Good morning and welcome to the UMH Properties Fourth Quarter and Year End 2015 Earnings Conference Call. All participants will be in listen-only-mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Nelli Madden, Director of Investor Relations. Thank you, Ms. Madden. You may now begin.

Thank you very much, operator. In addition to the 10-K that we filed with the SEC yesterday, we have filed an unaudited annual and fourth quarter supplemental information presentation. This supplemental information presentation along with our 10-K are available on the company’s website at umh.reit. I 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 annual 2015 earnings release and filings with Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. Having said that, I’d like to introduce management with us today, Eugene Landy, Chairman; Samuel Landy, President and Chief Executive Officer; and Anna Chew, Vice President and Chief Financial Officer. It is now my pleasure to turn the call over to UMH’s President and Chief Executive Officer, Samuel Landy.

Thanks very much, Nelli. Good morning, everyone, and thank you for joining us. We are pleased to report our results for the year ended December 31, 2015. UMH continues to produce strong results, Normalized FFO per diluted share increased by 15% from $0.48 per diluted share in 2014 to $ 0.55 per diluted share in 2015. This marks the second consecutive year of solid double-digit growth. We have achieved this from both the acquisition and integration of our new communities as well as through strong organic growth. Same property revenue increased 9% year-over-year, driven by increased rents in same property occupancy gains of 70 basis points. Because same property expenses only increased by 0.4%, we generated substantial same property NOI growth of 17%. UMH made further advancements in our growth strategy of using debt, preferred stock, and equity raise through the DRIP and SIP, to purchase well-located communities in our target markets. We believe this strategy will continue to result in increased funds from operations per share, and should also result in substantial price appreciation over time. During the year, we acquired 10 manufactured home communities, containing approximately 2,800 developed homesites for a total purchase price of $81.2 million. This represents an 18% increase in total homesites over the prior year. Over the past six years, we have more than doubled our portfolio by acquiring and successfully integrating a total of 70 communities containing almost 11,000 developed homesites. Our portfolio is now comprised of 98 communities with 17,800 developed homesites located throughout seven states. During this time, the prices for well-located communities have risen substantially. Competition has increased and consequently the value of our portfolio has risen. We continue to seek acquisitions in our target markets excluding, including the Marcellus and Utica Shale regions of Ohio and Pennsylvania. Our growth…

Thank you, Sam. Core fund from operations or Core FFO was $3.9 million or $0.14 per share for the fourth quarter of 2015, compared to $3.8 million or $0.16 per diluted share for the fourth quarter of 2014. Normalized FFO which excludes realized gains on the sale of securities and other nonrecurring items was $3.8 million or $0.14 per diluted share for the fourth quarter of 2015, as compared to $3.5 million or $0.15 per diluted share in the prior-year period. For the full year of 2015, Core FFO was $14.3 million or $0.55 per diluted share, compared to $12.3 million or $0.55 per diluted share in 2014. For the full year 2015, Normalized FFO was $14.2 million or $0.55 per diluted share, compared to $10.8 million or $0.48 per diluted share in the prior year, representing an increase of 15% on a per share basis. Our per share results for the fourth quarter of 2015 were impacted by approximately $0.03 due to our recent preferred equity offering completed in October of this year. As the proceeds from this offering become fully invested, our results will be favorably impacted. Rental and related income for the quarter was $20.6 million, compared to $16.9 million a year ago, representing an increase of 22%. For the full year, rental and related income was $74.8 million as compared to $63.9 million for 2014, resulting in an increase of 17%. These increases were primarily due to our acquisitions, the addition of rental homes and the growth in occupancy. As Sam mentioned, at year-end we had 3,700 rental homes as compared to 2,600 a year ago, representing a 42% increase. Total community operating expenses for the quarter were 47.3% of rental and related income, representing a 210 basis point improvement from the 49.4% for the prior-year…

Thank you, Anna. As Founder and Chairman of the Board of Directors, I am proud of the substantial progress our UMH team has made this year. We have delivered strong double-digit Normalized FFO growth for the second consecutive year. We have acquired and integrated 10 communities, increasing our portfolio of developed homesites by 18%. We have increased our rental home portfolio by 42%. Same property metrics continued to improve with same property NOI increasing by 17%. We have realized growth in individual property values through refinancing, adding over $100 million to our investment capital base. We have accessed the capital markets through our recent preferred issuance, which allows us to continue the substantial growth we have achieved. The primary function of our REIT securities portfolio is to enhance our balance sheet liquidity. This past year our portfolio generated $4.4 million in income. Securities investments have also delivered substantial realized gains. Over the past five years our net realized gains totaled $12.6 million. We are very pleased with our current holdings and anticipate excellent performance going forward. The housing recovery is expected to be resilient, given the low interest rate environment, the pent-up demand and expected continued increase in prices. Low energy prices coupled with strong employment numbers benefit UMH and our residents. Given all these positive trends, management will recommend to the Board of Directors the continuation of our current $0.18 a quarter with $0.72 annual per share cash distribution. We will now be happy to take questions.

We will now begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. And our first question will come from Craig Kucera of Wunderlich.

Hey, good morning, guys.

Good morning, Craig.

I may have missed this, but did you guys discuss your capital spending plan for the next year? I think you did about 1,100 units last year, 900 the year before. Kind of what are you thinking this year make sense?

Okay. So we’re going to add 800 rental units for $32 million. Additionally, with the acquisitions, the capital budget for improvement to the acquired communities is much higher than normal, but will be about $15 million. So that’s the capital budget.

Got it. Is there a reason that, just given the ability to really drive same stores, is there a reason that you’re slowing down the rental unit purchases and implementation or is it just kind of where you’re starting at this point of the year?

Now, we don’t think we’re slowing down at all. We think adding 800 units is on pace with what we planned last year. I mean, if it goes better, it goes better. But we judge the demand at each community every month. The people are filling rental units just as quickly as we put them in. And everybody we talk to is extremely optimistic about our ability to add 800 rental units during the course of the year and fill 800 units. I’ll add to that, that we put in 200 units before the end of the year that we’re not occupied, because they were being completed. And those 200 should become occupied in the very near future, and so that, you will get 10 to 12 months revenue on that. And the other 800 units we’ll add this year, the revenue grows throughout the year. You don’t get the full 12 months.

Got it. And when we think about just longer-term with the portfolio, I think you mentioned that about 25% was currently rental. I know there are some limits from the GSEs in the way they land on that, but do you find that to be the case within your portfolio or should you over time be able to sort of eventually get that occupancy up to more normalized level through the rental unit program as long as the demand remains?

Right. The rental demand in the older communities that we’re adding value to everyday by making capital improvements and adding rental units, we’ll continue to increase occupancy there and those communities. We have people reporting 100% occupancy now. So those communities’ occupancy will continue to grow through rental units and they can potentially achieve 100% occupancy. There are other communities that were designed and built for multi-section houses that are meant as high-end expansions, where we’re not adding rental units to those communities, because we believe at some point sales will improve and those are made for profitable sales. And so those communities will never have rental units, but the other communities will continue to add as many as the market will bear.

Got it. And going to the sales environment, it looks like your sales on a volume basis were pretty much flat year over year, but your - the revenue was down about 10%. Is that just a reduction in price to get that volume or is there some sort of mix, maybe smaller homes that were sold on average? Can you give me some color on that?

First January and February last year were pretty much a disaster in sales, because of the implementation of new regulations and trying different finance program. So we got off to a terrible start on sales last year. We don’t see that happening this year. We have a more favorable lending relationship to finance the home sales. So at this moment, it appears sales will increase. Last year, I imagine it was predominantly sale of lower price rental units and sale of repossessed homes, things like that, as opposed to sale of new homes. The sale of new homes should be between $70,000 and over $100,000. So as we’re able to sell new homes again, we see the sales volume potentially getting to $10 million or above.

Okay. And one more then I’ll jump back in the queue. Sam, I know we’ve discussed some legislation that FHFA is sort of reviewing and looking to potentially comment on maybe getting Fannie and Freddie at little bit more involved in lending to the manufactured housing space. Can you give us some color on any moment you’re seeing there or do you see anything, do you see any acceleration on that end from the legislation perspective?

What everybody tells us is it’s unlikely anything will be complete till after the election. But both the Democrats and Republicans agree there needs to be a change in that, there is something wrong with the finance laws, because working people cannot get financing to buy affordable houses. So everybody is aware of the problem, everybody is proposing different solutions. Everybody thinks something will happen. But the question is when it will happen and the consensus is it will happen after the election.

I just want to add that, so there’s no confusion on the financing of manufactured home communities. We’re very happy with the situation. And the Freddie Mac and the other government sponsored entities are doing a really good job on the ability of UMH and others in the industry to finance the communities. What Sam and I are talking about is there should be a program that the tenants could finance their homes. At the present time, we charge, what, about 8%.

Yes.

And the conventional home mortgage is at 3.75%. That’s a big competitive disadvantage. And we are pushing that the government sponsored entities, who have a duty to serve our industry, come up with a program that they’ll be government guaranteed loans, so that we can get a lower rate of interest. And by the way, UMH is perfectly willing to guarantee our portion of the chattel paper. We have every confidence in whatever home we sell that the mortgage we put on that home is a good mortgage. And we think with a government guarantee, we added to the package, we can get lower interest rates to the consumer.

Great. Thanks, guys.

Very good. Thank you.

[Operator Instructions] And we have a question from Rick Murray of Midwest Advisors.

Good morning. Can you provide us with how much of the depreciation expense in the quarter was related to the rental homes?

I don’t have the number in front of me, but I will take a look and let you - and get back to you on that.

Okay, great. Thanks. And just one more, if you had available, the amount of maintenance capital expenditures in the quarter?

Capital expenditures or has been capitalized, are you talking about repairs and maintenance?

Capital expenditures.

Capital, that’s in our cash flow statements. So let me pull that up, right now. If you look at the - in the cash flow statements, we have a purchase of investment property and equipment of $51 million, but included in that are the rental homes of approximately, I would say, 8 times 4, about $32 million.

Okay, great. Thank you.

You’re welcome.

The next question will come from John Shea, [ph] a private investor.

Yes. I may have missed it, but I didn’t hear any discussion on the divided going forward. Could you please elaborate a little, please?

Several years, we’ve announced that the funds from operation have not covered the dividend and we’ve been very optimistic though that we’re going to increase occupancy. The main thing in UMH is to increase occupancy. We have - was it 18,000?

18,900.

18,900 units, we have 2,700 vacancies. Historically, if you go back more than a decade, manufactured home communities were full. And we are very optimistic we can increase our occupancy and that increase the top line and that will increase the bottom line. And we’ll have the dividend covered. But at the present time, there is a shortfall. Now, this year, as Sam pointed out, is beginning rather optimistically. We think sales are going to pick up. We think occupancy is going to pick up. We think the rental unit program is going to work even better this year. And we may have an increase in FFO this year. But because there is a deficit, we still continue with $0.18 a quarter, $0.72 a year dividend. And we’re optimistic, we will be able to cover that dividend, but it may take more than this year.

Just to correct the number you gave, it’s 17,793 sites.

How many of vacancies do we have?

3,000 approximately.

3,000 vacancies, 3,000 vacancies is $15 million in potential revenue. And when you analyze UMH, that’s where we are concentrating all our efforts to back to a community program, where we run 100% occupied.

Thank you.

And 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, and I are available for any follow-up questions. We look forward to reporting back to you after our first quarter. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. The teleconference replay will be available in approximately one hour. To access this replay, please dial U.S. toll-free 1-877-344-7529 or international 1-412-317-0088. The conference ID number is 10077524. Thank you and please disconnect your lines at this time.