced growing occupancy and sales and collections have remained strong. Our earnings have been impacted by rising interest rates, completion of expansions and adding to the rental inventory, which triggers added interest expense and seasonal fluctuations in sales and operating expenses.

We believe that we are poised for meaningful earnings growth this year, and as such, we have tightened our guidance. Housing is a bipartisan issue with bipartisan support. There is pending legislation that will strengthen the manufactured housing industry. The pending legislation has the potential to improve the availability of financing for our tenants through changes to the Title 1 program as well as remove the requirement that a manufactured home has to be on a permanent chassis. We've already made a substantial progress through the innovation of single-section and multi-section duplex homes. Additionally, we are hopeful that as we develop more communities, local municipalities will see the benefit of manufactured housing and ease burden some regulatory requirements that have made getting entitlements nearly impossible. UMH and the manufactured housing industry are in an exciting time with many possibilities. We have positioned the company to benefit from these changes and anticipate substantial growth of the company and our earnings in the near future. Thank you again for joining us today. Operator, we are now ready to take questions.

[Operator Instructions] The first question will come from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on your same property NOI and some of the comments around the impact of winters on the same property expenses. So on a normalized basis, do you still expect to deliver same-store NOI in high single-digit and low double-digit range, as you mentioned on the last earnings call?

Yes, sure, Brett here. And yes, as you mentioned, it was a tough winner, Pennsylvania, Ohio, Indiana and New York, even Tennessee had deep freezes and extended periods of below freezing temperatures, which obviously impacts our water and sewer. It impacts our maintenance over time dealing with freeze-up. We had a lot of snow and a lot of snow removal related charges. So overall community operating expenses were 8.2%. I do want to point out that last year, our community operating expenses in the first quarter were also elevated in about the 7.5% range. So this year, was a little bit higher, but largely in line. We're very happy with the occupancy growth and the revenue growth we were able to produce in the first quarter. And as we go throughout the rest of the year, we expect that expense growth to moderate. We've always pointed out that we expect expenses to grow in the 5% to 7% range, nothing changes there, and we're absolutely confident in our ability to deliver high single-digit same property NOI growth.

One of the things we think about, like why is somebody short 3 million shares of UMH properties? And I don't know what they see or think they see that we see differently. Our 3,240 vacant sites represent incredible opportunity to increase sales and rental revenue and that will come to the bottom line. And to me, it's reasonable to believe someday, in the near future, we'll sell 320 homes in a year at $150,000 average price and gross $48 million in sales. So we remain incredibly optimistic, but obviously, somebody else is pessimistic.

As a follow-up, I want to ask you on the home sales. Have you seen -- in the earnings press release, I think you talked about expectation of sales growth as we go into peak selling season. I'm just wondering if you could comment on the trends that you saw in April for home sales?

Yes. The trends in the portfolio look very good. Including Honey Ridge for the first quarter, sales were up year-over-year. Again, sales are absolutely impacted by the cold winter and everybody's ability to move. Our April sales were very strong. They're coming in at about $3.5 million. So we're very happy with that. Our pipeline remains in good shape. We've got a lot of inventory that's now ready for sale or just about ready for sale at a lot of the expansions that we've recently opened. And as Sam mentioned at the call, we've got several hundred expansion sites built over the past few years that should all generate increased sales in the second and third quarter.

I do also want to point out that our New Jersey communities and some of our Eastern Pennsylvania communities were impacted by the winter, but we're expecting and we're seeing a very strong sales pipeline at those locations. Sales in the second quarter of last year were about $10.5 million. We're on track through April. Obviously, there's a long way to go, but we remain confident in our ability to grow sales in the second quarter and year-over-year.

Next question will come from Craig Kucera with Lucid.

There was a pretty significant swing in your marketable securities portfolio, not much of an impact on a net basis, but can you give us some color on what was going on there?

Yes. Craig, it's Anna. We had written off on security. And if you think about it, it was already written down in our unrealized gain line -- unrealized gain and loss line. So we just wrote it down -- physically wrote it down, so we moved it from the unrealized to the realize. So that's all it was.

Okay. That's helpful. Changing gears, are there any critical materials sourced from the Middle East that are a component for manufactured housing development or maybe aluminum or plastics or most of those materials sourced elsewhere?

At this moment, everything I've heard about supply has remained no issues and no material increases. What do you think, Brett?

Same point here. The main thing that I follow there is the backlog we're seeing from our manufacturers. While they've increased a little bit, I think, generally, we're still able to get homes in that 6- to 8-week range. So with limited price increases, I mean, there are some price increases. But overall, it's a pretty stable home ordering environment. We're comfortable with where we are. And if anything changes, we'll get back to you.

And we believe, in the long term, efficiencies of factory-build houses that the factory-built homes will in comparison to all other forms of housing, reduce the cost per house based on efficiencies of manufacturing.

Got it. And just one more for me. I mean it was a quiet quarter from a capital raising perspective. You worked down your cash balance. Last year, you funded yourself primarily with debt. How are you thinking about funding the 2026 budget? I mean is that mostly line of credit? I know you've got about $38 million of mortgages that are maturing, but just curious to get your thoughts on that.

Well, it all depends on our capital needs, right? As we always say, we always need about $120 million to $150 million on an annual basis to do our business plan. We do plan on refinancing about -- as you said, about $38 million in mortgages when we refinanced last year, we were able to take out $100 million in additional capital. Now that won't happen again this year because, again, there's less mortgages that are coming due. However, we do have approximately $60 million communities that are free and clear. We have on hand about $40 million. We have unsecured line of credit of $260 million, which, within accordion feature, will go to $500 million. We have a rental home line. We have note receivable line. So all in all, believe that we will be able to obtain the capital necessary. And it will -- again, it all depends on our share price. It all depends on the market, what are the interest rates will be when we need that capital.

We have to understand that UMH is a unique company. We have a mission statement. We really believe in the nation needs housing. There's a shortage. The government's recent figures were 100 million -- 10 million units, and we used to figure they need 6 million units, so 4 million units. Whatever the number we have to reach to beat that shortage, we're not doing it. There'll be fewer homes built in 2026 than they were in 2025, but that's not the case with UMH. Our mission statement is to provide housing. We believe we have a definite advantage in the housing we have. We build houses and factories and ship them to communities. We have to create the communities, and we have to have the capital to do it, and we're using every means we can to expand the company. And we plan it -- we have units that we want to build in Tennessee, in Florida, in New York. So we are constantly seeking ways to profitably grow this company and it's important to the company because of the long range. In the long run, investing in housing is a good investment, and it's something the nation needs.

The next question will come from John Massocca with B. Riley.

Maybe starting on the regulatory front, how does the removal of the chassis or requirement rules impact UMH, if at all?

Yes. It's not complete yet, but as we've gone to duplex homes, there never used to be such things as one-bedroom manufactured home. And in apartments, you did 1 bedroom studio, 2-bedroom, 3-bedroom 4 bedroom. Manufactured housing was 2, 3 and 4 bedroom. Now the duplexes give us 1 bedrooms, which there's substantial demand for and allows us to obtain 2 rents from 1 lot, which can increase revenue. The removal of the chassis will allow 2-story homes. And those 2-story homes will allow bigger families to occupy the same size lot, the 5,000 square foot lot. And there's additional potential that those 2-story homes could be duplex. So 2-story is a really big deal.

Manufactured homes communities are built for HUD code houses. And the municipality has to allow whatever the HUD code allows. So this will allow 2-story homes in the communities, which can be a really big deal depending on location.

You build 2,000 square feet of homes instead of 1,000 square feet and the same piece of land, so a very, very important development. When you buy community to the older, it gives us a means of taking out these older homes and putting in twice as much space. So the space is more valuable. This is a change that's going to help every manufactured home community out in the country, and it's going to help the residents because we can provide new and improved housing in the spaces where we had older and obsolete housing and put a better product in. So it's really a major change for the industry. And I'd really like to thank you for that question.

Does it impact the cost? Because something is not on the ground? Does it impact the cost of installation of new homes and the pace at which you can kind of add new homes to existing communities? Or is that kind of just a net the rule of the chassis doesn't really change that per se?

Well, so removing the chassis can allow the house to be at ground level, which is very appealing to 55 and older who don't like walking up steps. So that helps there. Removing the chassis reduces the cost of each unit by $3,000 or more dollars, but then there's increased setup costs, which those will be worked out over time. Efficiencies will develop in setting up the houses. We've always found setting up 10 homes as opposed to 1 home at a time, you can save money because you have all the crews ready to do everything and you could reduce the cost per house. So I assume it will be the same thing when you get rid of the chassis. In the beginning, there will be inefficiencies of the added cost of setting up homes without chassis, but eventually, that will get worked out.

Okay. And then is there anything else you're seeing on the regulatory front that could change here in near term, especially in terms of maybe financing for manufactured homes?

Well, exactly. And we have more than $100 million in loans outstanding. We have more than 11,000 rental homes and many developments are occurring that could make it more favorable for people already renting homes or others to purchase our rental units or purchase additional houses or, for outside finance sources such as Fannie, Freddie and then I'm learning about in Pennsylvania, there's government programs, people may want to do these loans. And if they do the loans, homes we already sold where we have the loan, somebody could refinance and pay us off. That would be cash to us. We could be selling the rentals under a Title 1 program or other programs, which would be cash to us. So everything you read about in the Wall Street Journal pertaining to improving credit scores, finding other ways to determine people's credit that will increase loan approvals, that's beneficial to us. Title I is beneficial, it's 3% down. They're going to increase the loan limits. Fannie and Freddie are trying to do more on the affordable housing front. So all of these things factor in to help increase our sales, sell off existing loans and sell rental homes.

Okay. Maybe switching gears a little bit. And I think about some of your assets in the Southeast tend to be a little bit more value-add purchase, especially with some of those not being in the same-store pool. How are you kind of thinking about the pace or the potential pace of lease-up at those assets as we come in to kind of peak leasing/selling season?

So Daniel Landy, why don't you tell them how we're doing on the AZ fund properties and a little bit about the new video that's going to come out and how positive it is.

Yes. So for the OZ fund properties, 1 in Georgia and 1 in South Carolina, both of them have really great demand. The one in Georgia right now, the leasing pace has been around 4 or 5 homes a month. So I think we'll keep doing that. The one in South Carolina, we have an incredible waiting list and everything [indiscernible] home we set up there is full. We're just right now -- there's a north section that we're trying to get expansions and approvals for, looks like we'll be getting that, so we'll have a big infill there. And we're going to come out with a video showcasing what we're doing in the current OZ fund and in the South, and it will really give you investors a really great deal of the positive impact we've made there, the housing supply we've increased and the level of demand in the Southeast.

Yes, South Carolina, I think, is the fastest-growing state in the U.S., and we've done a really good job filling everything we can fill right now, and we're going to keep expanding there.

The next question will come from Rich Anderson with Cantor Fitzgerald.

This is Jeff [indiscernible] on for Rich. Just wanted to ask about same-property occupancy. It looks like it looks like it kicked up about 110 bps from last year to 89%. In your view, what's the kind of realistic feeling or target that you might have for occupancy across the portfolio? And are there any markets that you feel like have the most room to run from this point?

Yes. Good question, first of all, and we're very happy with what we've been able to accomplish. I think, but I'm not positive this is a peak of same-property NOI as long as I've been here. So it's nice to get there and it's really a function of going out purchasing properties. We know what the problem was when we purchased them. We made the improvements to the communities. We make them nicer and safer places to live and then we start to implement the rental home program.

Just to add some color there, we currently have 430 homes on site. Some of them are ready for occupancy. Some of them we're working on getting ready for occupancy. That is all low-hanging fruit that should allow us to continue to grow occupancy into the second and third quarters. I don't see any reason why, in the near term, call it the end of the year, we can't get above 90% occupancy. I think that's a very realistic goal.

You've always got some move-outs and some home removal that goes along with some of these home installations. So it does offset the occupancy growth a little bit, but by and large, we've done the majority of that work, and I do expect a lot of occupancy upside here going forward.

As far as regions that are doing very well, Ohio has really led the company over the past few years in occupancy growth. And the good news is we still have quite a few vacant sites at some of our communities that are the best performers. We expect that to continue. Pennsylvania actually had a pretty slow first quarter, but I think that was largely impacted by the winter. And when we're out there working with our community managers and our regional managers, we're expecting a nice uptick in occupancy there. Indiana has always been solid, and we've got some nice expansion sites that we're filling at a pretty rapid clip. And then I just can't leave Tennessee because Tennessee, albeit a smaller portion of the portfolio, always has very strong demand and always fills quite a few sites.

The issue in Tennessee as we ran out of site, but the good news is we've been developing expansion sites. We've got about 50 sites left at our Holiday Village expansion. We're about to complete the next phase of our Dock River expansion, which, in the short term, will give us 40 new lots to fill. And then we just built 55 units at River Block, which is joining Allentown. And on top of that, we have another 100 units that were just completed at Memphis Blues. So really throughout the portfolio, demand is strong.

I would just add that New York really does have a very seasonal impact because of the weather up there. Our occupancy in New York right now has rebounded and we're in very good shape up there. So I hate to say we're doing well everywhere, actually, I'd love to say we're doing it everywhere, but really across the board, we're seeing strong demand, and we're filling a lot of units.

Just to give an example, when the Mayor of Memphis said that they need 10,000 affordable homes, and the only people building not there right now are uhm and we're expanding there rapidly and we have a lot of extra land, we plan to buy some more land. And I don't know if we're in the third section we're going to be four section. Memphis is a sleeper. We did very well packing [indiscernible]. Now I think Memphis is going to be an excellent area to develop affordable housing.

Okay. Great. And just as a follow-up, can you walk us through the puts and takes on interest expense for the rest of the year? Just wondering if Q1 is the peak or if we should expect this level to kind of persist throughout 2026?

I believe that it is pretty much the same that we will expect throughout the year. I don't believe that we will have any big increases in interest expense or big decreases at this point.

Important to note, if I remember the numbers right, which I think I do, $600 million of the increased interest expense is from refinancing at a higher rate. The rest of the interest expense is from adding rental units and building lots, which cannot possibly earn money until they're occupied and they are now, at this moment, becoming occupied and will become occupied throughout the year. So to me, you have the maximum interest expense without revenue that you will have during the year.

Yes, that's generally correct. I just want to point out that last year, we had about $117 million in debt that was refinanced. It was at 4% at the time that it was being paid off. That increased to about 5.65% average, which increased the interest cost on that batch by just about $2 million, just over $2 million, if I remember correctly. On top of that, we did increased the mortgage debt. So that was another $4 million in interest and then we it's [indiscernible]. So that's why interest is [indiscernible].

But we don't believe that there will be any large fluctuations throughout the rest of the year.

This concludes our question-and-answer session. I would like to turn the conference back over to Samuel Landy for any closing remarks.

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our company. As always, Gene, Anna, Brett and I are available for any follow-up questions. We look forward to reporting back to you in early August with our second quarter 2026 results. Thank you.

The conference has now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately 1 hour. To access this replay, please dial the toll-free +1-855 669-9658 or international (412) 317-0088. The conference access code is 2161306. Thank you, and please disconnect your lines.

Good morning, and welcome to UMH Properties Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions]

Please note this event is being recorded. It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel. Thank you, Mr. Koster, you may begin.

Thank you very much, operator. In addition to the 10-K that we filed with the SEC yesterday, we have filed an unaudited fourth quarter and year-end supplemental information presentation. This supplemental information presentation, along with our 10-K, are available on the company's website at umh.reit.

We would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's fourth quarter and year-end 2025 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

In addition, during today's call, we will be discussing non-GAAP financial metrics. Reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as the explanatory and cautioning language are included in our earnings release, our supplemental information and our historical SEC filings. Having said that, I would like to introduce management with us today. Eugene Landy, Founder and Chairman; Samuel Landy, President and Chief Executive Officer; Anna Chew, Executive Vice President and Chief Financial Officer; Brett Taft, Executive Vice President and Chief Operating Officer; Jim Lykins, Vice President of Capital Markets; and Daniel Landy, Executive Vice President.

It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

2025 was another strong year for UMH Properties, marked by continued operational excellence, strategic growth and solid financial performance. We made significant progress in increasing the value of our portfolio, driving occupancy gains, breaking our sales record, growing the company through external acquisitions and positioning the company for sustained future growth. The affordable housing crisis has gained national attention. Prebuilt homes for sale of rent in communities is a solution to that crisis.

Normalized FFO was $0.24 per share in the fourth quarter of 2025 compared to $0.24 in the prior year. Normalized FFO for 2025 was $0.95 per share compared to $0.93 in the prior year, representing an increase of 2%. Gross normalized FFO increased 7% for the quarter and increased 15% for the year.

We strive for per share earnings growth and anticipate strong earnings growth in 2026. At this time, we are announcing 2026 guidance of $0.97 to $1.05 per share, representing an increase of approximately 2% to 10%.

During the year, we strengthened our balance sheet through prudent capital management. We refinanced 17 communities for $193.2 million in total proceeds at a weighted average interest rate of 5.67%, using the proceeds to repay existing debt, fund our rental home program, support capital improvements, pursue acquisitions and repurchase stock. These refinanced communities were appraised at $309 million, representing a 121% increase over our original $140 million investment underscoring the significant value we've created.

Additionally, we issued $80.2 million and 5.85% Series B bonds due 2030 for foreign investors, providing flexible capital for general corporate purposes. Further, in the fourth quarter, we repurchased 320,000 shares of our common stock at an average price of $15.06 per share for an aggregate cost of $4.8 million, reflecting our confidence in the company's undervaluation. We also realized $5.7 million in gross proceeds from the sale of 100,000 shares of Realty Income Corporation from our securities portfolio.

Rental and related income, a core driver of our business grew to $226.7 million for the year, representing a 10% increase over last year. Our total revenue, including home sales, was $261.8 million for the year, representing an increase of 9% over last year. Our same property results continue to demonstrate the effectiveness of our long-term business plan. We generally purchase properties where we believe we can improve results through increased home rentals, sales income and finance income. Our team and our platform have proven time and time again that we can preserve and increase the supply of affordable housing while delivering solid and sustainable operating results.

In 2025, we delivered same-property revenue growth of 8.2% or $16.9 million and same property NOI growth of 9% or $11.1 million. This growth in same property revenue and same property NOI was driven by site rent increases of 5%, an increase in occupancy of 354 net units. Our occupancy gains continue to be driven by the successful implementation of our rental home program.

During the year, we added and rented 717 new homes across our portfolio, including those in our joint venture communities, bringing our total rental home inventory to approximately 11,000 units with a 93.8% occupancy rate. Our rental home program continues to operate efficiently with a turnover rate of approximately 20%. Our expenses per unit per year are approximately $400. Our capitalized turnover costs vary, but we are generally able to increase rents to earn 10% on any additional investments in the rental homes.

Our home sales business also performed well, generating gross revenue of $36.4 million for the year, including contributions from our new Honey Ridge community in our joint venture with Nuveen Real Estate, representing a 9% increase from $33.5 million in 2024.

In the fourth quarter, gross home sales reached $9.3 million, up 8% from the prior year period, including sales from Honey Ridge. We have acquired and developed communities in strong locations, which should allow us to further increase our gross sales and sales profitability in the coming quarters.

On the acquisition front, we completed the acquisition of 5 communities during the year, adding 587 developed homesites for a total purchase price of $41.8 million. The average occupancy in these 5 communities was 78% at acquisition, providing immediate upside through the infill of vacant sites, which should result in value creation through our proven turnaround strategy.

On the expansion and development front, we efficiently opened Honey Ridge, our 113 site greenfield development in Honey Brook, Pennsylvania. Sales at this community are going very well, and we anticipate a rapid infill pace. Additionally, we completed the development of 34 expansion sites and made progress obtaining entitlements, which should allow us to develop 400 or more sites in 2026.

Over the past 4 years, we have developed an average of approximately 200 sites per year. Expansions greatly increase the value of our existing communities. A large asset generally operates with better margins as a result of economies of scale. Additionally, these expansion sites are well located and have the potential to greatly increase our sales and sales profits.

As we fill our recently developed sites, our earnings will grow. Expansions in development require patient capital will lead to strong returns over time. UMH continues to deliver solid results while growing the company through the infill of our existing communities, acquisitions and development. We've built a best-in-class operating platform that continues to produce results year after year. We invested significant additional funds for long-term growth, which will result in stronger improvements in our operating results over the years to come.

Our long-term business plan allows us to acquire communities at a discount to their stabilized value, complete improvements and over time, realize the increases in value through refinancing. Our quality income stream is derived from our 24,000 families that have chosen to make UMH communities their home. This income stream has proven resilient through all economic cycles. Overall, these accomplishments demonstrate the resilience and growth potential of our business model.

I'll now turn the call over to Anna, our CFO, to review our financial results in more detail.

Thank you, Sam. Normalized FFO, which excludes amortization and nonrecurring items, was $20.5 million or $0.24 per diluted share for the fourth quarter of 2025 compared to $19.2 million or $0.24 per diluted share for 2024.

For the full year 2025, normalized FFO was $80.1 million or $0.95 per diluted share for 2025 compared to $69.5 million or $0.93 per diluted share for 2024, resulting in a 2% per share increase. We were able to obtain this increase in annual normalized FFO despite our operating results being impacted by our investments in growing the company through value-add acquisitions and developments and increased expenses.

Rental and related income for the quarter was $58.2 million compared to $53.3 million a year ago, representing an increase of 9%. For the full year, rental and related income increased from $207 million in 2024 to $226.7 million in 2025, an increase of 10%. This increase was primarily due to acquisitions, increases in rental rates, same property occupancy and additional rental homes.

Community operating expenses increased 12% during the quarter and 10% for the year. This increase was mainly due to acquisitions and an increase in payroll costs, real estate taxes, snow removal and water and sewer costs. This increase also includes onetime legal and professional fees of $724,000 for 2025.

Despite the increase in community operating expenses, community NOI increased by 7% for the quarter from $31.1 million in 2024 to $33.3 million in 2025, and increased by 9% for the full year from $119.7 million in 2024 to $130.7 million in 2025.

Our same property results continue to meet our expectations. Same-property income increased by 8% for both the quarter and for the year, generating same-property NOI growth of 6% for the quarter and 9% for the year. From a liquidity standpoint, we ended the year with $72 million in cash and cash equivalents, and $260 million available on our credit facility with a potential total availability of up to $500 million pursuant to an accordion feature. We also had $129 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.

During the year, we issued $80.2 million in 5.85% Series B bonds due 2030 to foreign investors, providing flexible capital for general corporate purposes.

As we turn to our capital structure, at year-end, we had approximately $761 million in debt, of which $556 million was community-level mortgage debt, $28 million was loans payable, and $177 million was our 4.72% Series A bonds and 5.85% Series B bonds, 99% of our total debt is fixed rate. The weighted average interest rate on our mortgage debt was 4.73% at year-end compared to 4.18% at year-end last year. The weighted average maturity on our mortgage debt was 6.1 years at year-end and 4.4 years at year-end last year. The weighted average interest rate on our short-term borrowing was 6.38% as compared to 6.54% last year. In total, the weighted average interest rate on our total debt was 4.9% at year-end compared to 4.38% at year-end last year.

In 2025, we successfully refinanced 17 communities generating total proceeds of $193.2 million at a weighted average rate of 5.67%. This capital was used to repay existing debt, invest in our rental home program, capital improvements, acquire new communities and buy back our common stock. The appraisals conducted for the refinancing demonstrates the value created by our business plan. Our total investment in these communities was approximately $140 million or $37,000 per site, and they were valued at approximately $309 million or $82,000 per site, generating an increase in value of $169 million, representing an increase of 121% in value, which, as Sam mentioned, underscores the significant value we've created.

During 2026, we have 6 mortgages maturing, totaling $38.2 million and expect to have the same success in refinancing these communities. At year-end, UMH had a total of $323 million in perpetual preferred equity. Our preferred stock, combined with an equity market capitalization of over $1.3 billion and our $761 million in debt results in total market capitalization of approximately $2.4 billion at year-end as compared to $2.5 billion last year.

In the fourth quarter of 2025, we repurchased 320,000 shares of our common stock at a weighted average price of $15.06 per share for a total of $4.8 million, reflecting our confidence in the company's undervaluation. Our common stock repurchase program allows us to repurchase up to $100 million of our common stock, and we will continue to monitor the market to determine the appropriate time to continue using the program.

During the year, we issued and sold 2.6 million shares of common stock through our common ATM program, generating net proceeds of approximately $44.1 million. Currently, the common ATM program remains closed. The company also received $9.3 million, including dividends reinvested through the DRIP. In addition, we issued and sold 93,000 shares of our Series G preferred stock during 2025 through the preferred ATM program, generating net proceeds of approximately $2 million. Subsequent to year-end, we issued 66,000 shares of our Series C preferred stock through our preferred ATM program, generating net proceeds of approximately $1.5 million.

From a credit standpoint, we ended the year with net debt to total market capitalization of 28.3%, net debt less securities to total market capitalization of 27.3%, net debt to adjusted EBITDA of 5.4x and net debt less securities to adjusted EBITDA of 5.2x. Interest coverage was 3.6x and fixed charge coverage was 2.3x. Additionally, we had $23.8 million in our REIT securities portfolio, most of which is unencumbered. The portfolio represents only approximately 1.1% of our undepreciated assets. We are committed to not increasing our investments in our REIT securities portfolio aside from dividend reinvestment and have, in fact, continued to sell certain positions.

During 2025, we realized $5.7 million in gross proceeds from the sale of 100,000 shares of Realty Income Corporation from our securities portfolio. We are well positioned to continue to grow the company internally and externally and are introducing 2026 normalized FFO guidance in a range of $0.97 to $1.05 per share.

And now let me turn it over to Gene before we open it up for questions.

Thank you, Anna. UMH is well positioned as a leader in the manufactured housing industry. We now own 145 communities containing 27,100 developed home sites with approximately 11,000 rental homes on those sites. Every year, we make a considerable amount of progress building an irreplaceable company and best-in-class operating platform. Our business plan has resulted in outstanding operating results, growing earnings per share and an overall larger, more profitable company. We intend to continue growing the company through compelling acquisitions when they are available, developing our vacant land, the investment in rental homes and further increasing the profitability of our sales company. We accomplished all of this while executing on our mission of providing the nation with much needed high-quality affordable housing.

Our portfolio of communities has materially grown over the years. We have selectively acquired well-located communities that have benefited from our capital improvements and rental home program. I am proud to say that every community we own is in better condition today than the day we bought it. Our investments in our communities provide the highest quality of living at the most affordable price in just about any market we operate in. These investments generate strong demand, which results in waiting list for rental homes and increased home sales.

Our 4,000 acres of land in the Marcellus and Utica Shale areas have considerable unrecognized value that will become more apparent as we continue generating revenue due to lease signing bonus and royalty income. Our 2,300 acres of vacant land also carried substantial value as we explore the expansion of our communities or other uses such as single-family home development, apartments and data centers.

In addition, the recent announcement to build a new natural gas generation facility in Portsmouth, Ohio, which will be the largest natural gas generation facility in history, generating 9.2 gigawatts of power further supports the untapped potential value we have in the 4,000 acres we own within the Marcellus and Utica Shale regions.

Our country needs an affordable housing solution. We are working diligently to do more to help provide this housing and position manufactured housing as the preferred solution to the problem. Housing is a bipartisan issue, and we believe that new legislation will encourage new development of manufactured housing communities.

Additionally, 2 story and duplex homes will increase the viability of manufactured housing in urban areas and areas with higher land costs. Changes to finance laws could result in lower cost loans for our tenants, which will further improve the fundamentals of our business. We are well positioned to benefit from these legislative changes and are excited about the prospects of each of them.

Looking ahead to 2026, we anticipate strong growth prospects supported by positive industry fundamentals. Demand for affordable housing remains high, and our sector benefits from limited new supply and favorable demographics. Our recent acquisitions and ongoing community improvements will further contribute to organic growth, while our joint venture and opportunity zone fund provide additional avenues for long-term growth while limiting the impact on our short-term earnings. We expect these factors to drive continued FFO growth in 2026. Our team is focused on executing our strategy to deliver long-term value for shareholders.

Thank you again for joining us today. Operator, we are now ready to take questions.

[Operator Instructions] And the first question will come from [ Rich Anderson ] with Cantor Fitzgerald.

Great year and forward-looking perspective. I want to ask about the rental versus home sale strategy. You sort of focus on rentals as the sort of the driver to the growth story. You're breaking records and selling homes. I know the rental business is a byproduct of the Dodd-Frank legislation and so on. But I'm curious if you guys have an idea in mind and what the ultimate breakout in the portfolio might be between rental and owned homes if there's sort of a sweet spot in your mind?

Rich, Sam here. We will always use the rentals because there's so many people just looking for short-term housing, 1 year to 3 years. There's so many people who never lived in a manufactured home community. Don't really know what to expect, don't understand the houses. So the renting program creates buyers and fill sites so much quicker than selling homes. So we never won't have rentals, and we have 11,000 of them today.

But the new changes to the Title I finance laws right now, there's a limit to how much you can finance, approximately $70,000, and they might increase that. And those are government guaranteed loans. The customer only needs 3% down, that could dramatically increase our sale of the older rental units because somebody can switch their home rent portion of their payment. If they're paying $1,000 a month, $500 is lot rent, $500 rent for the house, they could convert that $500 rent for the house to a loan payment so that for the future, they are always building equity. It will never increase. It's beneficial to them, and then they own the house, which is beneficial to us. So we could be buying brand-new homes for $75,000, selling old homes for $60,000 and only needing $15,000 cash to replace them.

So we're perfectly happy doing Memphis Blues as 100% rental communities. Rentals work, we consider it horizontal apartments. We take all the efficiencies of factory built housing and that efficiency is cumulative. Even people in the business don't really understand how much better and more cost effective our houses get year after year. If you look at a 1970s home and you look at the house of today, there's nothing in common. They're completely different houses. And yet the affordability component is better than ever in comparison to any other type of housing.

So we take that fantastic efficiency of the factory-built home plus the efficiency of managing 250 lots on approximately 40 acres and pass that on to the customer. And how many people have household income of only $40,000, and they can rent the house from us for $1,000 per month, which is 30% of income. And there's nothing else they could have as good in such a high-quality community. So it works every time, and then generate sales because as people live in our communities, as they think they might want a bigger house, a multisection house, they feel comfortable buying it.

Okay. So would you say like the sweet spot, rental versus home owned is -- just for a lack of a better number, 50-50 as an efficient frontier for UMH?

I'm going to say, yes, and I just want to -- every community is different. So some communities could be 100% rental. You get to New Jersey, you almost have 0 rentals. So every community is different. But as a company, do I think we'll have 50% rentals? Yes.

Okay. On the same-store performance, you had some elevated expenses in the fourth quarter. I assume that was snow removal and weather related. What would it have been without that, if you were to normalize normal quarter's worth of expenses, would have been approaching a 10%-ish type number, same-store NOI?

Yes, exactly, Rich. And this is Brett here. And just looking at the numbers for the year, we were very happy with the 8.2% revenue growth, the 7% community operating expense number and the overall 9% community NOI increase.

So that's pretty close to where we expected to be. We're always out there saying we anticipate expenses to rise 5% to 7%. We did have elevated snow removal costs. We did have overtime related to snow removal. We also had additional tree removal related to snow removal in the fourth quarter. And then you've got some real estate tax increases and some insurance expenses that also increase that overall number.

So looking at a normal quarter without the bad winter we've had, we do expect that we would have been in that 10% range. But looking forward, we anticipate being able to get our 800 new rentals installed and rented. We anticipate to get our annual rent increases, and we should be able to control our expenses in that 5% to 7% range, which again, should result in high single-digit or low double-digit NOI growth, which is where we've been over the past few years.

Okay. And last for me. Any meaningful change to home prices, supply chain issues, tariffs, blah, blah, blah, like how is that changing what the wholesale cost is for your homes when you kind of bring them into a community and then either rent or sell them? What has the dynamic been there lately?

Sam here. Brett will elaborate, but everything I see is favorable. No dramatic weights for houses, prices, actually in some cases, coming down. Go ahead, Brett.

Yes. No, prices are in a very similar position to where they were all of this year and last year. We'll keep an eye on that going forward, but we're still able to get our rental homes in the $75,000 to $80,000 range, which positions us well to rent homes at $1,000, $1,200 or $1,400 a month depending on the market.

Factory backlogs for the most part, are in good shape in the 6- to 8-week range. There's a few factories that are a little bit further out than that, but we're working with those manufacturers to try and either get homes or find a comparable home from another factory. So we don't anticipate any problems getting homes, getting them set up with the one caveat being that it's been a very snowy winter in most of our locations. So that does slow down [ sales ] a little bit. But demand is strong for both sales and rentals. We have homes either on site or being delivered to the sites. They're being set up in a timely manner, and we anticipate similar occupancy gains in 2026.

The next question will come from Barry Oxford with Colliers.

Sam, real quick. If you could kind of walk me through. I understand some of the headwinds that existed in 2025. But then when I look at what you're doing on a same-store NOI, internal growth, very strong numbers, no reason to think, at least at this particular juncture that you won't be able to put up similar numbers. But yet, when I look at the low end of your guidance at $0.97, that's only 2 more cents than what you did this year. Can you help me kind of walk through what's holding back the FFO per share?

I think it's better suited asking Jim to answer on the guidance. Go ahead, Jim.

So that could be any number of things, Barry. Home sales could be worse than what we're anticipating. We could potentially raise capital that we're not anticipating right now. But sitting here right now, we would expect to come in right in the middle of that range. That's kind of a -- sitting here right now, worst case and best case scenario, we don't consider that number to be either conservative or overly optimistic. We think it's straight down the fairway.

And the only thing I'll add to that, we really don't know what sales will be, 2 communities in 2024, between the 2 of them had approximately $8 million in sales that were full in '25. So we couldn't have any sales from them in '25. And they will have available lots in '26. So that there's a potential of all the sales in '25 plus $6 million just from those locations. Additionally, there's other expansions just built, places where you're getting to -- as expansions or new communities become more mature, the sales get easier. So there's a lot of reason to be even more optimistic on sales, but you just never know because there's so many factors that come into it. But if everything goes right, sales can really get beyond $40 million in a year.

Next question will come from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on the rental homes outlook of 700 to 800 homes this year. What's the timing of that? Do you expect that to be evenly split during 4 quarters?

Probably not evenly spread, as we are seasonal. And as I just mentioned, the first quarter, we are experiencing some challenges with incredibly cold temperatures and snow, which unfortunately does slow things down on the home side and in some cases, the move in. But I am happy to say that sitting here now, we're happy with where sales are. We're happy with the occupancy gains we've seen so far this year.

We do have 100 homes in inventory that are fully set up and ready for occupancy at the moment. And we've got another 380 homes being set up. So we should see some occupancy growth in the first quarter. The second and third quarter is where the majority of that occupancy growth will come in, and the fourth quarter does tail off a little bit. But we do expect it to be heavily weighted to the spring, summer months, and it's pretty consistent with the previous years as well.

Okay. Second question, maybe on the acquisition opportunities. What are you guys seeing in the market as far as acquiring new properties?

Yes. The acquisition market remains competitive, high-quality assets that are well located and stabilized are trading in the sub-5% area in most cases, in some cases sub 4%. We are looking at several smaller portfolio opportunities and one-off acquisitions that could trade in the 5% to 6% range, but we're out there analyzing the opportunities, doing our detailed underwriting and making sure that we fully account for any capital items that may be needed and get the right deals in the right locations to continue our growth and try and put together deals that are accretive to earnings.

So nothing to report on the pipeline at the moment. We were very happy to find 5 communities to acquire last year. That was 587 sites or $41.8 million in markets that we like and think we'll do well in for the future. So we're out there looking for those opportunities in 2026.

And I'll just mention the joint venture with Nuveen for newly built communities as well as the opportunity zone fund create incredible opportunity to expand what we've done in new community construction.

UMH, the parent company can only develop so many new sites per year because it's a lost business for 3 to 5 years. But doing it in a joint venture or doing it in the opportunity zone fund, there's almost no limit to how much we can do, and that has incredible potential to allow us to build new communities throughout the country.

The next question will come from John Massocca with B. Riley.

So apologies if I missed this earlier in the call, but hopping around between a couple of different earnings calls, but with regards to the guidance provided, any color on what you're expecting in terms of the contribution from new home sales and just the kind of scale of potential new home sales in 2026?

Jim, you could tell us what you use, yes.

So we -- John, we haven't disclosed what -- or what the amount will be in anticipated home sales this year or the number, I would just tell you that we assume an improvement. Sam mentioned earlier that we could get to $40 million. So I would keep that in mind, but we haven't disclosed an actual dollar amount where we anticipate sales coming in.

Okay. The sale, I mean -- go ahead.

The sales are very difficult to predict, but we have more available expansion sites than we've ever had in the past. We have the turnaround communities such as Oak Tree in New Jersey. We have a lot of locations that could potentially increase sales more than conservative people would expect.

Okay. In terms of the in-place portfolio, any changes you're seeing in terms of delinquency or the bad debt outlook?

No. Collections remain incredibly strong in that 98.5% range. It really hasn't fluctuated too much. Every year around the holidays, it goes down a little bit, but then pick back rate up towards the end of January. So rent continues to be paid. We haven't had any issues passing through our annual rent increases and don't anticipate any changes coming here shortly, but constantly monitor it and if anything changes, everybody will know.

And our write-offs are approximately 1% or a little less of our rental and related income, and that has been consistent for the last, I don't know, how many years.

Okay. And then apologies if this was already addressed in the call, but you sold some shares out of the marketable securities portfolio. Is that something you think you could continue doing going into 2026? Or was that kind of one-off in nature?

No, no. We have announced that we have a $100 million buyback. And of course, the timing of buying back shares depends on whether we have any acquisitions, whether we invest in new greenfield developments more than we've originally planned. And the whole purpose of the securities program is always to keep liquidity. And so we have about $26 million in liquidity there. But we also have unused bank lines of $260 million. We've been conservative, and we plan to keep bank conservative but we do eventually intend to carry less cash because it puts a drag on our earnings, and we do plan to eventually take down the securities program to 0.

But at the present time, we'd like having $26 million available for any acquisition and other ways that we would need capital. We're a very conservative company, and we intend to continue to do that. But we will be reducing the securities program.

Okay. And I guess, was the reason for tapping that due to the buyback you had in place? You thought your stock was more attractive than maybe the valuation on some of the assets in the marketable securities portfolio?

No, the securities portfolio, at its present low level, we're very pleased with the securities portfolio. We have nothing but admiration for the 3 basic companies that are in it, and we think they're great investments. We just think our own properties are better investment.

This concludes our question-and-answer session. I would like to turn the conference back over to Samuel Landy for any closing remarks.

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our company. As always, Gene, Anna, Brett and I are available for any follow-up questions. We look forward to reporting back to you in early May with our first quarter 2026 results. Thank you.

The conference has now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately 1 hour. To access this replay, please dial U.S. toll-free 1 (877) 344-7529 or international (412) 317-0088. The conference access code is 1544518. Thank you, and please disconnect your lines.

Good morning, and welcome to UMH Properties Third Quarter 2025 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded. It is now my pleasure to introduce your host, Mr. Craig Koster, Executive Vice President and General Counsel. Thank you. Mr. Koster, you may begin.

Thank you very much, operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited third quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.reit. We would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no

assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's third quarter 2025 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

In addition, during today's call, we will be discussing non-GAAP financial metrics. Reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as explanatory and cautioning language are included in our earnings release, our supplemental information and our historical SEC filings. Having said that, I would like to introduce management with us today. Eugene Landy, Founder and Chairman, Samuel Landy, President and Chief Executive Officer; Anna Chew, Executive Vice President and Chief Financial Officer; Brett Taft, Executive Vice President and Chief Operating Officer; Jim Lykins, Vice President of Capital Markets; and Daniel Landy, Executive Vice President. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you very much, Craig. We are pleased to report normalized FFO of $0.25 per diluted share for the third quarter of 2025 as compared to $0.24 per diluted share for the same period last year representing an increase of 4%. Sequentially, normalized FFO per diluted share increased 9% from $0.23 in the second quarter. Normalized FFO of $0.25 per diluted share for the quarter annualizes out to an even $1 and is a significant milestone we are proud of. We continue to execute our long-term business plan, which is resulting in increased occupancy, sales and ultimately, increased net operating income and property values.

We now own 145 communities containing approximately 27,000 developed homesites with 10,800 rental homes. Our portfolio is 87.2% occupied, leaving us with 3,500 vacant sites to continue to grow organically as we invest in our rental home program and experience further growth in our sales operation. At any given time, UMH has $100 million or more invested in turnaround acquisitions, expansions and inventory. These long-term investments provide for a runway to generate strong operating results, grow the company and increase the value of our communities. For example, over the past 5 years, we have completed the construction of approximately 1,100 sites. Of these sites, approximately 470 are currently occupied. As we fill the remaining 630 sites, we have the opportunity to earn significant sales profits and increase our overall occupancy rates, revenues and property values. 630 sites can generate sales profits of $20 million or more and generate recurring site rental revenue of $4 million per year or more.

Additionally, we have approximately $33.6 million invested in our joint ventures with Nuveen, which own 3 recently developed communities containing 471 sites. These communities continue to make progress increasing occupancy and should begin to positively impact earnings in the coming quarters. We have the potential to increase sales profits, occupancy, NOI and grow our loan portfolio. We have raised the capital to do this because we believe that will result in FFO per share growth in the next few quarters. During the third quarter, we increased total revenue from $60.7 million in the third quarter of last year to $66.9 million in the third quarter of this year, that represents an increase in quarterly total income of 10%. For the 9 months ended September 30, 2025, total income was $194.8 million an increase of 9% from the prior year period. We are on track to surpass $250 million in total income in 2025.

Our company is well positioned with a strong balance sheet and a sound operating environment for earnings per share growth in the quarters to come. During the quarter, we issued $80 million of our new 5.85% Series B Israeli bonds, which will be deployed accretively over time. We have capital needs of $120 million to $150 million annually, which we invest in our capital improvements, new rental homes, expansions and financing of home sales. Most of these uses being accretive uses of capital. Over the past 2 years, we have relied on our common ATM to fund our growth initiatives. This year, we are utilizing our ATM less and debt more. In the long term, this debt will be repaid and the equity should increase in value. The objective is to grow earnings per share and ultimately, our share price. Over the past 5 years, normalized FFO per share has increased by 48% and the dividend has increased by 25%.

During the quarter, we increased same property occupancy by 132 units over the second quarter and by 357 units over last year. For the 3 months ended September 30, 2025, same property rental and related income increased by 9% and same-property NOI increased by 12% or $3.7 million. Year-to-date, same property rental and related income increased by 8% and same property NOI increased by 10% or $9.2 million. Our same-property operating expense ratio for the quarter fell to 39.7% as compared to 41.1% last year. Our rental home occupancy was 94.1% as compared to 94.4% last year. During the quarter, we converted 227 new homes from inventory to revenue-generating rental homes. Year-to-date, we have converted 523 new homes from inventory to revenue-generating rental homes. We currently have 400 homes on site with 100 homes ready for occupancy and another 300 being set up an additional 200 homes on order that have not yet been delivered. The pipeline of homes on our vacant sites positions us for additional occupancy increases throughout the rest of the year and into next year.

We anticipate by the end of 2025, we will have added 700 to 800 new rental homes. Sales of manufactured homes continue to grow, driving additional sales profits. Gross sales for the quarter were $9.1 million as compared to $8.7 million last year, representing an increase of 5%. Not included in these sales results are an additional $800,000 in sales at our recently opened joint venture, which is a greenfield development Honey Ridge. Including these sales, sales for the quarter were up 14% over last year. For the 9 months ending September 30, 2025, Sales of manufactured homes increased by 5% from the prior year period. Gains from sales for the quarter were $1.3 million or 14% of total sales. Gain from the sales for the 9 months were $3.2 million or 12% of total sales. During the quarter, we acquired 2 Maryland communities consisting of 191 lots, which are 79% occupied for a total purchase price of $14.6 million. Subsequent to quarter end, we closed on the acquisition of one community located in Georgia, consisting of 130 sites of which 32% are occupied for a total purchase price of $2.6 million.

Year-to-date, we closed on 5 communities containing 587 sites for a total purchase price of $41.8 million. Our Marcellus and Utica shale strategy, which began in 2011, has resulted in substantial appreciation of the land, communities, homes and approved sites we own in the area. Data centers, the Shell cracker plant pipeline projects, new gas wells and electric generation plants all generate the need for more quality affordable housing. UMH owns 4,000 acres of land in 78 communities with 12,300 home sites in the Marcellus and Utica shale areas. We are seeing increased interest in leasing our oil and gas rights and anticipate more lease signings in the coming months. UMH is well positioned for future growth through the occupancy of our 3,500 vacant lots, the development or sale of our 2,300 acres of vacant land infill of our 600 recently constructed expansion lots, the infill of our 329 sites owned through our joint venture, the leasing of our oil and gas rates and the growing profitability of our sales and finance company.

We anticipate that we will achieve our 5% annual rent increase, generating $11 million in new revenue install and rent 800 new rental homes generating an additional $10 million in revenue and a substantial increase in our sales revenue and sales profit. These are valuable opportunities to increase rental revenue, sales revenue, finance and insurance revenue and increased value and FFO per share that are not currently reflected in the value of the company. Additionally, we have $36 million in inventory that is paid for and actively being sold and rented, which will increase earnings as the homes and lots become occupied. This organic growth should allow us to generate earnings growth and improve operating results for the years to come. We are incredibly optimistic about the future of the company and look forward to driving FFO per share growth. And now I will turn it over to Anna to discuss our third quarter results.

Thank you, Sam. Normalized FFO per diluted share increased from $0.24 to for the third quarter of 2024 to $0.25 for the third quarter of 2025, representing an increase of 4%. Sequentially, normalized FFO per diluted share increased 9% from $0.23 in the second quarter to $0.25 in the third quarter. Rental and related income for the quarter was $57.8 million compared to $51.9 million a year ago, representing an increase of 11%. This increase was primarily due to an increase in same-property occupancy the addition of rental homes and increase in rental rates and the additional revenue generated by the purchase of 2 communities at the end of the first quarter of 2025 and the purchase of 2 communities at the beginning of the third quarter of 2025.

Community operating expenses increased 11% during the quarter. This increase was due to acquisitions and an increase in payroll costs, real estate taxes, snow removal and water and sewer expenses. These increases in community operating expenses also includes onetime legal and professional fees of $660,000 for the 3 and 9 months ended September 30, 2025. The 11% increase in both rental and related income and community operating expenses resulted in a net increase in community NOI of 11% for the quarter. Our same property results continue to meet our expectations. Same-property income increased by 9% for the quarter, while same-property community operating expenses only increased by 6% and resulting in an increase in same-property community NOI of 12%. Same-property NOI increased by $9.2 million for the 9 months ended September 30, 2025, resulting in an annualized run rate of $12.3 million. Our community operating results continue to be exceptional, and we anticipate further growth as we fill our recently developed sites and our inventory.

As we turn to our capital structure, at quarter end, we had approximately $673 million in debt, of which $468 million was community-level mortgage debt, $28 million was loans payable and $177 million with our Israeli bonds. Total debt was 99% fixed rate at quarter end with a weighted average interest rate of 4.83%. The weighted average interest rate on our mortgage debt was 4.58% at quarter end compared to 4.17% at quarter end last year. The weighted average maturity on our mortgage debt was 5.8 years at quarter end and 4.6 years at quarter end last year. In August and September, we paid off 10 mortgages totaling $61 million, and we are currently in the process of refinancing most of these communities and anticipate closing during the fourth quarter. On July 22, 2025, we sold $80.2 million of 5.85% Series B bonds that are due in 2030. The net proceeds of the sale of these bonds after deducting offering discounts, fees and other transaction costs were $75.1 million.

On July 8, 2025, we amended our $35 million revolving line of credit with Ocean First Bank to extend the maturity date to June 1, 2027. Interest is at prime with a floor of 4.75% and is secured by our eligible notes receivable. At quarter end, we had a total of $322 million in perpetual preferred equity. Our preferred stock, combined with an equity market capitalization of $1.3 billion and our $673 million in debt results in total market capitalization of approximately $2.3 billion at quarter end. During the quarter, we issued and sold 290,000 shares of common stock under the September 2024 common ATM program at a weighted average price of $16.44 per share. Generating gross proceeds of $4.8 million and net proceeds of $4.6 million after offering expenses. The company also received $2.6 million including dividends reinvested through the DRIP. During the quarter, we issued and sold 3,000 shares of our Series D preferred stock under our 2025 preferred ATM program at a weighted average price of $23 per share, generating gross proceeds of $75,000 and net proceeds of $59,000 after offering expenses. We currently have $99.9 million eligible for sale under the 2025 preferred ATM program.

From a credit standpoint, we ended the quarter with net debt to total market capitalization of 28.3% and net debt less securities to total market capitalization of 26.9%, net debt to adjusted EBITDA of 5.1x and net debt by securities to adjusted EBITDA of 4.8x. Interest coverage was 3.7x and fixed charge coverage was 2.3x. From a liquidity standpoint, we ended the quarter with $34 million in cash and cash equivalents and $260 million available on our unsecured revolving credit facility with a potential total availability of up to $500 million pursuant to an accordion feature. We also had $183 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes. Additionally, we had $32 million in our REIT securities portfolio, all of which is unencumbered. This portfolio represents only approximately 1.5% of our undepreciated assets. We are committed to not increasing our investments in our REIT securities portfolio. We are well positioned to continue to grow the company internally and externally. And now let me turn it over to Gene before we open it up for questions.

Thank you, Anna. UMH has continued to deliver consistent growth over the years by executing a disciplined strategy implemented by our talented and dedicated team. This strategy begins with identifying and investing in assets with strong upside potential. Our systems and processes, which have been refined through more than 55 years of operating experience, allow us to unlock that potential. We do this through infilling vacant lots, developing new sites, replacing outdated homes with modern state of their heart housing and applying a targeted sales and rental platform in markets where we already have a proven track record.

To fuel these operations across our portfolio, we've taken a disciplined approach to raising capital by thoughtfully issuing both equity and debt we've been able to expand while maintaining a strong, flexible balance sheet. One that's built to capitalize on market opportunities, continuously improve our existing portfolio and withstand unforeseen challenges. Because of UMH's proven business plan and responsible capital management, we are well positioned to continue growing earnings per share, increasing our property values and enhancing long-term shareholder value.

We remain focused on the strong fundamentals of the manufactured housing sector and the broader need for housing across the country. These tailwinds, combined with our disciplined approach, continue to drive meaningful increases in the value of our portfolio. Our communities continue to perform exceptionally well with strong sales demand rising occupancy and the ongoing and operational efficiencies. We've also developed our vacant land in ways that will enhance both the value of our communities and the company over time and we've achieved this while keeping our mission, treating residents fairly and expanding the supply of attainable workforce housing at the center of everything we do.

Looking ahead, our mission has never been more important. The national housing shortage continues to intensify, and manufactured housing is uniquely positioned to help meet this critical need. We are encouraged by recent legislative initiatives that may provide residents with better financing options while also creating new opportunities for UMH to access long-term cost-effective capital for growth through acquisition and new development. We are confident that we are on the right track. Our continued success should translate to growth in earnings per share and stock price along with the satisfaction of helping to meet one of the most pressing social needs of our time, quality, affordable housing.

[Operator Instructions]

Our first question today comes from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on your 4Q acquisition in Georgia. Can you provide some color on the occupancy upside there and it also looks like the average monthly home rent is lower than your other property in Georgia. Just hoping to get some more color on that property.

Yes, sure. So the property in Albany, Georgia is located very close to our other community in Georgia. It's 130 sites. It's currently about 30% occupied. It's really our typical value-add business plan we will go in there make some immediate improvements, increase the overall quality of the infrastructure, add some amenities and then start to bring in new homes for rent. I would expect the rental rates to be in the $1,000 to $1,200 a month range once we get going, and that property has really significant upside potential.

Our plan is to get in there and start bringing in homes basically as soon as we complete some initial improvements. And we should see a pretty substantial increase in occupancy over the first year. we're getting ahead of ourselves a little bit, but 30 units a year should be about what we're able to accomplish there potentially more.

I just wanted to note the -- it appears to us in the Southeast, nobody has followed our model which is shipped to renting homes. They're going by the old model, resident owns the home and rent a lot by adding rental units, if you look at our 3 Southern states: Georgia, South Carolina, Alabama, our revenue increase for the past year, 469% in Georgia, 37% South Carolina, 23% Alabama. So our Southern strategy is working, and we're going to continue it.

Second question I have is on share repurchases. In September, you increased your share repurchase size of $100 million from $25 million. Just want to get some more color on how share repurchases fit in your capital allocation plan going forward.

So the plan is we've done quite a bit of work. Part of our expense increase was the increased legal to create a contract to sell vacant land at the time a developer sells houses. That's a very long-term prospect because somebody has to get the approvals to build the expansions, sell the houses and then eventually, we'll turn that into cash. But the objective is to sell assets, issue preferred stock, use those things to fund our growth and then potentially repurchase stock.

If I can add, UMH is unique, and there's a REIT. Our sector is unique. We have the government-sponsored entities, which are legislation we are privileged to borrow money and the amount of perhaps 60% of value as the value of our communities go up, the ability to borrow money goes up. And over the last 5 years, we've had a remarkable growth in values, and we've realized some of that additional borrowing power. But we do -- when we studied the company, -- we see that we are very conservative, but perhaps we've been too conservative and that we certainly can have debt of 45%, 50% assets, and we have the ability then to go to the government-sponsored entities and borrow very substantial amounts of money. In addition, there's a shortage of preferred shares. It's a unique type of security its equity as far as we're concerned and yet it doesn't share in the growth of the company so that it's very accretive to the common stock. So between the preferred stock and the ability to borrow from government sponsors. We are in a really unique and privileged position to complete the buyback that the Board has authorized.

And then lastly, in your prepared remarks, you talked about seeing more interest in oil and gas rights that your company has. Can you provide some more details on how big that opportunity set is?

Well, it's very difficult for even us to evaluate that. We receive more and more inquiries pertaining to the properties. But if you look at the Marcellus and Utica Shale map and you recognize we have 4,000 acres, I believe, or in the Marcellus and Utica Shale area. You think about the Homer City data centers and these articles in today's Wall Street Journal about how technology is improving, how they could drill deeper they could obtain more energy from the ground. The value of these rights is increasing. The demand for energy is increasing. Data centers are a huge thing. Off topic a little bit because we're talking about the Marcellus and Utica shale.

But in that regard, when you look at where we've located our communities directly outside of great cities, Nashville, Memphis, Columbus, Pittsburgh, Jackson, New Jersey, Eatontown, New Jersey, the growth in value of these locations, just like the Marcellus and Utica shale, it's substantial and really creates a great future for us.

The next question is from Craig Kucera with Lucid Capital Markets.

There was a pretty meaningful decline in G&A from really the last 3 quarters. I know there's some seasonality in your G&A, but is there anything else that we should be thinking about?

It was primarily seasonality and the timing of certain expenses, we would expect that on average, Q3 year-to-date would be what we would expect for Q4.

Okay. That's helpful. And I just wanted to confirm the onetime legal and professional expenses were booked as property operating expenses.

Yes, it was.

Okay. Got it. When I look at what you paid for Albany, I think it's like $20,000 a site, which is significantly below which you've been typically paying even going back to '21. Is this property going to require a lot more CapEx in your typical value-add acquisition? Or is it going to be something similar to what you usually do?

No, it's a very similar strategy. I mean, you look at all body doing though, and it's 130 sites. It's only 32% occupied at the time of acquisition. There's very limited income there now. And obviously, the NOI property throws off is what really generates that property value. So we looked at Albany as an asset with a ton of upside by implementing our typical business plan. And quite frankly, we wish we could go out and find more assets that fit that exact strategy. That's what we've proven we're able to do very well, and we're going to keep our eye out for other assets that meet that criteria.

Just to add to the other acquisitions we've completed this year, Cedar Grove and Maplewood Village in New Jersey are both 100% occupied properties with reasonable site rent. So that's going to drive that cost per site up into the $90 $2,000 a pad range. And then Maryland similar to New Jersey, higher rents, higher occupancy and drives a higher per pad price.

Yes, that makes sense.

You have to realize that manufactured housing is in a unique position we believe we can produce 3 bedrooms, 2 baths and 1,100 square feet of home for 250,000 unit 1,000 units for $250 million. And the cost -- the conventional construction is running 400,000, 450,000 unit and apartments, which were only 650 square feet and only one bathroom running 350,000 units. So we have a distinct cost advantage. We are affordable housing. The government is recognizing it. The market is recognizing it and we hope that we can continue to add 1,000 homes to the nation's need for housing.

Great. And just circling back to the new Georgia acquisition. I think you've had some issues with some of the new markets you've entered in the Southeast in the past where the municipalities have slowed down approvals. Is this community fully entitled and approved to move forward? Or do you expect any sort of delay?

To be fair, the one that we had issues with was fully entitled and we didn't expect a delay. But no, this is fully entitled. There should not be issues. If anything changes, we'll update you in the future. But our game plan is to go full speed ahead down there.

Got it. Just one more for me. You had a nice pickup in your net additions of rental homes this quarter. And I know your sales out of the used home pool are sort of up and down, but how meaningful do you view the remaining pool of used homes for sale? Is it getting closer to being complete? Or do you still think you have a healthy number you think you'll try and sell.

Well, the ultimate objective is that the finance laws become more liberal. And that would be incredible because our first rental homes were purchased in approximately 2011. So they're just getting to be about 15 years old. We can be selling more and more rental homes if the people who live in there -- live in them can be approved for the loans. If all of that works out and add to that, there could be government guaranteed loans generating cash to us. And the way the rentals worked the first year, we did 100 2nd year $300 then than 800 a year. Eventually, we could be selling a significant percentage of the 15-year-old rentals as finance sales and potentially government guaranteed cash sales and we'll be adding our new 800 rental units needing minimal cash as a comparison to how it's done today.

Today, we buy 800 rentals and set them up at about $75,000 a piece and we need to obtain all of that cash to do that. If we're selling 500 older rentals, which could be cash sales, and you're selling them, I hope, for about $60,000 per unit and you're paying $75,000 per new unit that will greatly reduce the cash we need to grow the rental portfolio in the future.

The next question is from John Massocca with Ladenburg Thalmann.

Good morning. So on did I missed this earlier in the call, in bouncing between a couple of different ones. But could you give any update maybe on manufactured home sales quarter-to-date? And I guess what are the seasonal expectations in 4Q for home sales? Could they be weaker than 2Q, 3Q? Or does the increased size of your portfolio today maybe offset some of the traditional seasonality in terms of sales?

It's a good question, John. And we did not provide an update on the call, so you're the first one there. But our sales pipeline remains very strong. We've been happy with what we've seen in October so far. Pipeline today is about $3 million and growing as we get some home set up at some high-traffic expansions with good demand right now. So Hard to say exactly where we'll shake out in Q4 as it is typically one of our slower selling seasons as is Q1. But last year, we had a very strong fourth quarter, and we think we're positioned this year to also have a strong fourth quarter. We think we're in line to beat the sales record that we set last year, and we'll hopefully smash the record, honestly.

In our presentation for the call on Page 13, we list homes sold since 1996. And in 2005 or 2006, when we were a much smaller company, we did $15 million in sales in 1 year because we had -- we were on the last phases of great expansions. And today, we have great expansions, new communities we've built and there are so many factors that go into how home sales are, including whether or not the people 55 and older are experiencing good sales to sell their home and downsize. One of the things we've just done some research on -- we have photographs of the homes, people were downsizing from to buy homes from us. And people are selling remarkably large expensive homes to buy a house from us for $300,000 and in the community.

And that's exactly what the demographics say should be happening, the percentage of the population over 65 years old, who now wants to sell their home and downsize. And right now, they're stalled a little bit because of interest rates. They're not selling their existing homes in the numbers you would expect. But as that changes, our sales can dramatically improve.

And then on the rental side, as we think about some of the additional color you gave in the earnings release, the 100 homes or so you kind of have on site. I mean are those contributing to the vacancy number at this point? Are those kind of counted as vacancy today. And I guess kind of what are you thinking of in terms of timing for renting those units out and the 300, you said are kind of around and available to kind of set up? I mean, is that something we should expect to have -- they've already occurred in the quarter? Or is that something that could occur later in kind of December? And how does all that work in the context of maybe 4Q not being a traditional kind of core leasing season?

Right after COVID, you had the problem of the factories were producing homes. And that sent everything off balance. There are no problems today. In terms of we can order a home, have it and set it up. And Brett, how long would that take us?

Well, the home, you're probably 2 months backlog right now, and then you've got 2 to 3 months of setup. It can be done quicker, but you can run into utility issues and things like that. So from the time you order a home to the time it's fully set up, call it, 6 months.

So we don't see any problem going forward or 800 units and possibly additional homes during the year, and we see communities accelerating their demand for rentals. Brett, can you give some specific examples?

Yes, sure. So property friendly village we own in the Toledo area, Perrysburg, Ohio. They're on track to fill over 80 rental units this year. One of the first years we own that property, they filled 100. So the only slowdown they really had was, let Sam just mentioned when they were not able to get inventory. So we're optimistic we'll continue to push there. We've got some positive going on near Purdue University right now with Wood's Edge. We've got a couple of hundred vacant sites at that community with very strong demand. And then you look really throughout the portfolio, and it may not be 50 or 100 sites, but there's many communities that can do 10 or 15 in a year, and that's where we should see some of this growth.

Now to answer the question about whether that's included in occupancy or not, the inventory homes are not included in the overall occupancy number. So they show as vacant sites. They also are not included in the vacant rental pool. Once that home turns from inventory to a rental home, that's when it hits the rental pool.

And -- just going back to the commentary from the earnings release, not 100 homes or so you said are on site and ready for occupancy. Are those essentially contributing to the rental pool vacancy?

No, they are not included in the rental pool until they are rented for the first time.

All of our homes when we order them are either for rent or for sale. So therefore, we determine when it becomes a sole home. It becomes a sole phone that's out of inventory. When it becomes a rental, then we move it into the rental pool.

This concludes our question-and-answer session. I would like to turn the conference back over to Samuel Landy for any closing remarks.

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our company. As always, Gene, Anna, Brett and I are available for any follow-up questions. We look forward to reporting back to you in February with our fourth quarter and year-end 2025 results. Thank you.

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