UMH Properties, Inc. (United Mobile Homes, Inc.) - 10-Q Summary
Business Context and Reporting Period
This is an unaudited quarterly report (Form 10-Q) for United Mobile Homes, Inc. (UMH Properties, Inc.) for the period ended September 30, 1998. The Company owns and operates twenty-four manufactured home communities. As of November 6, 1998, there were 7,198,073 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended 9/30/98 | Nine Months Ended 9/30/98 | Nine Months Ended 9/30/97 |
|---|---|---|---|
| Rental and Related Income | $4,225,218 | $12,523,728 | $11,432,333 |
| Net Income | $955,431 | $3,073,271 | $2,937,380 |
| Net Income Per Share (Diluted) | $0.13 | $0.44 | $0.44 |
| Funds From Operations (FFO) | $1,546,546 | $4,856,193 | $4,510,746 |
| Net Cash from Operating Activities | N/A | $4,849,004 | $4,349,952 |
| Total Assets | $46,954,076 (as of 9/30/98) | ||
| Total Liabilities | |||
| Mortgages Payable | $21,548,840 (as of 9/30/98) | ||
| Cash and Cash Equivalents | $110,058 (as of 9/30/98) |
Material Changes vs. Prior Period
- Revenue Growth: Rental income increased 9.4% for the quarter and 9.6% for the nine-month period compared to 1997. This was driven by approximately 5% annual rental rate increases, higher occupancy, and the acquisition of Waterfalls Village in late 1997.
- Operating Income: Income from community operations rose to $2,224,582 for the quarter (up $162,650) and $6,875,898 for the nine months (up $467,519).
- Expenses: Community operating expenses increased due to the new acquisition and costs associated with filling vacant expansion sites. Interest expense rose due to a higher average principal balance on borrowings.
- Debt Structure: Mortgages payable increased by $1,437,817 year-over-year. On April 28, 1998, the Company secured a new $3,600,000 mortgage at a fixed 7.5% rate, maturing May 1, 2003, to retire existing debt and purchase securities.
- Investments: The Company purchased $2,356,357 in securities available for sale during the nine-month period.
Guidance, Outlook, and Risks
- Liquidity: Management believes funds from operations and refinancing capabilities are sufficient to meet needs for the next several years.
- Year 2000 Compliance: The Company is implementing a compliance plan involving hardware replacement and software upgrades, with completion targeted for the first half of 1999. Contingency plans include manual system operations. Management anticipates costs will be immaterial, though success is not guaranteed.
- Dividends: A dividend of $0.1875 per share was paid on September 15, 1998. The Dividend Reinvestment and Stock Purchase Plan (DRIP) generated $3,276,725 in capital for the nine-month period.
- Accounting Changes: The Company adopted SFAS 130 effective January 1, 1998, requiring the reporting of comprehensive income.
Investor Verification Checklist
- Verify the occupancy rates and rental rate increases cited as drivers for revenue growth.
- Confirm the terms and covenants of the new $3.6 million mortgage with Summit Bank.
- Review the status of the Year 2000 compliance plan and any potential cost overruns.
- Assess the impact of the amended Dividend Reinvestment Plan (optional cash payments discontinued) on future capital raising.
- Monitor the utilization of the $2.9 million in land development costs and the timeline for placing these assets in service.