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UMH Properties Inc Reports Operating Results (10-Q)

November 09, 2009 | About:
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10qk

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UMH Properties Inc (UMH) filed Quarterly Report for the period ended 2009-09-30.

United Mobile Home's primary business is the ownership and operation of manufactured home communities - leasing manufactured home spaces on a month-to-month basis to private manufactured home owners. The company also leases homes to residents. A manufactured home community is designed to accommodate detachedsingle family manufactured housing unitswhich are produced off-site by manufacturers and delivered by truck tothe site. Umh Properties Inc has a market cap of $88.92 million; its shares were traded at around $7.78 with a P/E ratio of 18.75 and P/S ratio of 2.43. The dividend yield of Umh Properties Inc stocks is 9.25%.

Highlight of Business Operations:

The Companys revenue primarily consists of rental and related income from the operation of its manufactured home communities. Revenues also include sales of manufactured homes, interest and dividend income and gain on securities transactions, net. Total revenues decreased by approximately 4% from $10,240,058 for the quarter ended September 30, 2008 to $9,856,780 for the quarter ended September 30, 2009. Total revenues decreased by approximately 12% from $29,014,594 for the nine months ended September 30, 2008 to $25,432,007 for the nine months ended September 30, 2009. These decreases were primarily due to a decrease in sales of manufactured homes of $945,019 and $3,030,158 for the quarter and nine months ended September 30, 2009, respectively, partially offset by an increase in rental and related income and interest and dividend income. There was also an increase in the loss on securities transactions, net of $1,566,825 for nine months ended September 30, 2009.

Gain on securities transactions, net amounted to $297,746 and $10,043 for the quarter ended September 30, 2009 and 2008, respectively. Loss on securities transactions, net amounted to $2,152,319 and $585,494 for the nine months ended September 30, 2009 and 2008, respectively. This increase was primarily due to non-cash impairment charges relating to securities which were considered other than temporarily impaired. The Company had unrealized gains of $1,204,632 in its securities portfolio as of September 30, 2009 as compared to unrealized losses of $5,671,361 at December 31, 2008, an improvement of almost $7,000,000. Historically, REIT share prices were not volatile. Over the past two years, they have been highly volatile with price swings of 5% or more occurring frequently. REIT securities have always represented less than 10% of the market value of our total assets. The dividends received from our securities investments continue to meet our expectations and we anticipate realizing satisfactory returns. It is our intent to hold these securities long-term.

Community operating expenses increased 8% from $3,190,263 for the quarter ended September 30, 2008 to $3,450,419 for the quarter ended September 30, 2009, primarily due to an increase in temporary personnel. Community operating expenses remained relatively stable for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008. General and administrative expenses remained relatively stable for the quarter ended September 30, 2009 as compared to the quarter ended September 30, 2008. General and administrative expenses decreased 11% from $2,761,851 for the nine months ended September 30, 2008 to $2,466,071 for the nine months ended September 30, 2009. The Company has been focusing on reducing costs, including operating expenses, salaries, employee benefits, professional fees and travel. Interest expense decreased 4% from $1,140,359 for the quarter ended September 30, 2008 to $1,100,227 for the quarter ended September 30, 2009. Interest expense decreased 6% from $3,527,218 for the nine months ended September 30, 2008 to $3,330,521 for the nine months ended September 30, 2009. This was primarily due to the change in fair value of the Companys interest rate swaps which decreased interest expense by $114,523 and $287,267 for the quarter and nine months ended September 30, 2009, respectively, but only decreased increased interest expense by $52,000 for the quarter ended September 30, 2008 and increased interest expense by $82,000 for the nine months ended September 30, 2008. Cash paid for interest during the three and nine months ended September 30, 2009 amounted to $1,611,931 and $3,895,912, respectively. Cash paid for interest during the three and nine months ended September 30, 2008 amounted to $1,274,216 and $3,759,720, respectively. Depreciation expense remained relatively stable for the three and nine months ended September 30, 2009 as compared to the three and nine months ended September 30, 2008. Amortization of financing costs increased 55% from $38,370 for the quarter ended September 30, 2008 to $59,520 for the quarter ended September 30, 2009. Amortization of financing costs increased 41% from $116,185 for the nine months ended September 30, 2008 to $163,360 for the nine months ended September 30, 2009. This was primarily due to amortization of costs associated with the new Weatherly Estates mortgage and the extension of our Sandy Valley mortgage.

Sales of manufactured homes amounted to $1,843,341 and $2,788,360 for the quarters ended September 30, 2009 and 2008, respectively, a decrease of 34%. Sales of manufactured homes amounted to $4,423,259 and $7,453,417 for the nine months ended September 30, 2009 and 2008, respectively, a decrease of 41%. Cost of sales of manufactured homes amounted to $1,729,002 and $2,383,739 for the quarters ended September 30, 2009 and 2008, respectively. Cost of sales of manufactured homes amounted to $4,157,777 and $6,288,216 for the nine months ended September 30, 2009 and 2008, respectively. Selling expenses amounted to $293,762 and $414,358 for the quarters ended September 30, 2009 and 2008, respectively. Selling expenses amounted to $910,021 and $1,125,535 for the nine months ended September 30, 2009 and 2008, respectively. These decreases are directly attributable to the decrease in sales. Loss from the sales operations

Securities available for sale increased 41% or $8,888,015 during the nine months ended September 30, 2009. The increase was due primarily to purchases of $6,190,049 and an increase in the unrealized gain of $6,875,993, partially offset by the write-down in carrying value of securities deemed to be other than temporarily impaired of $1,893,314, and sales of securities with a cost of $2,284,713.

As of September 30, 2009, the Company has a $5,000,000 unsecured line of credit, all of which was available. The Company also has a $10,000,000 revolving line of credit for the financing of home sales, of which $8,690,000 was outstanding. The Company owns 28 properties, of which 16 carried mortgages totaling approximately $69,000,000. The Company has one mortgage secured by four properties with a balance of approximately $12,500,000 maturing in November 2009. We are currently in the process of refinancing/extending this mortgage and are optimistic that we will be successful.

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10qk
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