Q1 2024 UMH Properties Inc Earnings Call

Participants

Craig Koster; Executive Vice President, General Counsel, Secretary; UMH Properties Inc

Samuel Landy; President, Chief Executive Officer, Director; UMH Properties Inc

Anna Chew; Chief Financial Officer, Chief Accounting Officer, Vice President, Treasurer, Director; UMH Properties Inc

Eugene Landy; Chairman of the Board, Founder; UMH Properties Inc

Brett Taft; Chief Operating Officer, Executive Vice President; UMH Properties Inc

Robert Stevenson; Analyst; Janney Montgomery Scott LLC

Rich Anderson; Analyst; Wedbush Securities Inc.

Jeff Walkenhorst; Analyst; Copeland Capital Management LLC

John Massocca; Analyst; B. Riley Securities

Presentation

Operator

Good morning, everyone, and welcome to UMH Properties First Quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question. You may press star and one on your touchtone telephone. To withdraw your questions, you may press star and two and also note today's event is being recorded.
Is now my pleasure to introduce your host, Mr. Craig Kastner, Executive Vice President and General Counsel. Thank you, Mr. Koster, you may begin.

Craig Koster

Thank you very much, operator. And 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 dot.
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 and the risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the Company's first quarter of 2024 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 is now my pleasure to turn the call over to you may just President and Chief Executive Officer, Samuel Landy.

Samuel Landy

Thank you very much, Craig. Umh is pleased to report continued improved community operating results and growing year-over-year earnings. Normalized FFO per share for the first quarter of 2024 was $0.22 as compared to $0.20 last year, representing an increase of 10%. Our year-over-year growth in per-share earnings can be attributed to our solid community operating results. Overall, occupancy increased 220 basis points from 84.9% last year to 87.1% this year for an increase of 598 units sequentially. Overall, occupancy increased by 132 units. This improvement in occupancy, combined with our annual rent increases, generated an 11% increase in rental and related income and a 16% increase in community net operating income, our community expense ratio improved from 44.3% last year, so 41.9% this year. We are on track to grow revenue by $20 million or more in 2024 as compared to 2023. This growth stems from our increased occupancy from last year's rental home investments. Our investment in 800 or more new rental homes this year. And our annual rent increases our high quality communities, exceptional operating platforms and strong fundamentals for affordable housing position, UMH to continue to excel in 2024. The strength of our operating result and our earnings growth in 2023 positioned us to raise our common stock dividend for a fourth consecutive year. We are proud to increase the dividend by $0.01 per quarter or $0.04 per year, representing an increase of approximately 5%. This results in a total annualized dividend of $0.86 since 2020, we have increased our dividend four times by an aggregate amount of $0.14, representing a 19% increase. Our rental home portfolio continues to perform well we now own over 10,000 rental units, of which 95.1% are occupied as compared to 93.7% occupancy last year, representing a 140 basis points increase. We continue to experience 30% or less turnover per year, and our expenses average only approximately $400 per unit per year. Our turnover costs are generally covered by the tenant's security deposit. In most cases, the homes are left in Broome, clean condition ready for the next tenant, excluding tenants that moved in last year, our average renters tenure is approximately four years. We are on track to install and rent 800 homes in 2024. Backlog from our manufacturers have returned to pre-COVID traditional levels of four to eight weeks. This has helped to reduce our interest expense and carrying costs while allowing us to generate similar overall occupancy and revenue gains without negatively impacting earnings.
Our annual investment in new rental homes yield approximately 10% on the invested funds. This investment is accretive to earnings and substantially improved our communities, statically and financially. Same property occupancy improved by 121 units from the fourth quarter and 545 units year over year. This represents an increase of 40 basis points and 200 basis points respectively. Same property income increased by 10%, while expenses only grew 3%, resulting in a 16% same-property NOI growth or $16 million annualized. This increase in same property NOI substantially increases the value of our communities as demonstrated by our recent refinancing of three communities acquired in 2012 and five communities acquired in 2013. Our total investment in these communities, including capital improvements is $52.2 million or approximately $41,000 per site communities have praised for approximately $108 million or $84,000 per site, reflecting an increase in value of $55.9 million or 107%. Gross home sales were $7.4 million as compared to $7.3 million last year, representing an increase of 1%. During the quarter, we leased our sales center in Belle, Vernon, Pennsylvania to Clayton Homes or the homes that were in inventory at the sales center were sold to Clayton Homes at the invoice price, excluding the home was liquidated in this sales center, sales of manufactured homes amounted to $6.4 million. Cost of sales amounted to $4.2 million and the gross profit percentage was 34% for the three months ended March 31, 2024.
Last year's first quarter sales were exceptionally high due to supply constraints pushing many 2022 sales to the first quarter of 2023. Our second quarter sales to date are in line with our current sales projections for 2024. We currently have a pipeline of approximately $4 million in sales and expect to close those deals and grow our pipeline going into the summer. At quarter end, the balance of our notes receivable was $80.5 million at a weighted average interest rate of 7%. During the first quarter, we financed approximately 53% of our home sales. Over the last two years, we have developed approximately 440 sites. These expansions are include markets in Maryland, Pennsylvania, Tennessee and Indiana. We have made investments in these expansions, but they are not yet full and accretive to earnings. We believe these expansions provide us with Premier sales slots that should allow us to generate profitable home sales, increase occupancy and more valuable communities. This year, we should obtain approvals to develop 800 sites and plan on developing approximately 300 or more sites. Umh is well positioned to grow the Company through internal and external growth opportunities. We have 3,300 vacant sites, which we plan on selling throughout our rental and sales programs. We have 2,100 acres of vacant land that will allow us to expand our community. We can profitably sell and finance homes. We can build new communities through our joint venture with Nuvion real estate, we can acquire communities when they are first sale at reasonable prices. Most importantly, we have a strong balance sheet, which will allow us to execute on these growth opportunities. The fundamentals of manufactured housing are strong and UMH is well positioned to continue to grow through our established long-term business plan. Manufactured housing has two natural tailwinds, increasing GDP and inflation, we can add 800 rental homes and over 200 new home sales per year. And the high quality of our communities adds value to our real estate. Our hard work grows our communities through developing expansions and by building 200 lots or more per year. This allows us to increase the size of the Company when compelling acquisition opportunities arise. Our hard work has positioned the company with one of the highest quality portfolios of manufactured home communities in the country. And now Anna will provide you with greater detail on our results for the quarter.

Anna Chew

Thank you, Sam. And normalized FFO, which excludes amortization and nonrecurring items, was $15 million or $0.22 per share for the first quarter of 2024 compared to $11.7 million was $0.20 per share for 2023, resulting in a 10% per-share increase. Rental and related income for the quarter was $50.3 million compared to $45.3 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 an increase in rental rates.
Community operating expenses increased 5% during the quarter. This increase was mainly due to an increase in payroll costs, rental home expenses, real estate taxes and snow removal. Our same-property results continued to meet our expectations. Same-property income increased by 10% for the quarter and despite the increase in community operating expenses, Community NOI increased by 16% for the quarter from $26 million in 2023 to $30 million in 2024. As we turn to our capital structure. At quarter end, we had approximately $672 million in debt, of which $494 million was community-level mortgage debt $78 million was loans payable and $100 million was our 4.72% Series A. bonds. Total debt was 92%. Fixed rate at quarter end the weighted average interest rate on our mortgage debt was 4.17% at quarter end compared to 3.91% at quarter end last year. The weighted average maturity on our mortgage debt was 5.1 years at quarter end and 5.3 years at quarter end last year, increasing interest rate environment, the weighted average interest rates on our short-term borrowings was 60 basis points lower at 6.79% at the current quarter end. It compares to 7.39% at quarter end last year. In total, the weighted average interest rate on our total debt was 34 basis points lower at 4.56% at the current quarter end compared to 4.9% at quarter end. Last year. At quarter end, you had a total of $295 million in perpetual preferred equity. Our preferred stock combined with an equity market capitalization of over $1.1 billion and our $672 million in debt resulted in a total market capitalization of approximately $2.1 billion at quarter end as compared to $1.9 billion last year, representing an increase of 12%. During the quarter, we issued and sold 1.3 million shares of common stock through our common ATM program, generating net proceeds of approximately $20.4 million. The Company also received $2.5 million, including dividends reinvested through the DRIP In addition, we issued and sold 194,000 shares of our Series D preferred stock during the first quarter of 2024 the preferred ATM program, generating net proceeds of approx, notably $4.4 million. Subsequent to quarter end, we issued 190,000 shares of common stock through our common ATM program, generating net proceeds of approximately $3 million. In addition, we issued 19,000 shares of our Series D preferred stock through our preferred ATM program, generating net proceeds of approximately $444,000.
From a credit standpoint, we ended the quarter with net debt to total market capitalization of 30%, net debt of securities to total market capitalization of 28.6% net debt to adjusted EBITDA of 5.9 times and net debt less securities to adjusted EBITDA of 5.6 times. Interest coverage was 3.1 times as fixed charge coverage was two times.
From a liquidity standpoint, we ended the quarter with $39.9 million in cash and cash equivalents and $130 million available on our unsecured revolving credit facility with an additional $400 million potentially available pursuant to an accordion feature. We also had $194 million available on our other lines of credit for the financing of home sales and the purchase of inventory and rental homes. Subsequent to quarter end, we expanded the borrowing capacity of our unsecured revolving credit facility from $180 million in available borrowings to $260 million in available borrowings. This facility is now syndicated with three banks' BMO Capital Markets, JPMorgan.
Chase and Wells Fargo as joint arrangers and joint book runners. Additionally, we had $29.1 million in our securities portfolio, all of which is unencumbered. This portfolio represents only approximately 1.6% of our undepreciated assets. We are committed to not increasing our investment in our 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.

Eugene Landy

Umh's are off to a strong start to 2024, with demand for affordable housing in our markets and across the country remain incredibly strong as communities continue to fill sites with homes for rent and sale. A long-term business plan is favorably positioned the company with 33 hundred vacant sites to fail and 21 hundred acres of land to develop these vacant lots and Vacon agents are increasingly valuable as the affordable housing crisis continues to only intensify. We have done an incredible job rehabilitating old communities we acquired that had deferred maintenance and deferred capital improvements we have also made substantial progress, expanding our communities and acquiring newly developed communities. Our improvements have transformed the Quest communications of first class communities, creating waiting lists for At Home's displaces plan has allowed us to profitably increase the supply of quality affordable housing in the markets we serve. Within the next five years, our community should be full, and there will be limited lots available to place loans on the housing crisis and the inability for conventional builders to deliver housing affordable price points highlight the tailwinds behind UMH and our industry. Umh had achieved nearly 100% occupancy and make continued progress developing our expansion land. All of this will translate to substantial earnings improvement, a stable income strength and an attractive valuation that being said, we must do more to combat the affordable housing crisis. A nation must work to expedite the approval of new land lease communities. We are proud of the progress we have made educating the nation, our elected officials about the benefits of manufactured housing and community living. We invite all of you to attend the innovative housing showcase in Washington, D.C. from June seventh to ninth, we will be flat maybe with some of our manufacturers display, a HUD-Code multi-section homes and a modular single section too precise on the national mall. This event allows us to show our products to the legislators and lobby for changes, which will allow us to produce more affordable housing.

Question and Answer Session

Operator

Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touchtone telephone. To withdraw your questions. You may press star two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one join the question queue.
Our first question today comes from Rob Stevenson from Janney. Please go ahead with your question.

Robert Stevenson

Good morning, guys. Sam, can you talk a little bit about the acquisition pipeline today. I know that when you guys have talked in previous quarters that there's a couple of deals that you guys have been working on, et cetera, as is getting closer to fruition and there have been hiccups there.

Samuel Landy

I'm going to have Sam here. I'm going to have Brett fill you in on the acquisitions. Let's go ahead, Brett.

Brett Taft

Yes, the two properties you are referring to are the two properties in Maryland next to our cinnamon wood community really can't get into too much detail, but we are in due diligence. There are some matters that we're working with the seller to resolve. We think we can resolve those problems, but it's obviously delayed the closing on those properties. I wouldn't want to sit here right now and put a tentative closing date out there, but it wouldn't be until later this year.
And then as to other acquisitions, we continue to monitor the acquisition market. We're looking at a lot of deals, both stabilized and value-add haven't found much. That has really checked our acquisition criteria of boxes, but we continue to look and we're hopeful that throughout the remainder of the year, we'll find some deals that either provide longer-term value strategy or accretive in the short term.

Robert Stevenson

Okay. That's helpful. And then I guess a question on the rental units now that, you know, things have returned to a more normalized supply environments and we're beyond COVID. What are you guys seeing in terms of the seasonality in terms of rental velocity like the apartments see significantly greater foot traffic in the second and third quarters and then substantially less in the first and fourth. But homebuilders don't see as much variability on that. What are you guys seeing these days on the rental units and the ability and the absorption numbers there on a on a quarterly basis, you're seeing significant seasonality in the summer months?

Samuel Landy

Well, there may be seasonality or what our problem in the last two years was first, the inability to get the houses and getting them all at once at this moment, but we're filling homes as quickly as we put them in. The managers are asking us for more homes. We've been trying to limit their inventories to five homes, which kind of slows down the set up a little bit. But but all of them are very optimistic about their ability to fill every house we could put in there so that our goal is to fill a minimum of 800 new rentals this year and everything's on target to do that.
In regard to seasonality, Brett?

Brett Taft

Yes. Well, first of all, we did work through almost all of our inventory that we had at the beginning of last year, which was 12 or 1,300 units. Now we have about 280 homes that are actually in our communities, 150 of those homes were delivered in the first quarter. So we're getting those homes set up and they'll be ready for occupancy and that is a total of 442 homes. We've already filled 120 new homes this year. We're confident in our ability to fill those for 40 and then begin placing our next quarters. So another 320 orders would bring us to 800. We're very confident we can do that. There's certainly some seasonality and I think you're right in that the second and third quarters are our strongest for finals and for sale. But we do experience strong demand in the fourth and first quarters as well.

Robert Stevenson

Okay. And then last one for me, Anna, where's the best source of debt capital today? I mean, how meaningful are the rate differentials between your line mortgage debt and other borrowing sources that you have access to today?

Anna Chew

I think the best for us is still the GSEs. As you know, at the end of last year, we were able to close on them, AGSE. loan at under 6%. And of course, rates one fire on us afterwards. But we were able to do that when other places were holding a lot higher rates on the good thing about our mortgage portfolio this year is that we don't have anything coming due in 2024. We do have of approximately $100 million coming due $118 million coming due in 2025. And we are hoping that the rates will come hopefully stabilize or maybe decrease a little bit in 2025. And since most of these communities are in that $118 million right now, we currently have GSE financing. We do not anticipate any problems getting additional GSE financing

Robert Stevenson

when in '25, that $118 million up for wrapping?

Anna Chew

Yes, all throughout the year. I mean, we'll go from there, I guess, February or March all the way through to the end of the year.

Robert Stevenson

Okay. All right, guys. Appreciate the time and have a great weekend.

Anna Chew

Thank you.

Operator

Our next question comes from Rich Anderson from Wedbush. Please go ahead with your question.

Rich Anderson

Hey, thanks. Good morning. My first UMH experience, so I wanted to a question on <unk> on length of stay. You mentioned four years. I'm curious how you feel about that or do you see any kind of strategy to change it? Would you rather be shorter so you can mark rents to market or would you rather to be longer and sort of make it more of a less a lesser risk situation? What's your view on length of stay today?

Samuel Landy

Now we appreciate that. We have only approximately 30% turnover of rental homes and the occupancy stability is actually growing, and that's very beneficial in that it reduces turnover us. Additionally, each satisfied residents invites family and friends to the community to the houses, generating additional sales and additional rentals. So we like that number to be a low number. I'd point out that we started doing rentals 10 years ago, buying the homes for $40,000 apiece and renting them out for 8,000 per year. Replacement cost is now $70,000 per house and keeping the phones occupied with the same resident is very beneficial, even even though you do get better rent increases on turnover, that reduces your costs. And I think it's the Better Business Plan

Rich Anderson

Okay. And I think you said a target of 800 rentals today this year and 200 sales, correct me if I got that wrong, if I if it's right, is that a little bit more in the way of sales volume relatively speaking than you would normally do.

Samuel Landy

And so the 200, probably our new home sale number --

Brett Taft

the 200,000 new home sales numbers and it's slightly above last year. I think we did about 180 last year at a similar range --

Anna Chew

164

Samuel Landy

but we are very optimistic about the new home sales. Five six of those locations are just opened within the last 12 months of expansion, and those six locations are in great markets such as cinnamon works and kind of spoke of melons kind of kind of window. But these are that's a place where we think manufactured homes will sell for as much as $300,000 and you're dealing with approximately a 30% markup. So we see $2 million in additional sales profits potentially this year from those locations and sales remain strong. You have the baby boomers who can pay cash. So sales, we see growing higher, higher growth and higher net.

Rich Anderson

Okay. In terms of the 16% same-store NOI growth to a very good number. How sustainable is it in your mind you got a lot of occupancy lift this quarter is do you see yourself producing another double digit type of same-store NOI growth year? Or is there maybe some some movement in the occupancy that might change the math a little bit as we go through the year

Samuel Landy

ow, what happens is until communities are 80% occupied, they're really not efficient. And then from that 80% to 100%, that's where we're going to get the expense ratio going down. And there's only 3,000 vacant lots left today. So, you know, four to five years, we'll fill those 3,000 vacant loss. So that's four to five years. We project the 5% rent increase, plus the 800 new rental units generating increased revenue, meaning that these double-digit increases in operating and income are possible until we run out of loss. But meanwhile, we keep getting our expansion, lots approved and those expansion lots have the possibility of generating increased sales income going all the way back to 26 when we had expansion lots at a profitable, good time to sell homes. We were we were a much smaller company, maybe only 30 communities and we did $16 million in sales and made $2 million. So today. We're building more expansions in great locations, and we hope to one day shows what a great job we can do selling homes in our earnings sales profits.

Rich Anderson

Just last one for me and maybe a bit a little ignorance here again, my first conference call you guys, but on the on the occupancy for rental and then well into the 90%, 95% or whatever it was this quarter, but owned homes are much lower that I can understand logically why why occupancy would be greater for the rental model but maybe you can fill in some blanks for me to explain why it's such a difference and what you might tried to do?

Samuel Landy

Well, I would have yes, narrow that spread you did the important thing to understand the community occupancy numbers. The vacancies are vacant, lots, lots that exist in the community that are not earning revenue. So all of the homes in the community are occupied, right? Whether whether it's a rental home for a resident own homes, those are occupied units, right? So that's so that that's 86% something occupancy consists of our 10,000 rental homes that are occupied plus community resident homes that are occupied, but the 14% vacancy, it blocks that exist, they physically exist. They have driveways. They have water and sewer there, on-road and all they need is the addition of a house. And so during the many years, going back to about 26, we intentionally acquired communities with vacancies buying lots for as little as $30,000 per site because they were vacant. And then we added $70,000 rental homes to that line. So that for $100,000, we create 1,000 square foot, three bedroom, two bath dwelling unit on a 5,000 square foot lot. That rent today for about $1,000 per month. So we're basically building horizontal apartments with our quotes per lot roughly ranges from 30,000 to 70,000 when you're buying and you build them for about 100,000. And then we're adding that factory-built house. That's an incredibly efficient quality, energy, efficient house, and then we're renting it up. And because this product is as good as any apartments, but plus less, we have these waiting lists and we have such strong rental occupancy. And so we ran into problems when COVID close down the factories and we couldn't get the homes. So that was the process that year. If we were able through the next year, we were able to get our 5% rent increase. But we couldn't tell you that we added 800 rentals and fill them because they didn't come from the factory and the year that followed that the homes all came from the factory all at once so the first half of the year, we had set them up. And then the second half of the year, we rented homes and now we're in the next year and all those problems that were are behind us are now behind us. Everything's back to normal. We have 3,000 vacant lots to fill by getting the home from the factory setting. It up and it's two to three months and renting it out so that that 14% vacancy should be filled over the next four years.

Rich Anderson

Okay. I was I think I was asking a slightly different question if I didn't phrase it right, but I'll take it offline. That was good color regardless. So thanks for that, and a great, great quarter. Thank you.

Samuel Landy

Thank you.

Operator

Our next question comes from Jeff walk and Horst from Colin Capital Management. Please go ahead with your question.

Jeff Walkenhorst

Thank you. Good morning. So I think the chain you covered a lot of ground there. That was very helpful in the seams. I was going to ask about the same-store NOI growth, which is really again unparalleled in the universe today. And I think that should certainly make UMH stand out. And the question was, how long can that continue? I think you suggested that this double-digit pace should be sustainable.
My question follow-up question to that is how does that translate into bottom line per share FFO growth in the last several years, we saw flattish FFO per share performance from UMH. And I think you went through some of the challenges which direction the company worked through. So even now today in the higher cost of funding environment, new drove 10% year over year adjusted FFO and normalized FFO per share growth. Is it your view that that we are at a point where information can continue to show very healthy per share FFO growth over the next several years?

Samuel Landy

Absolutely. It's important to think of how equity leverage works, right? So the money has to come from somewhere to buy these new rental homes into do the expansions so what we are trying to use 50% equity, 50% debt. So it comes from the common ATM as well as debt. But when you do the math and you figure out that that new money buys, that 70,000 rental homes, that creates $12,000 per year in growth income, right? So each each 70,000 is going to bring in 12,000 new dollars in rents going to be about a 40% expense ratio. So 60% of that is income. And so without leverage were earning about 9% with leverage were earning about 13%, 14%. So this new equity could be earning over $2 per share. So it is accretive and it will be more and more accretive and it's debt at that time that the brakes got hit when we couldn't get the houses from the factory that may distort people's view about how well equity leverage will work for us.

Eugene Landy

If I may add the nation needs 4 million homes, the shortage of housing is growing. The population is growing. We're not building enough housing. In fact, the shortage will increase. My estimate is that the nation needs 500 new communities of 200 units apiece for 100,000 units. That means the industry should double its production from 100,000 units to 200,000 units. The housing shortage is very, very real key. I've lived through times when you woke up and the apartments became vacant houses have again Vacon and we've all seen recessions, but I don't think that's in the cards for a nation that has the kind of housing shortage we have today, the growing immigrant populations. We get requests from groups for 1,000 units. And we've been one of the leaders in the industry, though SOD1-ALS is doing less sales. We've been providing at least 1,000 units a year, we really should provide to 3,000 units a year. So the problem as a nation is not a as an abundance of housing and shortages. The problem for the nation is to provide the housing now is that housing profitable?
We are providing housing the best quality housing at the lowest price. That's a nice place to be in an industry which is in demand in the early stages of new construction, greenfield construction. We don't make any money in the early stages of rehabilitating five. We don't make sufficient money.
The question is long term, but I am going to have increased rents and compounding and we've proven that over the decades and our estimates of where we're going. We have this that we will well at a 5% compound, wait as far as the eye can see, certainly for 14 years where everything doubles. So when you look at our per share earnings are using the reported share earnings today or the reported earnings, we will report tomorrow. If we look at what tomorrow's earnings will be, we'll bring we'll be able to do two things to alleviate the housing crisis and make a great deal of money.

Jeff Walkenhorst

Okay. That sounds good to follow-ups. Demand, I think you said that you have waiting lists for your communities or the waiting lists are very balanced across the geographies, different locations.

Samuel Landy

It's not completely uniform. Western New York is not as strong as other locations, but we do continue to grow occupancy there. I would say Michigan is not as strong

Brett Taft

Imaging has been doing okay, specifically close to Ohio, Ohio is very strong at the end. It's very strong and very strong Eastern New York, Eastern Pennsylvania are very strong with waiting lists. The others and a lot of them in those other markets do have waiting lists that might just not be as long as the ones for reporting elsewhere. But I think it's a testament to our 95% rental home occupancy. Most of our vacancy of just your typical turnover and our ability to fill 800 new rental homes per year. So and those homes geographically are going to every corner of our portfolio.

Jeff Walkenhorst

Okay. So the demand side sounds good. The ability to drive continued occupancy gains. There's no roadblocks or concerns that you see in that front.

Brett Taft

Now we're very confident with our ability to maintain our 94% to 95% occupancy ranges and install and rents are 800 homes this year and our markets continue to do well. We continue to achieve our 5% rent increases and as a result of the increased revenue and occupancy. Our expense ratios are decreasing, which is allowing us to hit the same property double digit NOI increases. So we're optimistic this will continue, but we our closely monitored every community in our portfolio.
I'd also add to that that our collections are as strong as they are normally are historically in the first quarter, it was 98.7%, almost 99%. So the company is doing well operationally from just about every standpoint.

Jeff Walkenhorst

Okay, thanks. And one final comment or insight. It's interesting that the valuations that single-family rental rates are receiving versus UMH when in fact, you now have, I think, over 10,000 rental units effectively single-family home your portfolio

Samuel Landy

agreed and Thank you. And it's very efficient to operate rental homes in a manufactured home community on 50 acres, we have 250 homes. So it's much simpler to manage our homes than when you own rental homes scattered throughout many towns and many counts.

Jeff Walkenhorst

Thanks, guys.

Samuel Landy

Thank you.

Operator

And our next question comes from John Massocca from B. Riley Securities. Please go ahead with your question.

John Massocca

Good morning. So maybe just I know you kind of mentioned on the call and it was in the 10-Q. I was just curious more color on why you closed the one sale center and kind of rented that virtual facility to clean home. Just any kind of additional color on that would be helpful.

Samuel Landy

And that particular sales center is a highway location in what was once one of the top sales locations in the country, but it's a land home place. We're good at selling homes in our communities planned home as a whole separate specialty, where you have to mobilize contractors to go to individual lots. You have to hold the homeowner's hands on all of the permitting last construction home setup. It involve so many different things that are not part of our day-to-day business, whether that's aseptic well excavation, if I believe that we could do it. But at the same time, we haven't made money at that sales center since we opened it and take Clayton Homes wanted to acquire, it does do extremely well there. And on top of that, we have an expansion we built a Port Royal. So we have vacant lots and for Royal that they could put homes in that will result in us filling the community faster. It's a good point to mention that we have 500 expansion lots that we've built, which is approximately $30 million in investments that's currently not earning anything and the faster we get a return on that investment, the better it is for us to grow FFO per share. So the sale of that sales center is for that purpose. Not we don't want to lose money on sales plate, we'll make more money there than we did, and it will fill our community faster.

John Massocca

Is that are there other examples of that center within the portfolio today that you can you could do a similar transaction with or is that kind of a one-off?

Samuel Landy

That's a one-off. We have other vacant land that can be used for different uses this vacant lands, not vacant land. There was a sales center there, but this separate parcel of land with a third was conducive to being a site and sales center. We have other vacant land conducive to being single-family homes that we are in the process of trying to find a way monitor. Right.

John Massocca

And anything just based on that kind of last comment, I mean are there any?
Yes, Dave just spoke the brackets around the value of some of those parcels of land that maybe either have a higher and better use than manufactured housing or just aren't appropriate for manufactured housing for some reason.

Samuel Landy

So we've spoken about it on the prior calls. We have approximately 100,000 acres in Vineland, New Jersey, joining our Fairview Manor, which is very close to the mine Crouching Tiger Woods Golf, where it's being constructed today. So we suspect that we'll be able to enter into a joint venture with a homebuilder. We can't predict exactly how many lots they will have approved, but my guess is somewhere around 150 lakh. And we can't predict what those homes will sell for, but my guess is it will certainly be over $500,000 and could be $1 million. And we believe the proper deal for that is that U.S. is the landowner would receive 20% of the gross price of the house. So no way to know what will happen? Will they ever get it approved? How many years will it take to get filled, but we do own 100,000 acres, right near a Tiger Woods, Mike truck, golf course. And we believe a homebuilder will want.

John Massocca

Okay. And then maybe bigger picture I think in a lot of other industries period, but also your other other types of <unk>, right? You're seeing this kind of narrative maybe around a bifurcation in terms of the economic impact on and it's different income levels have consumers of residence, et cetera. I mean, are you seeing any evidence of is that on your residence, whether it be and you know an uptick in move outs or delinquencies, et cetera.

Samuel Landy

So you're asking a very broad, very important question. So first, manufactured homes in communities can service the blue-collar worker who earns $40,000 per year through our rental home because 30% of income is $12,000. And we're the only one who provides that house and that house it is our bread and butter 10,000 unit rentals works phenomenally well. But on top of that and maybe in a sense, the exact opposite cinema was going to be manufactured homes have retailed for 300,000 a piece. So these are people who can have other housing choices, right dates. They're downsizing there 55 and older, they can live pretty much anywhere they want yet. They choose the manufactured home in our community at $300,000. And both these groups of people are doing very well right now. And the blue-collar worker is doing extremely well. The baby boomers have money to retire and can sell their homes paying off their existing mortgage. So we see both extremes, the $40,000 wage earners and the people are going to pay $300,000 per home as ready to continue our sales and rental occupancy.

John Massocca

If you look on a trailing 12-month basis, any a change to either scale or move outs or bad debt or anything like that?

Samuel Landy

No business is strong.

Brett Taft

now in our DNA or historical rental home move out rate is about 30% a year. That's good. It's actually below 30%. We're very happy about anchor tenants like living in our properties and trying to pay the rents on time in our collections in the first quarter were 98.7%, which is in line with where they generally are and that number will grow over the coming weeks on write-off on write-offs, I mean it's always been 1% or less.

Anna Chew

And it continues to be that through to the whole pretty much the history of the Company, even through COVID. It was only about 1%.

John Massocca

Okay. That's very helpful. And for me, thank you very much.

Operator

And ladies and gentlemen, with that, we'll be concluding today's question and answer session. And I'd like to turn the conference back over to Samuel Landy for closing remarks.

Samuel Landy

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, and we look forward to reporting back to you in August with our second quarter 2024 results Thank you.

Operator

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