UMH Properties
Annual Report 2023

Plain-text annual report

UMH PROPERTIES, INC. 2023 ANNUAL REPORT Our Vision UMH Properties, Inc. has a 55-year history of providing quality affordable housing. UMH owns and operates a portfolio of 135 manufactured home communities containing 25,800 developed homesites situated in 11 states. UMH also has an ownership interest in and operates two communities in Florida, containing 363 sites, through our joint venture with Nuveen Real Estate. Manufactured home communities satisfy a fundamental need of providing quality affordable housing. As home prices continue to rise and available home inventory continues to shrink, the supply of affordable housing becomes an ever-increasing concern. We are committed to being a part of the solution to America’s affordable housing crisis. UMH has long believed that we have an obligation to create sustainable and environmentally friendly communities that have a positive societal impact. Throughout our history, we have and will continue to develop and invest in environmentally friendly initiatives that conserve energy and natural resources. We build, upgrade and manage well-maintained communities that our residents are proud to call home. We believe in enriching the lives of the people impacted by our Company, such as our employees, residents, neighbors and shareholders. On Our Cover: SEBRING SQUARE, Sebring FL Acquired in 2021 2023 Year in Review 2.52.5%% 2323%% INCREASE IN INCREASE IN COMMON STOCK COMMON STOCK DIVIDEND DIVIDEND INCREASE INCREASE IN IN SALES SALES 1,040NEWNEW 1,040 RENTAL UNITS RENTAL UNITS ADDED ADDED 1313%% INCREASE IN INCREASE IN SAME PROPERTY SAME PROPERTY NOINOI OAK RIDGE ESTATES, Elkhart, IN Acquired in 2013 DEAR FELLOW SHAREHOLDERS Community Operating Income ($ in millions) The UMH team and our residents thank you for believing in us and investing in the Company. We strive to increase earnings per share and market value per share for our shareholders. We are proud to have increased the dividend for a third consecutive year as the best form of good corporate governance is returning capital to our shareholders. We believe that our success on the operational front will translate to growing FFO and future dividend increases. Additionally, Normalized FFO per share increased from $0.85 in 2022 to $0.86 in 2023 despite the $120 headwinds facing the real estate market. Normalized FFO in the fourth quarter was $0.23 as compared to $0.20 in the fourth quarter of 2022, representing an increase of 15%. Sequentially, Normalized FFO per share has increased for three quarters in a row, and we anticipate further growth as we continue to execute on our long-term business plan which is resulting in bottom line growth. $96 $72 $48 $24 We are proud that 100% of our income is deemed social by Sustainalytics, MSCI and HUD. We are careful to treat our residents and associates fairly, recognizing that all contractual relations require good faith and fair 2020 2023 dealing. We are proud to invest in communities and improve the quality of life for our existing residents. 2022 2019 2021 2018 $0 COMMUNITY NET OPERATING INCOME I n c r e a s e 7 8 % $80.2 $108.4 $91.0 $94.8 $66.9 $60.9 2018 2019 2020 2021 2022 2023 ) s n o i l l i m n i $ ( $120 $96 $72 $48 $24 $0 In some cases, we subsidize the community transition for existing residents because it is the right thing to do. This results in great community relations and eventually in increased profits. We know that our shareholders only want to be invested in a company that can earn strong returns while treating its residents fairly. The low-cost producer of a quality product always wins. UMH is the low-cost producer of 1,000 sq. ft. to 2,400 sq. ft. three-bedroom, two-bath housing on a 5,000 sq. ft. lot with a shed. Most of our lots have their own driveway and curbside garbage pickup. We provide a housing product most people must see to believe. A household with an annual income of $40,000 can rent a home from UMH for approximately $1,000 per month and they only need one month’s rent and one month’s security deposit to move in. Approximately 10,000 households are very pleased to rent homes from UMH. We maintain waiting lists for our rental homes, have 94% rental home occupancy, 98% rent collection, and below 30% annual rental home turnover with repair and maintenance costs of just $400 per unit, per year. Shareholders can view the communities they own by watching the drone videos on our website. Our residents see the value we add to their homes and communities allowing us to continue to achieve 5% annual rent increases. Our revenue growth in 2022 and early 2023 was hampered by supply constraints, not by lack of demand or an inability to have vacant lots ready to rent. However, in 2023 the UMH team fully set up and rented or sold approximately 1,200 homes. These new homes generated an increase in overall occupancy of 704 units to 86.7% and a same property occupancy increase of 632 units to 88.5%. This generated an increase in same property income of 9% and same property net operating income of 13%, or $12.2 million. In 2024, we will reap the benefits of the prior year’s 5% rent increase (approximately $10 million in new revenue), the addition of 800 rental units (approximately $10 million in new revenue), decreased inventory carrying costs and increased home sales at the community expansions and new communities Portfolio Growth 2016 2017 2018 2019 2020 2021 PORTFOLIO GROWTH Developed Sites No. of Communities 21,500 118 20,000 112 18,000 101 23,100 122 23,400 124 24,000 127 2016 2017 2018 2019 2020 2021 GROWTH OF RENTAL HOME PORTFOLIO GROWTH OF RENTAL HOME PORTFOLIO Page 2 2023 ANNUAL REPORT I n c r e a s e o f 3 , 5 0 0 h o m e s - 5 4 % 8,300 8,700 10,000 9,100 7,200 6,500 7,400 12,000 9,600 4,800 2,400 0 2018 2019 2020 2021 2022 2023 2023 2018 2019 2020 2021 2022 2023 30000 25000 20000 15000 10000 5000 0 30,000 25,000 20,000 15,000 10,000 5,000 0 12000 9600 7200 4800 2400 0 we built with our joint venture partner, Nuveen Real Estate. Our communities increase in value because of inflation, improved operating performance and improved economics and demographics of the surrounding area. In 2023, we refinanced eight communities for proceeds of $58 million at a 5.97% interest rate. We purchased those communities during 2012 and 2013 and invested a total of $52 million, including capital improvements. The appraisals completed during the refinancing established a value of $108 million, generating an increase in value of $56 million or 107% over the 10-year period. This refinancing demonstrates the considerable value that is created by our long-term business plan. Eugene Landy, our Chairman and Founder, leads us through economic cycles and black swan events with the mantra that prevailing on unleashes the power of compounding interest to create wealth for all of us. Under his leadership, we continue to grow the company, grow earnings, and provide the Nation with much needed quality affordable housing. The UMH Team is proud to go to work each day knowing that our shareholders and residents depend on us to make them proud and provide them with financial security and quality housing. We believe we succeeded again in 2023 and hope someday that everyone reading this will be able to tell a story of the wealth UMH created for them by long-term compounding of income and value. This year, we heard the remarkable story of two sisters whose grandparents purchased 3,000 shares of UMH in 1968 for approximately $7,500. Through the compounding of dividend reinvesting, they now hold over 43,000 shares of UMH worth in excess of $650,000 and earn an annual dividend of over $35,000 per year. Many thanks to our investment banks, regional banks, analysts, UMH officers, UMH directors, employees, national and state associations, and all the friends who we have made and who have joined and stayed with us over our 55-year history. All we accomplish is because we do it together and we thank each of you for being a part of our mission to profitably provide quality housing in factory-built homes for sale or rent. Very truly yours, SAMUEL A. LANDY President and Chief Executive Officer March 2024 Page 3 2023 ANNUAL REPORT LETTER FROM THE CHAIRMAN Over the past few years, we have successfully navigated the peaks and valleys of the real estate and economic cycle. From historically low interest rates and all-time high real estate valuations to COVID lockdowns and the ensuing supply chain disruptions to rising interest rates and associated bank failures. UMH came out of all of these scenarios stronger than before and with the belief that we can expand the company and implement our business plan across the Nation. Our 55 years of experience in the real estate industry has taught us to always be prepared for black swan events by maintaining a conservative balance sheet to ensure that the company is financially sound regardless of the economic cycle. UMH continues to provide much needed quality affordable housing across our portfolio. Our executive team, board of directors, vice presidents, regional managers, community managers and maintenance staff have built a first-class portfolio of manufactured home communities that our investors should be proud to own. Our portfolio consists of 25,800 developed homesites situated in 135 manufactured home communities across 11 states. Additionally, we are a 40% partner with Nuveen Real Estate in a joint venture that owns two communities containing 363 sites in Florida  and one community under construction in Pennsylvania. We have over 3,400 vacant sites available to fill and 2,100 vacant acres of land that can potentially be developed into an additional 8,500 homesites. The quality of our communities is apparent when touring our assets and comparing them to our competitors. Drone videos of our communities are available at www.umh.reit and truly show the quality of UMH’s communities and the high- quality living provided through manufactured housing. We take great pride in executing our business plan while working to provide quality affordable housing.  Our mission is now more important than ever before.  The United States has a massive shortage of quality affordable housing, ranging from four to six million units. The combination of higher interest rates and low inventory have further decreased housing affordability. This has resulted in 200,000 fewer housing starts. Additionally, most new homes being built are not at an affordable price point. Other than manufactured housing, there are limited options available at a price point under $500,000. We work every day to expand the supply of affordable housing through manufactured housing. We are acquiring and improving existing communities with Page 4 2023 ANNUAL REPORT high vacancies, expanding our communities, developing new communities through our joint ventures, and financing chattel home sales at reasonable rates. All of these verticals are social in nature and increase the supply and attainability of manufactured housing while generating exceptional operating results.   Every business succeeds only where there is good faith and fair dealing by all. The path to maximizing shareholder value is by creating and owning needed housing and treating our residents equitably. To do this, we need satisfied residents as well as satisfied investors. Investors should be proud to own UMH because we serve an important social mission by providing affordable housing and doing it in an environmentally friendly manner. Our success has led to increased property values and earnings, which investors realize through increased dividends.  We believe that this will also translate to an increased stock price. Our residents should be proud to live in our communities. We take great pride in improving the communities and the quality of life that is provided by living in a UMH community. We are always fair with residents and limit our rent increases. With resident and investor acceptance, UMH is positioned to further build upon our success. Very truly yours, EUGENE W. LANDY Chairman of the Board March 2024 OUR 55TH ANNIVERSARY CELEBRATION AT THE NEW YORK STOCK EXCHANGE UMH Properties’ Board of Directors, Executive Team and Guests Page 5 2023 ANNUAL REPORT MEMPHIS BLUES, Memphis, TN MEMPHIS BLUES, Memphis, TN Acquired in 1985 PROPERTY PORTFOLIO AND YEAR IN REVIEW OUR ACCOMPLISHMENTS UMH continues to execute on our long-term business plan and is well positioned for future earnings growth. Our accomplishments during the year include: • • • • • • • • • • Increased Rental and Related Income by 11%; Increased Community Net Operating Income (“NOI”) by 14%; Increased Normalized Funds from Operations (“Normalized FFO”) by 16%; Increased Same Property NOI by 13%; Increased Same Property Occupancy by 230 basis points from 86.2% to 88.5%; Improved our Same Property expense ratio from 42.2% at yearend 2022 to 40.3% at yearend 2023; Increased our rental home portfolio by 871 homes Rental Revenue Sales from yearend 2022 to approximately 10,000 total 250 rental homes, representing an increase of 10% from yearend 2022; Sales 200 Increased Sales of Manufactured Homes by 23%; Rental Revenue 250 200 118 developed homesites, for a total cost of $3.7 150 Entered into a new joint venture agreement with Nuveen Real Estate to develop a 113-site community 100 in Honey Brook, Pennsylvania; 150 • • Amended our unsecured credit facility to expand 50 available borrowing capacity from $100 million to 100 $180 million; Entered into a $25 million term loan and a $25 0 million line of credit secured by rental homes and 2016 50 their leases; Expanded our revolving line of credit secured by 0 eligible notes receivable from $20 million to $35 million; Financed eight existing communities for total proceeds of approximately $57.7 million; 2015 TOTAL REVENUE 2015 2016 2017 2017 • • 2018 2018 • Raised our quarterly common stock dividend by • • 2.5% to $0.205 per share or $0.82 annually; Increased our Total Market Capitalization by 6% to over $2 billion at yearend; Increased our Equity Market Capitalization by 12% to over $1 billion at yearend; • Reduced our Net Debt to Total Market Capitalization • • • • from 38.2% in 2022 to 31.3% in 2023; Issued and sold approximately 9.4 million shares of Common Stock through At-the-Market Sale Programs at a weighted average price of $15.81 per share, generating gross proceeds of $148.6 million Interest/Dividend Income expenses; Interest/Dividend Income Issued and sold approximately 2.6 million shares of Series D Preferred Stock through At-the-Market Sale Programs at a weighted average price of $21.88 per share, generating gross proceeds of $56.7 million and Subsequent to yearend, issued and sold approximately 1.2 million shares of Common Stock through our 2023 Common Stock At-the-Market Sale Program at a weighted average price of $15.37 per share, generating gross proceeds of $19.2 million and net 2021 2020 Subsequent to yearend, issued and sold approximately 2019 121,000 shares of Series D Preferred Stock through our 2023 Series D Preferred Stock At-the-Market Sale Program at a weighted average price of $22.85 per share, generating gross proceeds of $2.8 million and 2023 2023 2020 2021 2019 Interest/Div idend Income Sales of Manufacture d Homes TOTAL REVENUE Rental Revenue Interest/Dividend Income Sales of Manufactured Homes Rental Revenue $122.8 $107.4 $122.8 $107.4 I n c r e a s e 1 1 2 % $172.2 $156.7 I n c r e a s e 1 1 2 % $172.2 $194.6 $202.7 $194.6 $202.7 $142.2 $156.7 $142.2 $228.2 $228.2 2016 2017 2018 2019 2020 2021 2022 2023 ) s n o i l l i m n i $ ( $250 $200 $250 $150 $200 $100 ) s n o i l l i $150 m n $50 i $ ( $100 0 $50 Page 8 2023 ANNUAL REPORT 0 PROPERTY PORTFOLIO SITES PER STATE 25,766 SITES SC 1% MD 1% GA 1% AL 1% MI 4% NJ 5% NY 5% TN 7% PA 31% OH 28% IN 16% TOTAL ACREAGE 7,771 ACRES Total Shale Region Acreage - 3,787 Total Non Shale Region Acreage - 3,984 Developed 35% Vacant 16% SITES PER STATE 25,766 SITES SC 1% MD 1% GA 1% AL 1% MI 4% NJ 5% NY 5% TN 7% PA 31% OH 28% IN 16% TOTAL ACREAGE 7,771 ACRES Total Shale Region Acreage - 3,787 Total Non Shale Region Acreage - 3,984 VACANT ACREAGE PER STATE 2,134 ACRES Developed 35% Developed 38% Vacant 16% Vacant 11% SC 0.5% AL 0.5% MI 1% MD 2% NJ 8% IN 9% OH 25% TN 16% MD 1% GA 1% AL 1% MI 4% Marcellus and Utica Shale Regions SITES PER STATE Acquired prior to 2023 25,766 SITES 134 communities and 25,700 sites SC 1% Acquired in 2023 1 community and 100 sites PA 31% Joint Venture: 220 acres to be developed into a manufactured home community NJ 5% NY 5% 2 communities and 400 sites TN 7% 61 acres to be developed into a manufactured home community OH 28% IN 16% TOTAL ACREAGE 7,771 ACRES Total Shale Region Acreage - 3,787 Total Non Shale Region Acreage - 3,984 VACANT ACREAGE PER STATE 2,134 ACRES Developed 35% Developed 38% Vacant 16% Vacant 11% SC 0.5% AL 0.5% MI 1% MD 2% NJ 8% IN 9% OH 25% PA 21% NY 17% TN 16% Page 9 2023 ANNUAL REPORT MENEVTNYMARICTNJPADEMDOHMIINWVVAKYNCSCTNGAFLALMSILWI 25000 20000 15000 10000 5000 0 Cumulative Volume 2010 2019 2020 2021 2022 2023 COMPELLING BUSINESS PLAN 25000 Annual Volume Cumulative Volume 20000 “UMH has a 55-year history of profitably providing quality affordable housing for our Nation through manufactured homes for sale or rent in our communities. We look forward to executing our mission for the benefit of our stakeholders.” 15000 10000 - Samuel A. Landy, President and Chief Executive Officer VALUE-ADD ACQUISITIONS 0 2010 2019 2020 2021 2022 2023 5000 Since 2010, UMH has tripled the size of the company by acquiring 107 communities containing approximately 18,800 developed homesites. These communities were acquired with a blended occupancy rate of 73% for a total purchase price of $616 million or $33,000 per site. We have improved the overall quality of housing at each of these locations which has driven increased demand, occupancy, and income. The improvements we make to the communities and the correlated increase in occupancy and revenue result in a substantial increase in property values. UMH can capture the value created through financing and refinancing the communities. In 2023, UMH completed the financing of eight communities that were acquired in 2012 and 2013. We have a total investment, including capital improvements of $52 million, or approximately $41,000 per site, in these communities. This financing valued the communities at $108 million representing a $56 million increase in value, resulting in an increase of 107%. UMH is proud to achieve excellent returns while providing high-quality affordable housing. NUMBER OF ACQUIRED SITES Cumulative Volume Annual Volume 16,346 16,656 17,199 18,685 18,803 25,000 20,000 15,000 10,000 5,000 0 2010-2019 310 2020 543 2021 1,486 2022 118 2023 SITES ENGINEERED FOR EXPANSION SITES ENGINEERED FOR EXPANSION 2,000 1,500 1,000 597 500 357 1,475 956 2024 2025 2026 2027 and thereafter 0 2024 2025 2026 2027 and thereafter 2000 1500 1000 500 0 PARKE PLACE, Elkhart, IN Acquired in 2017 Page 10 2023 ANNUAL REPORT Portfolio Growth Community Operating Income ($ in millions) 30000 25000 20000 15000 10000 5000 0 30,000 25,000 20,000 15,000 10,000 5,000 0 2016 2017 2018 2019 2020 2021 $120 $96 $72 $48 $24 $0 ) s n o i l l i m n i $ ( $120 $96 $72 $48 $24 $0 2018 2019 2020 2021 2022 2023 2016 2017 2018 2019 2020 2021 2018 2019 2020 2021 2022 2023 PORTFOLIO GROWTH Developed Sites No. of Communities 21,500 118 20,000 112 18,000 101 23,100 122 23,400 124 24,000 127 COMMUNITY NET OPERATING INCOME I n c r e a s e 7 8 % $80.2 $108.4 $91.0 $94.8 $66.9 $60.9 RENTAL HOME OPERATIONS 12000 9600 7200 4800 2400 0 GROWTH OF RENTAL HOME PORTFOLIO Rental homes in our communities are a key component of the success of our acquisition program. They provide us with the fastest infill rate, improve the aesthetics of the community and provide solid returns. We have worked with our manufacturers to design our homes so that they can withstand normal rental wear and tear. We currently have a portfolio of 10,000 rental homes that are 94% occupied. Our average rents are $933 per month. We plan to grow our portfolio of rental homes by 800-1,000 units annually. Our rental investments generate unlevered returns of approximately 10%. In 2023, UMH added 1,040 new rental homes to our portfolio as compared to 392 units in 2022. The new rental homes resulted in increased same property occupancy of 230 basis points, or 632 units. This generated an increase 2022 in same property income of 9% and an increase in same property NOI of 13%. 2019 2021 2023 2020 2023 2018 GROWTH OF RENTAL HOME PORTFOLIO 12,000 9,600 I n c r e a s e o f 3 , 5 0 0 h o m e s - 5 4 % 8,300 8,700 10,000 9,100 7,200 6,500 7,400 4,800 2,400 0 2018 2019 2020 2021 2022 2023 OAK RIDGE ESTATES, Elkhart, IN Acquired in 2013 Page 11 2023 ANNUAL REPORT $30 $25 $20 $15 $10 $5 $0 $35 $30 $25 $20 $15 $10 $5 $0 400 300 200 100 0 INCREASE IN SALES Sales ($ in millions) # of Homes Sold 370 400 323 $27.1 295 299 $20.3 $18.0 $15.8 222 $10.8 $30 $25 $20 $15 170 $8.5 $10 $5 $0 2016 2017 2018 2019 2020 2021 300 200 100 0 500 400 300 200 100 0 2021 2022 2023 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 WOODS EDGE, West Lafayette, IN Acquired in 2015 SALES AND FINANCE 2018 2019 In 2023, our taxable REIT subsidiary, UMH Sales and Finance, Inc., had another strong year. Gross revenue sales were $31.2 million. We sold 341 homes, of which 164 were new and 177 were used. Our average sales price was $91,000, as compared to $84,000 in 2022, representing an increase of approximately 8%. As we continue to improve the overall quality of our communities, we are experiencing an increase in sales demand. This has resulted in strong sales growth at communities that have historically been slower sales locations. 2020 2021 2023 2022 In 2023, we financed, through our third-party lending program, $21.8 million of our home sales, which was 70% of our total home sales. We have grown our portfolio of manufactured home loans to $78.7 million. The portfolio has an average interest rate of approximately 7%. Manufactured homes are approximately 40% less expensive than stick-built homes, but historically our loans costed 40% more. These higher interest rates reduced the affordability our product provided. However, our UMH Sales and Finance interest rates are now in 2020 line with conventional mortgage rates, which helps to increase sales and demonstrates the affordability of our product. 2019 2018 SALES Sales # of Homes Sold 299 $18.0 323 $20.3 295 $15.8 341 $31.2 370 $27.1 301 $25.3 2018 2019 2020 2021 2022 2023 ) s n o i l l i m n i $ ( $35 $30 $25 $20 $15 $10 $5 $0 500 400 300 200 100 0 Page 12 2023 ANNUAL REPORT Annual Volume Cumulative Volume Cumulative Volume 25000 20000 15000 10000 5000 0 2010 2019 2020 2021 2022 2023 2010 2019 2020 2021 2022 2023 NUMBER OF ACQUIRED SITES Cumulative Volume Annual Volume 16,346 16,656 17,199 18,685 18,803 25000 20000 15000 10000 5000 0 25,000 20,000 15,000 10,000 5,000 0 2010-2019 310 2020 543 2021 1,486 2022 118 2023 VACANT LAND EXPANSIONS 2000 1500 1000 500 0 SITES ENGINEERED FOR EXPANSION In 2023, we completed the construction of 216 sites. These expansion sites are well-located in markets with strong sales demand. Expansions create operating efficiencies in which each site generates additional revenue without an increase in fixed operating costs. The average development cost is approximately $75,000 per homesite. We expect to develop 300 or more sites in 2024. Home sales in expansions should generate sales profits of $30,000 or more per home, which reduces the cost to develop the site and increases our yield. Once stabilized, expansion sites yield more than what is available in the acquisition market. We have an additional 2,100 vacant acres, which can potentially be developed into 8,500 homesites. This 2026 vacant land adjoining our properties and our vacant sites give us the ability to internally grow the company for the foreseeable future. 2027 and thereafter 2025 2024 SITES ENGINEERED FOR EXPANSION 2,000 1,500 1,000 1,475 956 597 500 357 0 2024 2025 2026 2027 and thereafter MEADOWS OF PERRYSBURG, Perrysburg, OH Acquired in 2018 LAKE SHERMAN VILLAGE, Navarre, OH Acquired in 1987 Page 13 2023 ANNUAL REPORT OPPORTUNITY ZONE FUND In 2022, UMH formed an opportunity zone fund (“OZ Fund”) to develop and redevelop manufactured housing communities located in qualified opportunity zones. Many of these economically distressed communities have a great need for workforce housing. Workforce housing incentivizes businesses to invest in these areas, thereby improving the value of the real estate located within and around the opportunity zone over time. The OZ Fund owns two manufactured home communities, Garden View Estates and Mighty Oak. Garden View Estates, located in Orangeburg, SC, was purchased in August 2022 for $5.2 million. This community contains 181 developed homesites, of which approximately 34% are occupied. The community is situated on 39 acres. Mighty Oak was purchased in January 2023 for $3.7 million and is located in Albany, GA. This brand-new community contains 118 developed homesites and is situated on 26 acres. Tax Advantages Tax Advantages Investing in the OZ Fund minimizes the tax effect of capital gains to our shareholders. During 2022, UMH realized considerable capital gains through its securities portfolio. These capital gains, along with capital gains invested by outside investors, are tax-deferred until December 31, 2026. For outside investors, capital remaining in the OZ Fund for at least 10 years results in the cost basis of the property being equal to the fair market value on the date of sale, resulting in no taxable capital gains. Capital Advantages Capital Advantages The 10-year holding period provides UMH with access to additional sources of long-term patient capital. In addition, UMH has the right of first offer to purchase the communities held within the OZ Fund when the OZ Fund sells them after the 10-year holding period, enabling UMH to have a larger acquisition pipeline. There are a limited number of capital-intensive deals that UMH can invest in at any one time. By partnering with long term investors who are seeking tax efficient strategies, UMH has the ability to acquire more communities. Government Relations Advantages Government Relations Advantages The OZ Fund improves government relations by utilizing programs the government has created to further the government’s goals of providing affordable housing and investing in areas that have been underappreciated. UMH is creating and maintaining a relationship with federal, state and local governments by participating in these programs. GARDEN VIEW ESTATES, Orangeburg, SC Acquired in August 2022 MIGHTY OAK, Albany, GA Acquired in January 2023 Page 14 2023 ANNUAL REPORT JOINT VENTURE RUM RUNNER, Sebring, FL Acquired in December 2022 SEBRING SQUARE, Sebring, FL Acquired in December 2021 UMH has grown through value-add acquisitions by acquiring manufactured housing sites in good markets significantly below replacement cost. We have done an outstanding job on this front, but our success has led to imitation, which has driven increased competition ultimately leading to increased prices so that communities now sell for more than replacement cost. We still intend to grow by value-add acquisitions, but fewer deals are meeting our growth criteria. We can now become a leader in the development of new communities. In order to fund these developments, limit the short-term impact on FFO and reduce our risk, we have entered into a joint venture relationship with Nuveen Real Estate. The purpose of this joint venture is for the acquisition and development of communities in the process of being developed or that have been developed within the past 12 months. Nuveen has a 60% equity position while UMH has a 40% share in the joint venture. UMH earns assets under management fees, development fees and a favorable promote percentage for exceeding IRR SHORT-TERM RENTALS UMH is utilizing a number of our homes for short- term rentals to capitalize on the increasing demand for flexibility. This provides the added benefit of increasing exposure to our product and the attractive lifestyle of residing in a land-lease community. “Our main criteria was safety and serenity, THEY DELIVERED! The house is brand new and they had everything we needed to make our one month stay perfect. I started to cry when I left them today. Great people!” Review of home in Sebring Square by Jenni R. - September 2023 targets. UMH will also have the right to purchase these communities from the joint venture which will enhance our future acquisition pipeline. We are very happy to partner with Nuveen and look forward to investing in and developing many communities together. Through this joint venture relationship, we own two communities in Sebring, Florida, containing 363 sites. We are making progress installing and filling homes at both the Sebring Square and Rum Runner communities. These communities are highly amenitized with a clubhouse, swimming pool, bocce ball courts, pickleball courts, dog park and more. Once complete, these will be some of the highest quality communities in the country. Additionally, through this joint venture relationship, we are managing the development of a 113-site community in Honey Brook, Pennsylvania. Construction began in the fourth quarter of 2023 and is expected to take 12-15 months. At that time, we will begin installing homes for sale and for rent. We look forward to developing communities like these throughout the country. SEBRING SQUARE SHORT-TERM RENTAL Page 15 2023 ANNUAL REPORT • In April of 2023, Sustainalytics provided a Second Party Opinion (SPO) on an updated version of our Sustainability Finance Framework. The update opened other avenues UMH could use to access ESG financing beyond strictly bonds. Sustainalytics gave an even more favorable opinion on our portfolio’s ability to provide affordable housing to the target market of low-income earners, affordable housing, and access to financing. Our water and energy management initiatives were cited as well. • UMH increased its management systems around occupational health and safety by becoming ISO 45001 certified. A Vice President of Corporate Security was also hired to improve the all-around safety for residents and workers at the communities. Their in-depth knowledge and experience will be a benefit in planning the design of new communities, offices, and other structures, as well as help establish beneficial relationships with local law enforcement. • MSCI Business Involvement Screening Research stated that UMH derived 100% of revenues socially from affordable housing real estate. • The Board announced a new ESG Subcommittee. ESG HIGHLIGHTS At UMH, we believe that the true measure of sustainability is predicated on sound practices inherent and essential to operational performance. These practices need to enhance the effectiveness and efficiency of a company, resulting in tangible impacts. UMH’s sustainability is multifaceted, first centering on sustainable social infrastructure through affordable monthly housing rates and best-in-class financing terms. Additionally, the company is dedicated to smart and conscious environmental initiatives. Our ability to proudly carry out such a mission is, in part, thanks to the hard work that the entire UMH team puts in each day, and the leadership and backbone our governance provides. It is important that the Company’s sustainability approach aligns with the interests of residents, local officials, shareholders, and other stakeholders across the organization. Sustainability, in our view, is an ongoing progression that should benefit everyone involved. It shouldn’t be a trade-off between environmental responsibility and shareholder satisfaction; there are solutions that can foster prosperity for all, and our portfolio exemplifies this belief. Last year in 2023, UMH did some incredibly impactful work in the housing markets of our existing portfolio. UMH was able to add 1,040 new rental homes at affordable rates, which isn’t just a sound practice for customer relations; it’s an effective strategy for expanding revenue and streamlining efficiencies in current operations. The use of modern housing built in the most environmentally friendly way emphasizes the fact that we are committed to providing solutions to the two most salient and controversial crises affecting our country. We continue to purchase more energy-efficient ENERGY STAR and Zero Energy Ready homes, built in ISO 14001 certified factories. Our submetering for water and retrofitting for LED lights and smart thermostats continue to go tremendously well. In order to be more conscious of our emissions and practice more resource control, we have also systemized our mileage tracking across our fleet. We are also incessantly working with our third party data providers to have audit-ready emissions data that will help us satisfy shareholder desires as well as any federal or state laws around carbon emissions. Overseeing all of ESG matters will be the Company’s new ESG Subcommittee. ESG Highlights are shown below; however, a more in-depth analysis can be found in our annual ESG Report that can be viewed on our website: www.umh.reit. Page 16 2023 ANNUAL REPORT UMH PROPERTIES’ DUPLEX HOME DISPLAYED AT THE INNOVATIVE HOUSING SHOWCASE (on the right) Washington, D.C. / June 2023 SECRETARY MARCIA L. FUDGE, U.S. Department of Housing and Urban Development (HUD) LESLI GOOCH, Chief Executive Officer of the Manufactured Housing Institute (MHI) SAMUEL A. LANDY, President and Chief Executive Officer of UMH Properties, Inc. (from left to right) SAMUEL AND LAURIE LANDY AWARDED HONORARY DOCTORATE DEGREES / Curry College, Milton, MA / May 2023 SAMUEL A. LANDY, President and Chief Executive Officer of UMH Properties, Inc. LAURIE LANDY, Founder and President of Special Strides KENNETH K. QUIGLEY, JR., Attorney At Law, President Emeritus of Curry College (photo on the right, from left to right) Page 17 2023 ANNUAL REPORT 3000 2500 2000 1500 1000 500 0 Equity Market Capitalization Preferred Equity Total Debt 2015 2016 2017 2018 2019 2020 2021 2022 2023 COMPANY GROWTH COMPANY GROWTH Total Debt Preferred Equity Equity Market Capitalization ) s n o i l l i m n i $ ( $3,000 $2,500 $2,000 $1,500 $1,000 $500 0 I n c r e a s e 1 0 6 % $2,373 $1,509 $1,585 $1,914 $2,022 $1,157 $1,182 $980 2016 2017 2018 2019 2020 2021 2022 2023 RECENT SHARE ACTIVITY COMPANY GROWTH Equity Market Capitalization Preferred Equity Total Debt 3,000 2,500 First Quarter 2,000 Second Quarter 1,500 Third Quarter Fourth Quarter 1,000 High $18.87 16.61 16.85 15.57 $752 2023 Low $13.73 14.47 13.77 $980 13.26 Distribution 3 0 8 % I n c r e a s e $0.205 0.205 $1,157 0.205 $1,182 0.205 $0.82 High $27.44 25.46 $1,509 21.46 18.37 2022 Low $ 22.22 $1,587 16.50 15.74 15.14 $2,373 Distribution $0.20 0.20 0.20 0.20 $0.80 2017 Closing Price 2018 Dividend Paid 2019 2020 Total Return 2021 Share Volume Opening Price 2016 2015 (in thousands) 103,908 $16.16 $15.32 73,683 61,549 39,972 40,567 47,226 27.33 14.81 15.73 11.84 14.90 16.10 27.33 14.81 15.73 11.84 $0.82 0.80 0.76 0.72 0.72 0.72 0.16% -38.65% 91.42% -0.71% 40.21% -16.24% $582 2014 500 0 2023 2022 2021 2020 2019 2018 UMH Properties, Inc. common shares are traded on the New York Stock Exchange (NYSE:UMH) and Tel Aviv Stock Exchange (TASE:UMH) Page 18 2023 ANNUAL REPORT FINANCIAL HIGHLIGHTS (Dollars in thousands except per share amounts) (unaudited) Operating Information Number of Communities Number of Sites Rental and Related Income Community Operating Expenses Community NOI Expense Ratio Sales of Manufactured Homes Number of Homes Sold Number of Rentals Added, net Net Income (Loss) Net Income (Loss) Attributable to Common Shareholders Adjusted EBITDA excluding Non-Recurring Other Expense FFO Attributable to Common Shareholders Normalized FFO Attributable to Common Shareholders Shares Outstanding and Per Share Data Weighted Average Shares Outstanding Basic and Diluted Net Income (Loss) Attributable to Common Shareholders per Share Basic and Diluted FFO per Share - Diluted Normalized FFO per Share - Diluted Dividends per Common Share Balance Sheet Total Assets Total Liabilities Market Capitalization Total Debt, Net of Unamortized Debt Issuance Costs Equity Market Capitalization Series D Preferred Stock Total Market Capitalization $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ December 31, 2023 December 31, 2022 135 25,766 189,749 81,343 108,406 42.9% 31,176 341 871 7,851 (8,714) 101,870 51,069 54,533 63,068 (0.15) 0.80 0.86 0.82 1,427,577 720,783 690,017 1,041,422 290,180 2,021,619 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 134 25,568 170,434 75,660 94,774 44.4% 25,342 301 392 (4,972) (36,265) 89,926 28,489 46,840 54,389 (0.67) 0.51 0.85 0.80 1,344,596 793,400 761,676 927,298 225,379 1,914,353 Page 19 2023 ANNUAL REPORT $25 $0 Rental and Related Income Community Operating Expenses Community NOI 7800 Total Rentals Occupied Rentals SAME PROPERTY STATISTICS SAME PROPERTY PERFORMANCE SAME PROPERTY RENTAL OCCUPANCY 2022 2023 9,800 9,743 9,400 9,000 8,600 8,200 7,800 8,988 9,165 8,392 Total Rentals Total Rentals Occupied Rentals Occupied Rentals December 31, 2023 December 31, 2022 23,958 21,212 88.5% 126 9,743 9,165 94.1% $524 $930 23,886 20,580 86.2% 126 8,988 8,392 93.4% $502 $872 2022 2023 $200 $182.9 $175 $167.8 ) s n o i l l i m n i $ ( $150 $125 $100 $75 $50 $25 $0 $109.2 $97.1 $70.7 $73.7 Rental and Related Income Community Operating Expenses Community NOI Number of Sites Occupied Sites Occupancy % Number of Communities Total Rentals Occupied Rentals Rental Occupancy Monthly Rent Per Site Monthly Rent Per Home Including Site Page 20 2023 ANNUAL REPORT COMPANY 10-K UMH Ringing the NYSE Opening Bell January 10, 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] [ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ____________________ to _____________________ Commission File Number 001-12690 UMH Properties, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer identification number) Maryland 22-1890929 3499 Route 9, Suite 3C, Freehold, New Jersey 07728 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (732) 577-9997 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of exchange on which registered Common Stock, $0.10 par value 6.375% Series D Cumulative Redeemable Preferred Stock, $0.10 par value UMH UMH PRD New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. X Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes X No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). X Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer X Accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. X If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes X No Based upon the assumption that directors and executive officers of the registrant are not affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at June 30, 2023 was $1.0 billion. Presuming that such directors and executive officers are affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at June 30, 2023 was $945.8 million. The number of shares outstanding of issuer's common stock as of February 27, 2024 was 69,342,865 shares. Documents Incorporated by Reference: -Part III incorporates certain information by reference from the Registrant’s definitive proxy statement for the 2024 Annual Meeting of Shareholders, which will be filed no later than 120 days after the close of the Registrant’s fiscal year ended December 31, 2023. -1- TABLE OF CONTENTS PART I ....................................................................................................................................... 3 Item 1 – Business ..................................................................................................................... 3 Item 1A – Risk Factors ........................................................................................................... 10 Item 1B – Unresolved Staff Comments ...................................................................................... 25 Item 1C – Cybersecurity .......................................................................................................... 25 Item 2 – Properties ................................................................................................................. 26 Item 3 – Legal Proceedings ...................................................................................................... 39 Item 4 – Mine Safety Disclosures .............................................................................................. 39 PART II .................................................................................................................................... 39 Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .............................................................................................................. 39 Item 6 – [Reserved] ................................................................................................................ 41 Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations ....... 41 Item 7A – Quantitative and Qualitative Disclosures about Market Risk ............................................ 52 Item 8 – Financial Statements and Supplementary Data ................................................................. 53 Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....... 53 Item 9A – Controls and Procedures ........................................................................................... 54 Item 9B – Other Information .................................................................................................... 55 Item 9C – Disclosure Regarding Foreign Jurisdiction that Prevent Inspections ................................... 55 PART III ................................................................................................................................... 56 Item 10 – Directors, Executive Officers and Corporate Governance ................................................. 56 Item 11 – Executive Compensation ........................................................................................... 56 Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .......................................................................................................................... 56 Item 13 – Certain Relationships and Related Transactions, and Director Independence ........................ 56 Item 14 – Principal Accountant Fees and Services ........................................................................ 56 PART IV………………..…………………….……………………………………………….57 Item 15 – Exhibits, Financial Statement Schedules ....................................................................... 57 Item 16 – Form 10-K Summary ................................................................................................ 62 SIGNATURES ........................................................................................................................... 63 -2- Item 1 – Business General Development of Business PART I UMH Properties, Inc. (“UMH”), together with its predecessors and consolidated subsidiaries, are referred to herein as “we”, “us”, “our”, or “the Company”, unless the context requires otherwise. UMH is a Maryland corporation that operates as a self-administered and self-managed qualified real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code (the “Code”). The Company elected REIT status effective January 1, 1992 and intends to maintain its qualification as a REIT in the future. As a qualified REIT, with limited exceptions, the Company will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that it distributes to its shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. UMH was incorporated in the state of New Jersey in 1968. On September 29, 2003, UMH changed its state of incorporation from New Jersey to Maryland by merging with and into a Maryland corporation. Our executive office is located in Freehold, NJ. Description of Business The Company’s primary business is the ownership and operation of manufactured home communities – leasing manufactured homesites to residents. The Company also leases manufactured homes to residents and, through its wholly-owned taxable REIT subsidiary, UMH Sales and Finance, Inc. (“S&F”), sells and finances the sale of manufactured homes to residents and prospective residents of our communities and for placement on customers’ privately-owned land. In 2022, Company also formed an opportunity zone fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the Tax Cuts and Jobs Act of 2017 (the “TCJA”) to encourage long-term investment in economically distressed areas. The Company currently holds a 77% percentage interest in the opportunity zone fund. Our opportunity zone fund currently owns two communities, located in South Carolina and Georgia. As of December 31, 2023, the Company owned and operated 135 manufactured home communities (including two communities acquired through the Company’s opportunity zone fund) containing approximately 25,800 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. The Company also has an ownership interest in and operates two communities in Florida through a joint venture with Nuveen Real Estate (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 5 “Investment in Joint Venture” of the Notes to Consolidated Financial Statements). We have expanded our portfolio of manufactured home communities through numerous acquisitions. During 2023, the Company purchased one community, located in Georgia, containing 118 developed homesites, through our opportunity zone fund. In addition, during 2023, the Company expanded our joint venture relationship with Nuveen Real Estate by forming a new joint venture vehicle with Nuveen to develop a new manufactured housing community in Pennsylvania. A manufactured home community is designed to accommodate detached or semi-attached, single-family manufactured homes. These manufactured homes are produced off-site by manufacturers and installed on sites within the communities. These homes may be improved with the addition of features constructed on-site, including garages, screened rooms and carports. Manufactured homes are available in a variety of designs and floor plans, offering many amenities and custom options. Each manufactured homeowner leases the site on which the home is located from the Company. Generally, the Company owns the underlying land, utility connections, streets, lighting, driveways, common area amenities and other capital improvements and is responsible for enforcement of community guidelines and maintenance. Manufactured homes are accepted by the public as a viable and economically attractive alternative to conventional site-built single-family housing. The affordability of the modern manufactured home makes it a very -3- attractive housing alternative. Depending on the region of the country, prices per square foot for a new manufactured home average up to 50 percent less than a comparable site-built home, excluding the cost of land. This is due to a number of factors, including volume purchase discounts, inventory control of construction materials and control of all aspects of the construction process, which is generally a more efficient, environmentally friendly and streamlined process as compared to a site-built home. Modern residential land lease communities are similar to typical residential subdivisions containing central entrances, paved well-lit streets, curbs and gutters. Generally, modern manufactured home communities contain buildings for recreation, green areas, and other common area facilities, all of which are the property of the community owner. In addition to such general improvements, certain manufactured home communities include recreational improvements such as swimming pools, tennis courts and playgrounds. Municipal water and sewer services are available in some manufactured home communities, while other communities supply these services on-site. Typically, our leases are on an annual or month-to-month basis, renewable upon the consent of both parties. The community manager interviews prospective residents, collects rent and finance payments, ensures compliance with community regulations, maintains common areas and community facilities and is responsible for the overall appearance of the community. The homeowner is responsible for the maintenance of the home and leased site. As a result, our capital expenditures tend to be less significant relative to multifamily rental apartments. Manufactured home communities produce predictable income streams and provide protection from inflation due to the ability to annually increase rents. Many of our communities compete with other manufactured home community properties located in the same or nearby markets that are owned and operated by other companies in our business. We generally monitor the rental rates and other terms being offered by our competitors and consider this information as a factor in determining our own rental rates. In addition to competing with other manufactured home community properties, our communities also compete with alternative forms of housing (such as apartments and single-family homes). In connection with the operation of its communities, UMH also leases homes to prospective tenants. As of December 31, 2023, UMH owned approximately 10,000 rental homes, representing approximately 39% of its developed homesites. The Company engages in the rental of manufactured homes primarily in areas where the communities have existing vacancies. The rental homes produce income from both the home and the site which might otherwise be non-income producing. Inherent in the operation of a manufactured home community is the development, redevelopment, and expansion of our communities. In addition to leasing manufactured homes to residents, the Company sells and finances, through a third-party lending program, the sale of manufactured homes in our communities through its 100% owned, fully consolidated subsidiary S&F. S&F was established to potentially enhance the value of our communities by filling sites that would otherwise be vacant. The home sales business is operated as it is with traditional homebuilders, with sales centers, model homes, an inventory of completed homes and the ability to supply custom designed homes based upon the requirements of the new homeowners. In addition, our sales centers can earn a profit by selling homes to customers for placement on their own private land. Investment and Other Policies The Company may invest in improved and unimproved real property and may develop unimproved real property. Such properties may be located throughout the U.S. but the Company has generally concentrated on the Northeast, Midwest and Southeast. Since 2010, we have quadrupled the number of developed homesites by purchasing 107 communities containing approximately 18,800 homesites. We are focused on acquiring communities with significant upside potential and leveraging our expertise to build long-term capital appreciation. Our growth strategy involves purchasing well-located communities in our target markets. As part of our growth strategy, we intend to evaluate potential opportunities to expand into additional geographic markets, including other markets in the southeastern United States. The Company also evaluates our properties for expansion opportunities. Development of the additional acreage available for expansion allows us to leverage existing communities and amenities. We believe our ability to complete expansions translates to greater value creation and cash flow through operating efficiencies. The Company -4- has approximately 2,100 acres of additional land potentially available for future development. See PART I, Item 2 – Properties, for a list of our additional acreage. The Company seeks to finance acquisitions with the most appropriate available source of capital, including purchase money mortgages or other financing, which may be first liens, wraparound mortgages or subordinated indebtedness, sales of investments, and issuance of additional equity securities. In connection with its ongoing activities, the Company may issue notes, mortgages or other senior securities. The Company intends to use both secured and unsecured lines of credit. The Company’s joint venture relationship with Nuveen Real Estate also provides a source of financing for acquisitions of newly developed communities and development of new communities. The Company may repurchase or reacquire its shares from time to time if, in the opinion of the Board of Directors, such an acquisition is advantageous to the Company. During the years ended December 31, 2023 and 2022, the Company did not repurchase any shares of its Common Stock. In addition to its manufactured home communities, the Company also owns a portfolio of investment securities, consisting of marketable equity securities issued by other REITs, which represented 1.9% of undepreciated assets (which is the Company’s total assets excluding accumulated depreciation) at year end. We do not intend to increase our investments in our REIT securities portfolio. These liquid real estate holdings provide additional diversification, liquidity and income. The Company, from time to time, may purchase these securities on margin when the interest and dividend yields exceed the cost of funds. Regulations, Insurance and Property Maintenance and Improvement Manufactured home communities are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses and other common areas, and regulations relating to operating water and wastewater treatment facilities at several of our communities. We believe that each community has all necessary operating permits and approvals. Our properties are insured against risks that may cause property damage and business interruption including events such as fire, business interruption, general liability and if applicable, flood. Our insurance policies contain deductible requirements, coverage limits and particular exclusions. It is the policy of the Company to maintain adequate insurance coverage on all of our properties and, in the opinion of management, all of our properties are adequately insured. We also obtain title insurance insuring fee title to the properties in an aggregate amount which we believe to be adequate. State and local rent control laws in certain jurisdictions may dictate the structure of rent increases and limit our ability to recover increases in operating expenses and the costs of capital improvements. In 2019, the State of New York enacted the Housing Stability and Tenant Protection Act of 2019, which, among other things, set maximum collectible rent increases. Rent control also affects three of our manufactured home communities in New Jersey. Enactment of such laws has been considered at various times in other jurisdictions. We presently expect to continue to maintain properties, and may purchase additional properties, in markets that are either subject to rent control or in which rent-related legislation exists or may be enacted. It is the policy of the Company to properly maintain, modernize, expand and make improvements to its properties when required. The Company anticipates that renovation expenditures with respect to its present properties during 2024 will be approximately $20 - $30 million. Human Capital The attraction, motivation and retention of our employees are critical factors in furthering the growth and financial success of the Company. We recognize that our ability to achieve the high standards we set for ourselves can best be accomplished by having a diverse team. We are committed to promoting diversity, equity and inclusion and our benefits programs are designed to achieve employee satisfaction and advancement. As of February 16, 2024, the Company had approximately 480 employees, including officers. Approximately half of our management team and 45% of our total employee population are female. Over 41% of our employees are 40 years of age or older and 24% are over 60 years of age. During each year, the Company hires additional part-time and seasonal employees as groundskeepers and lifeguards and to conduct emergency repairs. -5- Our employees are fairly compensated as compared to employees of our competitors and are routinely recognized for outstanding performance. They are offered regular opportunities to participate in professional development programs which focus on building their skills and capabilities. We conduct regional training sessions and are committed to providing a safe and healthy workplace that is free from violence, intimidation and other unsafe or disruptive practices. We hold an annual employee meeting that includes safety training, as required under the federal Occupational, Safety and Health Act, as well as anti-harassment training. The Company also offers a robust wellness program to its employees that incorporates health benefits, including incentives for enrolling in exercise classes and for gym memberships. This encourages our employees to improve their mental and physical well-being. Information about our Executive Officers The following table sets forth information with respect to the executive officers of the Company as of December 31, 2023: Name Eugene W. Landy Samuel A. Landy Anna T. Chew Craig Koster Brett Taft Age 90 63 65 48 34 Position Chairman of the Board of Directors and Founder President and Chief Executive Officer Executive Vice President, Chief Financial Officer and Treasurer Executive Vice President, General Counsel and Secretary Executive Vice President and Chief Operating Officer Environmental, Social and Governance (“ESG”) Considerations The Company’s mission is to address the fundamental need of providing affordable housing and in doing so, create sustainable and environmentally friendly communities that have a positive societal impact. We recognize our obligation, as well as that of our industry, to reduce our impact on the environment and to conserve natural resources. We continually invest in energy-efficient technology where practicable, including water and energy conservation initiatives, and are committed to incorporating environmental and social considerations into our business practices to create value and enhance the communities where our residents live. We also recognize the importance of good corporate governance in ensuring the Company’s continued success and maintaining the confidence of our shareholders and financing sources. Our policies and practices are endorsed and supported by the Company’s executive management, including its Vice President of ESG, and are regularly reviewed by the Board of Directors and the Environmental, Social and Corporate Governance (“ESG”) Subcommittee of the Nominating and Corporate Responsibility Committee. Investments in the Company’s common stock and preferred stock may be considered qualified ESG investments. Sustainalytics, which is a leading independent ESG and corporate governance research ratings and analytics firm, reviewed our Sustainable Finance Framework and agreed that we not only provide a social good in the form of providing affordable housing, but also an environmental good for our conservation initiatives. The framework is also in line with UN Sustainable Development Goals 6, 7 and 11. Summary of Risk Factors The following is a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 1A. of this Annual Report on Form 10-K and other reports and documents filed by us with the SEC. Real Estate Industry Risks: • General economic conditions and the concentration of our properties in certain states may affect our ability to generate sufficient revenue to maintain our profitability. • We may be unable to compete with our larger competitors for acquisitions, which may increase prices for communities. • We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected. -6- • We may be unable to finance or accurately estimate or anticipate costs and timing associated with expansion activities. • We may be unable to sell properties when appropriate because real estate investments are illiquid. • Our ability to sell manufactured homes may be affected by various factors, which may in turn adversely affect our profitability. • Licensing laws and compliance could affect our profitability. • The termination of our third-party lending program could adversely affect us. • Costs associated with taxes and regulatory compliance may reduce our revenue. • Rent control legislation may harm our ability to increase rents. • Environmental liabilities could affect our profitability. • Some of our properties are subject to potential natural or other disasters. • Climate change may adversely affect our business. • Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties which could adversely affect our business. • Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow. • Our investments are concentrated in the manufactured housing/residential sector and our business would be adversely affected by an economic downturn in that sector. • Our joint venture relationship with Nuveen Real Estate may subject us to risks, including limitations on our decision-making authority and the risk of disputes, which could adversely affect us. Financing Risks: • We face risks generally associated with our debt. • We mortgage our properties, which subjects us to the risk of foreclosure in the event of non-payment. • We face risks associated with our dependence on external sources of capital. • We may become more highly leveraged, resulting in increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions. • We are subject to risks associated with the current interest rate environment, and changes in interest rates may affect our cost of capital and, consequently, our financial results. • Covenants in our credit agreements and other debt instruments could limit our flexibility and adversely affect our financial condition. • A change in the U.S. government policy with regard to Fannie Mae and Freddie Mac could impact our financial condition. • We face risks associated with the financing of home sales to customers in our manufactured home communities. Risks Related to our Status as a REIT: • If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT. • Failure to make required distributions would subject us to additional tax. • We may not have sufficient cash available from operations to pay distributions to our shareholders, and, therefore, distributions may be made from borrowings. • We may be required to pay a penalty tax upon the sale of property that is determined to be held for sale to customers. • We may be adversely affected if we fail to qualify as a REIT. • To qualify as a REIT, we must comply with certain highly technical and complex requirements. • There is a risk of changes in the tax law applicable to REITs. • We may be unable to comply with the strict income distribution requirements applicable to REITs. • Our taxable REIT subsidiary (“TRS”) is subject to special rules that may result in increased taxes. • Notwithstanding our status as a REIT, we are subject to various federal, state and local taxes on our income and property. -7- General Risk Factors • Global and regional economic conditions could materially adversely affect our business, results of operations, financial condition and growth. • We may not be able to obtain adequate cash to fund our business. • We are dependent on key personnel. • If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results, which could result in a loss of investor confidence and adversely affect the market price of our common stock. • Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests. • We may amend our business policies without shareholder approval. • Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks. • The market value of our Series D Preferred Stock and Common Stock could decrease based on our performance and market perception and conditions. • The market price and trading volume of our Series D Preferred Stock and Common Stock may fluctuate significantly. • Future issuance or sale of additional shares of Preferred Stock or Common Stock or other securities could adversely affect the trading prices of our outstanding Series D Preferred Stock and Common Stock. • Future issuances of our debt securities, which would be senior to our Series D Preferred Stock upon liquidation, or preferred equity securities which may be senior to our Series D Preferred Stock for purposes of dividend distributions or upon liquidation, may adversely affect the per-share trading prices of our Series D Preferred Stock. • There are restrictions on the transfer of our capital stock. • The dual listing of our Common Stock on the New York Stock Exchange (“NYSE”) and the Tel Aviv Stock Exchange (“TASE”) may result in price variations that could adversely affect liquidity of the market for our Common Stock. • The existing mechanism for the dual listing of securities on the NYSE and the TASE may be eliminated or modified in a manner that may subject us to additional regulatory burden and additional costs. • We are subject to restrictions that may impede our ability to effect a change in control. • We cannot assure you that we will be able to pay distributions regularly. • Dividends on our capital stock do not qualify for the reduced federal tax rates available for some dividends (i.e., they are not qualified dividends). • We are subject to risks arising from litigation. • Future terrorist attacks and military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity. • Disruptions in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our capital stock. • We face risks relating to cybersecurity attacks which could adversely affect our business, cause loss of confidential information and disrupt operations. • We are dependent on continuous access to the Internet to use our cloud-based applications. • We face risks relating to expanding use of social media mediums. • Our opportunity zone fund may fail to qualify for the tax benefits available for investments in qualified opportunity zones under the detailed rules adopted by the Internal Revenue Service. • We face various risks and uncertainties related to public health crises, such as the COVID-19 pandemic or other highly infectious or contagious diseases. Cautionary Statement Regarding Forward-Looking Statements Certain statements contained in this Annual Report on Form 10-K that are not historical facts are forward- looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about the Company’s expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. Forward-looking -8- statements can be identified by their use of forward-looking words, such as “may,” “will,” “anticipate,” “expect,” “believe,” “intend,” “plan,” “should,” “seek” or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described below and under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These and other risks, uncertainties and factors could cause our actual results to differ materially from those included in any forward-looking statements we make. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from our expectations include, among others: • • • • • • • • • • • • • • • • • changes in the real estate market conditions and general economic conditions; the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations affecting manufactured housing communities and illiquidity of real estate investments; increased competition in the geographic areas in which we own and operate manufactured housing communities; our ability to continue to identify, negotiate and acquire manufactured housing communities and/or vacant land which may be developed into manufactured housing communities on terms favorable to us; our ability to maintain or increase rental rates and occupancy levels; changes in market rates of interest; inflation and increases in costs, including personnel, insurance and the cost of purchasing manufactured homes; our ability to purchase manufactured homes for rental or sale; our ability to repay debt financing obligations; our ability to refinance amounts outstanding under our credit facilities at maturity on terms favorable to us; our ability to comply with certain debt covenants; our ability to integrate acquired properties and operations into existing operations; the availability of other debt and equity financing alternatives; continued ability to access the debt or equity markets; the loss of any member of our management team; our ability to maintain internal controls and processes to ensure all transactions are accounted for properly, all relevant disclosures and filings are made in a timely manner in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected; the ability of manufactured home buyers to obtain financing; the level of repossessions by manufactured home lenders; • • • market conditions affecting our investment securities; • • • changes in federal or state tax rules or regulations that could have adverse tax consequences; our ability to qualify as a real estate investment trust for federal income tax purposes; risks and uncertainties related to the COVID-19 pandemic or other highly infectious or contagious diseases; and, those risks and uncertainties referenced under the heading "Risk Factors" contained in this Form 10-K and the Company's filings with the Securities and Exchange Commission (“SEC”). You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. The forward-looking statements contained in this Annual Report on Form 10-K speak only as of the date hereof and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. -9- Available Information Additional information about the Company can be found on the Company’s website which is located at www.umh.reit. Information contained on or hyperlinked from our website is not incorporated by reference into and should not be considered part of this Annual Report on Form 10-K or our other filings with the SEC. The Company makes available, free of charge, on or through its website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Item 1A – Risk Factors Our business faces many risks. The following risk factors may not be the only risks we face but address what we believe may be the material risks concerning our business at this time. If any of the risks discussed in this report were to occur, our business, prospects, financial condition, results of operation and our ability to service our debt and make distributions to our shareholders could be materially and adversely affected and the market price per share of our stock could decline significantly. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” Real Estate Industry Risks General economic conditions and the concentration of our properties in certain states may affect our ability to generate sufficient revenue to maintain our profitability. The market and economic conditions in our current markets may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. As a result of the geographic concentration of our properties in ten states in the Eastern United States, we are exposed to the risks of downturns in the local economy or other local real estate market conditions which could adversely affect occupancy rates, rental rates, and property values in these markets. Other factors that may affect general economic conditions or local real estate conditions include: • • • • • • • • • • • • the national and local economic climate, including that of the energy-market dependent Marcellus and Utica Shale regions, may be adversely impacted by, among other factors, potential restrictions on drilling, plant closings, and industry slowdowns; local real estate market conditions such as the oversupply of manufactured homesites or a reduction in demand for manufactured homesites in an area; the number of repossessed homes in a particular market; the lack of an established dealer network; the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates; the safety, convenience and attractiveness of our properties and the neighborhoods where they are located; zoning or other regulatory restrictions; competition from other available manufactured home communities and alternative forms of housing (such as apartment buildings and single-family homes); our ability to provide adequate management, maintenance and insurance; a pandemic or other health crisis, such as the COVID-19 pandemic or other highly infectious or contagious diseases; increased operating costs, including insurance premiums, real estate taxes and utilities; and the enactment of rent control laws or laws taxing the owners of manufactured homes. Our income would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of sites, -10- or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the property. We may be unable to compete with our larger competitors for acquisitions, which may increase prices for communities. The real estate business is highly competitive. We compete for manufactured home community investments with numerous other real estate entities, such as individuals, corporations, REITs and other enterprises engaged in real estate activities. In many cases, the competing companies may be larger and better financed than we are, making it difficult for us to secure new manufactured home community investments. Competition among private and institutional purchasers of manufactured home community investments has resulted in increases in the purchase prices paid for manufactured home communities and consequently higher fixed costs. To the extent we are unable to effectively compete in the marketplace, our business may be adversely affected. We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected. We acquire and intend to continue to acquire manufactured home communities on a select basis. Our acquisition activities and their success are subject to risks, including the following: • if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied; • we may be unable to finance acquisitions on favorable terms; • • acquired properties may fail to perform as expected; the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates; acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures; and • • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations. If any of the above were to occur, our business and results of operations could be adversely affected. In addition, we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were to be asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow. We may be unable to finance or accurately estimate or anticipate costs and timing associated with expansion activities. We periodically consider the expansion of existing communities and development of new communities. Our expansion and development activities are subject to risks such as: • we may not be able to obtain financing with favorable terms for community development which may make us unable to proceed with the development; • we may be unable to obtain, or may face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of a community entirely if we are unable to obtain such permits or authorizations; • we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities; • we may be unable to complete construction and lease‑up of a community on schedule resulting in increased debt service expense and construction costs; • we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability; -11- • we may be unable to secure long‑term financing on completion of development resulting in • increased debt service and lower profitability; and occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and economic conditions, which may result in the community not being profitable. If any of the above were to occur, our business and results of operations could be adversely affected. We may be unable to sell properties when appropriate because real estate investments are illiquid. Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to vary our property portfolio promptly in response to changes in economic or other conditions. In addition, the Code limits our ability to sell our properties. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service our debt and make distributions to our shareholders. Our ability to sell manufactured homes may be affected by various factors, which may in turn adversely affect our profitability. S&F operates in the manufactured home market offering homes for sale to tenants and prospective tenants of our communities. The market for the sale of manufactured homes may be adversely affected by the following factors: • • • • • downturns in economic conditions which adversely impact the housing market; an oversupply of, or a reduced demand for, manufactured homes; the ability of manufactured home manufacturers to adapt to change in the economic climate and the availability of units from these manufacturers; the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales. Any of the above listed factors could adversely impact our rate of manufactured home sales, which would result in a decrease in profitability. Licensing laws and compliance could affect our profitability. Our subsidiary S&F is subject to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), which requires that we obtain appropriate licenses pursuant to the Nationwide Mortgage Licensing System & Registry in each state where S&F conducts business. There are extensive federal and state requirements mandated by the SAFE Act and other laws pertaining to financing, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and there can be no assurance that we will obtain or renew our SAFE Act licenses, which could result in fees and penalties and have an adverse impact on our ability to continue with our home financing activities. The termination of our third-party lending program could adversely affect us. S&F currently relies exclusively on its third-party lending program for all loan origination and servicing activity. As a result, the termination of our third-party lending program could impact our ability to continue with our home financing activities. Costs associated with taxes and regulatory compliance may reduce our revenue. We are subject to significant regulation that inhibits our activities and may increase our costs. Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties at a substantial cost and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We cannot predict what requirements may be enacted or amended or what costs we will incur to comply with such requirements. Costs resulting from changes in real estate laws, income taxes, service or other taxes may adversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which would adversely affect our business and results of operations. -12- Laws and regulations also govern the provision of utility services. Such laws regulate, for example, how and to what extent owners or operators of property can charge renters for provision of utilities. Such laws can also regulate the operations and performance of utility systems and may impose fines and penalties on real property owners or operators who fail to comply with these requirements. The laws and regulations may also require capital investment to maintain compliance. Rent control legislation may harm our ability to increase rents. State and local rent control laws in certain jurisdictions may limit our ability to increase rents and to recover increases in operating expenses and the costs of capital improvements. In 2019, the State of New York enacted the Housing Stability and Tenant Protection Act of 2019, which, among other things, set maximum collectible rent increases. Rent control also affects three of our manufactured home communities in New Jersey. Enactment of such laws has been considered at various times in other jurisdictions. We presently expect to continue to maintain properties, and may purchase additional properties, in markets that are either subject to rent control or in which rent related legislation exists or may be enacted. Environmental liabilities could affect our profitability. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under or in such property, as well as certain other potential costs relating to hazardous or toxic substances. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As a current or former owner and operator of real estate, we may be required by law to investigate and clean up hazardous substances released at or from the properties we currently own or operate or have in the past owned or operated. We may also be liable to the government or to third parties for property damage, investigation costs and cleanup costs. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos- containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities. We are not aware of any environmental liabilities relating to our investment properties which would have a material adverse effect on our business, assets, or results of operations. However, we cannot assure you that environmental liabilities will not arise in the future and that such liabilities will not have a material adverse effect on our business, assets or results of operations. Of the 135 manufactured home communities we operated as of December 31, 2023, 46 have their own wastewater treatment facility or water distribution system, or both. At these locations, we are subject to compliance with monthly, quarterly and yearly testing for contaminants as outlined by the individual state’s environmental protection agencies. In connection with the management of the properties or upon acquisition or financing of a property, the Company authorizes the preparation of Phase I or similar environmental reports (which involves general inspections without soil sampling or ground water analysis) completed by independent environmental consultants. Based upon such environmental reports and the Company’s ongoing review of its properties, as of the date of this Annual Report, the Company is not aware of any environmental condition with respect to any of its properties which it believes would be reasonably likely to have a material adverse effect on its financial condition and/or results of operations. However, these reports cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more properties. Some of our properties are subject to potential natural or other disasters. Certain of our manufactured home communities are located in areas that may be subject to natural disasters, including our manufactured home communities in flood plains, in areas that may be adversely affected by tornados and in coastal regions that may be -13- adversely affected by increases in sea levels or in the frequency or severity of hurricanes, tropical storms or other severe weather conditions. The occurrence of natural disasters may delay redevelopment or development projects, increase investment costs to repair or replace damaged properties, increase future property insurance costs and negatively impact the tenant demand for lease space. To the extent insurance is unavailable to us or is unavailable on acceptable terms, or our insurance is not adequate to cover losses from these events, our financial condition and results of operations could be adversely affected. Climate change may adversely affect our business. To the extent that significant changes in the climate occur in areas where our properties are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulations based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income. Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties which could adversely affect our business. We compete with other owners and operators of manufactured home community properties, some of which own properties similar to ours in the same submarkets in which our properties are located. The number of competitive manufactured home community properties in a particular area could have a material adverse effect on our ability to attract tenants, lease sites and maintain or increase rents charged at our properties or at any newly acquired properties. In addition, other forms of multifamily residential properties, such as private and federally funded or assisted multifamily housing projects and single-family housing, provide housing alternatives to potential tenants of manufactured home communities. If our competitors offer housing at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire. Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow. We generally maintain insurance policies related to our business, including casualty, general liability and other policies covering business operations, employees and assets. However, we may be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots, acts of war or other catastrophic events. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated profits and cash flow from the properties and, in the case of debt which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, no assurance can be given that we will not incur losses in excess of our insurance coverage, or that we will be able to obtain insurance in the future at acceptable levels and reasonable cost. Our investments are concentrated in the manufactured housing/residential sector and our business would be adversely affected by an economic downturn in that sector. Our investments in real estate assets are primarily concentrated in the manufactured housing/residential sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry. Our joint venture relationship with Nuveen Real Estate may subject us to risks, including limitations on our decision-making authority and the risk of disputes, which could adversely affect us. We have entered into joint venture arrangements with Nuveen Real Estate to acquire manufactured home communities that are recently developed or under development. We are required to contribute 40% of the capital required for investments by the joint venture entities. It is possible that our joint venture partner, Nuveen Real Estate, may have business interests, goals, priorities or concerns that are different from our business interests, goals, priorities or concerns. Although we manage the joint venture entities and their properties, we do not have full control over decisions and require approval of Nuveen Real Estate for major decisions. As a result, we may face the risk of disputes, including potential deadlocks in making decisions. In addition, the joint venture agreements provide that until the capital contributions to the joint venture entities are fully funded or the joint venture is terminated, and unless Nuveen declines an acquisition proposed by us, the joint venture will be the exclusive vehicle for us to acquire any manufactured home communities that meet -14- the joint venture’s investment guidelines. Nuveen Real Estate will have the right to remove and replace us as managing member of the joint venture entities and manager of the joint venture’s properties if we breach certain obligations or certain events occur, in which event Nuveen Real Estate may elect to buy out our interest in the applicable joint venture entity at 98% of its value. There are also significant restrictions on our ability to exit the joint venture. Any of these provisions could adversely affect us. Financing Risks We face risks generally associated with our debt. We finance a portion of our investments in properties and marketable securities through debt. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In addition, debt creates other risks, including: • • • • rising interest rates on our variable rate debt; inability to repay or refinance existing debt as it matures, which may result in forced disposition of assets on disadvantageous terms; refinancing terms less favorable than the terms of existing debt; and failure to meet required payments of principal and/or interest. To the extent we cannot refinance debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which would have an adverse impact on our financial performance and ability to service debt and make distributions. We mortgage our properties, which subjects us to the risk of foreclosure in the event of non-payment. We mortgage many of our properties to secure payment of indebtedness. If we are unable to meet mortgage payments, then the property could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure of one or more of our properties could adversely affect our financial condition, results of operations, cash flow, ability to service debt and make distributions and the market price of our Series D Preferred Stock and Common Stock and any other securities we issue. We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each year to distribute to our shareholders at least 90% of our REIT taxable income, and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including (i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings and cash distributions; and (iv) the market price of our Series D Preferred Stock and Common Stock and any other securities we issue. Additional debt financing may substantially increase our debt-to-total capitalization ratio. Additional equity issuance may dilute the holdings of our current shareholders. We may become more highly leveraged, resulting in increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions. We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Our governing documents do not limit the amount of indebtedness we may incur. Accordingly, our Board of Directors may vote to incur additional debt and would do so, for example, if it were necessary to maintain our status as a REIT. We could therefore become more highly leveraged, resulting in an increased risk of default on our obligations and in an increase in debt service requirements, which could adversely affect our financial condition and results of operations and our ability to pay distributions to shareholders. We are subject to risks associated with the current interest rate environment, and changes in interest rates may affect our cost of capital and, consequently, our financial results. In 2022 and 2023, the U.S. Federal Reserve raised short term interest rates by a total of 4.25% and 1.00%, respectively. Although rates have recently stabilized, additional interest rate increases may be possible. Changing interest rates may have unpredictable effects on markets, may result in heightened market volatility and may affect our ability to complete potential acquisitions. Because a portion of our debt bears interest at variable rates, in periods of rising interest rates, such as the current interest rate environment, our cost of funds would increase, which could adversely affect our cash flows, financial condition and -15- results of operations, ability to make distributions to shareholders, and the cost of refinancing. and reduce our access to the debt or equity capital markets. Increased interest rates could also adversely affect the value of our properties to the extent that it decreases the amount buyers may be willing to pay for our properties. Additionally, if we choose to hedge any interest rate risk, we cannot assure that any such hedge will be effective or that our hedging counterparty will meet its obligations to us. As a result, increased interest rates, including any future increases in interest rates, could adversely affect us. Covenants in our credit agreements and other debt instruments could limit our flexibility and adversely affect our financial condition. The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we were to default under our credit agreements, our financial condition would be adversely affected. A change in the U.S. government policy with regard to Fannie Mae and Freddie Mac could impact our financial condition. Fannie Mae and Freddie Mac are major sources of financing for the manufactured housing real estate sector. We depend frequently on Fannie Mae and Freddie Mac to finance growth by purchasing or guaranteeing manufactured housing community loans. A decision by the government to eliminate Fannie Mae or Freddie Mac, or reduce their acquisitions or guarantees of our mortgage loans, may adversely affect interest rates, capital availability and our ability to refinance our existing mortgage obligations as they come due and obtain additional long-term financing for the acquisition of additional communities on favorable terms or at all. We face risks associated with the financing of home sales to customers in our manufactured home communities. To produce new rental revenue and to upgrade our communities, we sell homes to customers in our communities at competitive prices and finance these home sales through S&F. We allow banks and outside finance companies the first opportunity to finance these sales. We are subject to the following risks in financing these homes: • • • • • the borrowers may default on these loans and not be able to make debt service payments or pay principal when due; the default rates may be higher than we anticipate; demand for consumer financing may not be as great as we anticipate or may decline; the value of property securing the installment notes receivable may be less than the amounts owed; and interest rates payable on the installment notes receivable may be lower than our cost of funds. Additionally, there are many regulations pertaining to our home sales and financing activities. There are significant consumer protection laws and the regulatory framework may change in a manner which may adversely affect our operating results. The regulatory environment and associated consumer finance laws create a risk of greater liability from our home sales and financing activities and could subject us to additional litigation. We are also dependent on licenses granted by state and other regulatory authorities, which may be withdrawn or which may not be renewed and which could have an adverse impact on our ability to continue with our home sales and financing activities. Risks Related to our Status as a REIT If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT. To qualify as a REIT, we must, among other things, satisfy two gross income tests, under which specified percentages of our gross income must be certain types of passive income, such as rent. For the rent paid pursuant to our leases to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint venture or some other type of arrangement. We believe that our leases will be respected as true leases for federal income tax purposes. However, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with this view. If the leases are not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs, and we could lose our REIT status. -16- Failure to make required distributions would subject us to additional tax. In order to qualify as a REIT, we must, among other requirements, distribute, each year, to our shareholders at least 90% of our taxable income, excluding net capital gains. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions (or deemed distributions) in any year are less than the sum of: • • • 85% of our ordinary income for that year; 95% of our capital gain net earnings for that year; and 100% of our undistributed taxable income from prior years. To the extent we pay out in excess of 100% of our taxable income for any tax year, we may be able to carry forward such excess to subsequent years to reduce our required distributions for purposes of the 4% nondeductible excise tax in such subsequent years. We intend to pay out our income to our shareholders in a manner intended to satisfy the 90% distribution requirement. Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the 90% distribution requirement and to avoid corporate income tax. We may not have sufficient cash available from operations to pay distributions to our shareholders, and, therefore, distributions may be made from borrowings. The actual amount and timing of distributions to our shareholders will be determined by our Board of Directors in its discretion and typically will depend on the amount of cash available for distribution, which will depend on items such as current and projected cash requirements, limitations on distributions imposed by law on our financing arrangements and tax considerations. As a result, we may not have sufficient cash available from operations to pay distributions as required to maintain our status as a REIT. Therefore, we may need to borrow funds to make sufficient cash distributions in order to maintain our status as a REIT, which may cause us to incur additional interest expense as a result of an increase in borrowed funds for the purpose of paying distributions. We may be required to pay a penalty tax upon the sale of property that is determined to be held for sale to customers. The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of real estate or other property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. We intend that we and our subsidiaries will hold the interests in the real estate for investment with a view to long-term appreciation, engage in the business of acquiring and owning real estate, and make occasional sales as are consistent with our investment objectives. We do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions. We may be adversely affected if we fail to qualify as a REIT. If we fail to qualify as a REIT, we will not be allowed to deduct distributions to shareholders in computing our taxable income and will be subject to federal income tax at regular corporate rates and possibly increased state and local taxes. In addition, we might be barred from qualification as a REIT for the four years following the year of disqualification. The additional tax incurred at regular corporate rates would reduce significantly the cash flow available for distribution to shareholders and for debt service. Furthermore, we would no longer be required to make any distributions to our shareholders as a condition to REIT qualification. Any distributions to shareholders would be taxable as ordinary income to the extent of our current and accumulated earnings and profits, although such dividend distributions to non-corporate shareholders would be subject to a maximum federal income tax rate of 20% (and potentially a federal tax on net investment income of 3.8%), provided applicable requirements of the Code are satisfied. Furthermore, corporate shareholders may be eligible for the dividends received deduction on the distributions, subject to limitations under the Code. Additionally, if we fail to qualify as a REIT, non-corporate shareholders would no longer be able to deduct up to 20% of our dividends (other than capital gain dividends and dividends treated as qualified dividend income), as would otherwise generally be permitted for taxable years beginning after December 31, 2017 and before January 1, 2026. To qualify as a REIT, we must comply with certain highly technical and complex requirements. We cannot be certain we have complied, and will always be able to comply, with the requirements to qualify as a REIT because there -17- are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability to continue to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income tax consequences of qualification. We believe that we have qualified as a REIT since our inception and intend to continue to qualify as a REIT. However, we cannot assure you that we are so qualified or will remain so qualified. There is a risk of changes in the tax law applicable to REITs. Because the IRS, the U.S. Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Numerous changes to the U.S. federal income tax laws are proposed on a regular basis. Any of such legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our investors. Additionally, the REIT rules are continually under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department, which may result in revisions to regulations and interpretations in addition to statutory changes. Furthermore, members of the U.S. Congress and the Biden administration have expressed intent to pass legislation to change or repeal parts of currently enacted tax law, including, in particular, legislation that will increase corporate tax rates from the current flat rate of 21%. If enacted, certain proposed changes could have an adverse impact on our business and financial results. Importantly, legislation has been proposed in several states specifically taxing REITs. If such legislation were to be enacted, our income from such states would be adversely impacted. We may be unable to comply with the strict income distribution requirements applicable to REITs. To maintain qualification as a REIT under the Code, a REIT must annually distribute to its shareholders at least 90% of its REIT taxable income, excluding the dividends paid deduction and net capital gains. This requirement limits our ability to accumulate capital. We may not have sufficient cash or other liquid assets to meet the distribution requirements. Difficulties in meeting the distribution requirements might arise due to competing demands for our funds or to timing differences between tax reporting and cash receipts and disbursements, because income may have to be reported before cash is received, because expenses may have to be paid before a deduction is allowed, because deductions may be disallowed or limited or because the IRS may make a determination that adjusts reported income. In those situations, we might be required to borrow funds or sell properties on adverse terms in order to meet the distribution requirements and interest and penalties could apply which could adversely affect our financial condition. If we fail to make a required distribution, we could cease to be taxed as a REIT. Our taxable REIT subsidiary (“TRS”) is subject to special rules that may result in increased taxes. As a REIT, we must pay a 100% penalty tax on certain payments that we receive or on certain deductions taken if the economic arrangements between us and our TRS are not comparable to similar arrangements between unrelated parties. The IRS may successfully assert that the economic arrangements of any of our inter-company transactions are not comparable to similar arrangements between unrelated parties, and may assess the above 100% penalty tax or make other reallocations of income or loss. This would result in unexpected tax liability which would adversely affect our cash flows. Notwithstanding our status as a REIT, we are subject to various federal, state and local taxes on our income and property. For example, we will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains; provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the shareholder level. We may be subject to other Federal income taxes and may also have to pay some state income or franchise taxes because not all states treat REITs in the same manner as they are treated for federal income tax purposes. General Risk Factors Global and regional economic conditions could materially adversely affect our business, results of operations, financial condition and growth. Adverse macroeconomic conditions, including inflation, slower growth or recession, tighter credit, higher interest rates and high unemployment could materially adversely impact our business, results of operations, financial condition and growth. In addition, uncertainty about, or a decline in, global or regional economic conditions could have a significant impact on our suppliers. We may not be able to obtain adequate cash to fund our business. Our business requires access to adequate cash to finance our operations, distributions, capital expenditures, debt service obligations, development and -18- redevelopment costs and property acquisition costs, if any. We expect to generate the cash to be used for these purposes primarily with operating cash flow, borrowings under secured and unsecured loans, proceeds from sales of strategically identified assets and, when market conditions permit, through the issuance of debt and equity securities from time to time. We may not be able to generate sufficient cash to fund our business, particularly if we are unable to renew leases, lease vacant space or re-lease space as leases expire according to our expectations. We are dependent on key personnel. Our executive and other senior officers have a significant role in our success. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely affect our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets. If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results, which could result in a loss of investor confidence and adversely affect the market price of our common stock. We are required by securities laws and provisions of our debt instruments to establish and maintain internal control over financial reporting and disclosure controls and procedures. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Disclosure controls and procedures are processes designed to ensure that information required to be disclosed is communicated to management and reported in a timely manner. We cannot be certain that we will be successful in continuing to maintain adequate control over our financial reporting and disclosure controls and procedures. Deficiencies, including any material weakness, in our internal control over financial reporting that may occur could result in misstatements or restatements of our financial statements or a decline in the price of our securities. In addition, as our business continues to grow, and as we continue to make significant acquisitions, our internal controls will become more complex and may require significantly more resources to ensure that our disclosure controls and procedures remain effective. Acquisitions can pose challenges in implementing the required processes, procedures and controls in the operations of the companies that we acquire. Any companies that are acquired by us may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by the securities laws that currently apply to us. Moreover, the existence of any material weakness or significant deficiency in our internal controls and procedures would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. If we do not maintain an effective system of internal controls and cannot provide reliable financial reports, our reputation, operating results and access to capital could be materially adversely affected, which could lead to a loss of confidence by investors in our reported financial information, which in turn could adversely affect the trading price of our common stock and preferred stock. Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests. Mr. Eugene W. Landy, the Founder and Chairman of the Board of Directors of the Company, previously owned a 24% interest in the entity that is the landlord of the property in Freehold, New Jersey where the Company’s executive offices are located. Effective January 2023, Mr. Eugene Landy transferred this ownership to his son, Mr. Samuel A. Landy, the President and Chief Executive Officer and a director of the Company, and other family members. Effective October 1, 2019, the Company entered into a new lease for these executive offices in Freehold, New Jersey which combined the existing corporate office space with additional adjacent office space. This new lease extended the previous lease through April 30, 2027 and required monthly lease payments of $23,098 through April 30, 2022 and $23,302 from May 1, 2022 through April 30, 2027. The Company is also responsible for its proportionate share of real estate taxes and common area maintenance. Mr. Samuel A. Landy may have a conflict of interest with respect to his obligations as our officer and/or director and his ownership interest in the landlord of the property. Further, Mr. Eugene W. Landy owns a 9.6% interest, Mr. Samuel A. Landy owns a 4.8% interest, Mr. Daniel Landy, who is also an officer of the Company and is Samuel A. Landy’s son, owns a 0.96% interest, and the Samuel Landy Family Limited Partnership (of which Daniel Landy is the sole general partner) own a 0.96% interest in the qualified opportunity zone fund, UMH OZ Fund, LLC (“OZ Fund”), that was formed by the Company in 2022. In addition, one of the Company’s independent directors owns a 0.96% interest in the OZ Fund. We may amend our business policies without shareholder approval. Our Board of Directors determines our growth, investment, financing, capitalization, borrowing, REIT status, operations and distributions policies. Although our -19- Board of Directors has no present intention to change or reverse any of these policies, they may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in our policies. We cannot assure you that changes in our policies will fully serve the interests of all shareholders. Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks. There is an increasing focus from certain investors concerning corporate responsibility, specifically related to environmental, social and governance factors. In addition, there is an increased focus on such matters by various regulatory authorities, including the SEC, and the activities and expense required to comply with new regulations or standards may be significant. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on companies have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by which companies’ corporate responsibility practices are assessed and the regulations applicable thereto are evolving, which could result in greater expectations of us and cause us to undertake costly initiatives or activities to satisfy such new criteria or regulations. Further, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate responsibility performance is perceived to be superior to ours, potential or current investors may elect to invest in our competitors instead of us. In addition, we could fail, or be perceived to fail, in our achievement of our initiatives and goals with respect to environmental, social and governance matters, or we could be criticized for the scope of such initiatives or goals. If we fail to satisfy the expectations of investors, our initiatives are not executed as planned, or we do not satisfy our goals, our reputation and financial results could be adversely affected. The market value of our Series D Preferred Stock and Common Stock could decrease based on our performance and market perception and conditions. The market value of our Series D Preferred Stock and Common Stock may be based primarily upon the market’s perception of our growth potential and current and future cash dividends, and may be secondarily based upon the real estate market value of our underlying assets. The market price of our Series D Preferred Stock and Common Stock is influenced by their respective distributions relative to market interest rates. Rising interest rates may lead potential buyers of our stock to expect a higher distribution rate, which could adversely affect the market price of our stock. In addition, rising interest rates would result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions. The market price and trading volume of our Common Stock may fluctuate significantly. The per-share trading price of our Common Stock may fluctuate. In addition, the trading volume in our Common Stock may fluctuate and cause significant price variations to occur. If the per-share trading price of our Common Stock declines significantly, investors in our Common Stock may be unable to resell their shares at or above their purchase price. We cannot provide any assurance that the per-share trading price of our Common Stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our stock include: • • • • • • • • • • • • actual or anticipated variations in our quarterly operating results or dividends; changes in our funds from operations or earnings estimates; publication of research reports about us or the real estate industry; prevailing interest rates; the market for similar securities; changes in market valuations of similar companies; adverse market reaction to any additional debt we incur in the future; additions or departures of key management personnel; actions by institutional shareholders; speculation in the press or investment community; the extent of investor interest in our securities; the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; -20- our underlying asset value; investor confidence in the stock and bond markets, generally; changes in tax laws; future equity issuances; failure to meet earnings estimates; failure to maintain our REIT status; changes in valuation of our REIT securities portfolio; general economic and financial market conditions; • • • • • • • • • war, terrorist acts and epidemic disease, including the COVID-19 pandemic or other highly infectious or contagious diseases; our issuance of debt or preferred equity securities; our financial condition, results of operations and prospects; and the realization of any of the other risk factors presented in this Annual Report on Form 10-K. • • • In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their Common Stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and per-share trading price of our Common Stock. The market prices and trading volumes of our Series D Preferred Stock may fluctuate significantly. Although our Series D Preferred Stock is listed and traded on the NYSE, the trading markets for the Series D Preferred Stock is limited. Since the Series D Preferred Stock has no maturity date, investors seeking liquidity may elect to sell their shares of Series D Preferred Stock in the secondary market. If an active trading market does not exist, the market price and liquidity of the Series D Preferred Stock may be adversely affected by such sales. Even if an active public market exists, we cannot guarantee that the market price for the Series D Preferred Stock will equal or exceed the price that investors in the Series D Preferred Stock paid for their shares. Future issuance or sale of additional shares of Preferred Stock or Common Stock or other securities could adversely affect the trading prices of our outstanding Series D Preferred Stock and Common Stock. Future issuances or sales of substantial numbers of shares of our Preferred Stock or Common Stock or other securities in the public market, or the perception that such issuances or sales might occur, could adversely affect the per-share trading prices of our Preferred Stock or Common Stock. The per-share trading price of our Preferred Stock or Common Stock may decline significantly upon the sale or registration of additional shares of our Preferred Stock or Common Stock or other securities. Future issuances of our debt securities, which would be senior to our Series D Preferred Stock upon liquidation, or preferred equity securities which may be senior to our Series D Preferred Stock for purposes of dividend distributions or upon liquidation, may adversely affect the per-share trading prices of our Series D Preferred Stock. In the future, we may attempt to increase our capital resources by issuing additional debt securities and/or additional classes or series of preferred stock. Upon liquidation, holders of our debt securities and lenders with respect to other borrowings will be entitled to receive our available assets prior to any distribution to holders of our Series D Preferred Stock. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our Series D Preferred Stock. Any shares of preferred stock that we issue in the future could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to pay dividends to holders of our Series D Preferred Stock. Any such future issuances may adversely affect the trading price of our Series D Preferred Stock. There are restrictions on the transfer of our capital stock. To maintain our qualification as a REIT under the Code, no more than 50% in value of our outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals, as defined in the Code to also include certain entities, during the last half of a taxable year. Accordingly, our charter contains provisions restricting the transfer of our capital stock. These restrictions may discourage a tender offer or other transaction, or a change in management or of control of us that might involve a premium price for our Series D Preferred Stock or Common Stock or that our shareholders otherwise believe to be in their best interests, and may result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares. -21- The dual listing of our Common Stock on the New York Stock Exchange (“NYSE”) and the Tel Aviv Stock Exchange (“TASE”) may result in price variations that could adversely affect liquidity of the market for our Common Stock. Our Common Stock is listed and trades on both the NYSE and the TASE. The dual listing may result in price variations of our Common Stock between the two exchanges due to various factors, including the use of different currencies and the different days and hours of trading for the two exchanges. Any decrease in the trading price of our Common Stock in one market could cause a decrease in the trading price in the other market. In addition, the dual-listing may adversely affect liquidity and trading prices on one or both of the exchanges as a result of circumstances that may be outside of our control. For example, transfers by holders of our securities from trading on one exchange to the other could result in increases or decreases in liquidity and/or trading prices on either or both of the exchanges. Holders could also seek to sell or buy our Common Stock to take advantage of any price differences between the two markets through a practice referred to as arbitrage. Any such arbitrage activity could create volatility in both the price and volume of trading of our Common Stock. The existing mechanism for the dual listing of securities on the NYSE and the TASE may be eliminated or modified in a manner that may subject us to additional regulatory burden and additional costs. The current Israeli regulatory regime provides a mechanism for the dual-listing of securities traded on the NYSE and the TASE that does not impose any significant regulatory burden or significant costs on us. If this dual-listing regime is eliminated or modified, it may become more difficult for us to comply with the regulatory requirements, and this could result in additional costs. In such event, we may consider delisting of our Common Stock from the TASE. We are subject to restrictions that may impede our ability to effect a change in control. Certain provisions contained in our charter and bylaws and certain provisions of Maryland law may have the effect of discouraging a third party from making an acquisition proposal for us and thereby inhibit a change in control. These provisions include the following: • Our charter provides for three classes of directors with the term of office of one class expiring each year, commonly referred to as a “staggered board.” By preventing common shareholders from voting on the election of more than one class of directors at any annual meeting of shareholders, this provision may have the effect of keeping the current members of our Board of Directors in control for a longer period of time than shareholders may desire. • Our charter generally limits any holder from acquiring more than 9.8% (in value or in number, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our excess stock). While this provision is intended to assure our ability to remain a qualified REIT for Federal income tax purposes, the ownership limit may also limit the opportunity for shareholders to receive a premium for their shares of Common Stock that might otherwise exist if an investor was attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise effect a change in control. • The request of shareholders entitled to cast at least a majority of all votes entitled to be cast at such meeting is necessary for shareholders to call a special meeting. We also require advance notice by common shareholders for the nomination of directors or proposals of business to be considered at a meeting of shareholders. • • Our Board of Directors may authorize and cause us to issue securities without shareholder approval. Under our charter, the board has the power to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as the Board of Directors may determine. “Business combination” provisions that provide that, unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, dispositions of 10% or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested shareholder” or an affiliate of an interested shareholder for five years after the most recent date on which the interested shareholder became an interested shareholder, and thereafter unless specified criteria are met. An interested shareholder is defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question. • The duties of directors of a Maryland corporation do not require them to, among other things (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) -22- authorize the corporation to redeem any rights under, or modify or render inapplicable, any shareholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act to exempt any person or transaction from the requirements of those provisions, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the shareholders in an acquisition. We cannot assure you that we will be able to pay distributions regularly. Our ability to pay distributions in the future is dependent on our ability to operate profitably and to generate cash from our operations and the operations of our subsidiaries and is subject to limitations under our financing arrangements and Maryland law. Under the Maryland General Corporation Law, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as the debts became due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus, unless the charter permits otherwise, the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution of shareholders whose preferential rights on dissolution are superior to those receiving the distribution. Accordingly, we cannot guarantee that we will be able to pay distributions on a regular quarterly basis in the future. Dividends on our capital stock do not qualify for the reduced federal tax rates available for some dividends (i.e., they are not qualified dividends). Income from “qualified dividends” payable to U.S. shareholders that are individuals, trusts and estates are generally subject to tax at preferential rates. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Although these rules do not adversely affect our taxation or the dividends payable by us, to the extent that the preferential rates continue to apply to regular corporate qualified dividends, investors who are individuals, trusts and estates may perceive an investment in us to be relatively less attractive than an investment in the stock of a non-REIT corporation that pays qualified dividends, which could materially and adversely affect the value of the shares of, and per share trading price of, our capital stock. It should be noted that the TCJA provides for a deduction from income for individuals, trusts and estates up to 20% of certain REIT dividends, which reduces the effective tax rate on such dividends below the effective tax rate on interest, though the deduction is generally not as favorable as the preferential rate on qualified dividends. The deduction for certain REIT dividends, unlike the favorable rate for qualified dividends, currently expires after 2025. We are subject to risks arising from litigation. We may become involved in litigation. Litigation can be costly, and the results of litigation are often difficult to predict. We may not have adequate insurance coverage or contractual protection to cover costs and liability in the event we are sued, and to the extent we resort to litigation to enforce our rights, we may incur significant costs and ultimately be unsuccessful or unable to recover amounts we believe are owed to us. We may have little or no control of the timing of litigation, which presents challenges to our strategic planning. Future terrorist attacks and military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity. Among other things, it is possible that interest rates may be affected by these events. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. Terrorist acts affecting our properties could also result in significant damages to, or loss of, our properties. Additionally, we may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types would adversely affect our financial condition. Disruptions in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our capital stock. Uncertainty in the stock and credit markets may negatively impact our ability to access additional financing at reasonable terms, which may negatively affect our ability to acquire properties and otherwise pursue our investment strategy. A prolonged downturn in the stock or credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our investment strategy accordingly. These types of events in the stock and credit markets may make it more difficult or costly for us to -23- raise capital through the issuance of the Series D Preferred Stock, Common Stock or other equity or debt securities. The potential disruptions in the financial markets may have a material adverse effect on the market value of the Series D Preferred Stock and Common Stock, any other securities we issue, and/or the economy in general. In addition, the national and local economic climate, including that of the energy-market dependent Marcellus and Utica Shale regions, may be adversely impacted by, among other factors, potential restrictions on drilling, plant closings and industry slowdowns, which may have a material adverse effect on the return we receive on our properties and investments, as well as other unknown adverse effects on us. We face risks relating to cybersecurity attacks which could adversely affect our business, cause loss of confidential information and disrupt operations. We rely extensively on information technology to process transactions and manage our business. In the ordinary course of our business, we collect and store sensitive data, including our business information and that of our tenants, clients, vendors and employees on our network. This data is hosted on internal, as well as external, computer systems. Our external systems are hosted by third-party service providers that may have access to such information in connection with providing necessary information technology and security and other business services to us. This information may include personally identifiable information such as social security numbers, banking information and credit card information. We employ a number of measures to prevent, detect and mitigate potential breaches or disclosure of this confidential information. We have established a Cybersecurity Subcommittee of our Audit Committee to review and provide high level guidance on cybersecurity related issues of importance to the Company. We also maintain cyber risk insurance to provide some coverage for certain risks arising out of data and network breaches. While we continue to improve our cybersecurity and take measures to protect our business, we and our third-party service providers may be vulnerable to attacks by hackers (including through malware, ransomware, computer viruses, and email phishing schemes) or breached due to employee error, malfeasance, fire, flood or other physical event, or other disruptions. Any such breach or disruption could compromise the confidential information of our employees, customers and vendors to the extent such information exists on our systems or on the systems of third-party providers. Such an incident could result in potential liability or a loss of confidence and legal claims or proceedings; damage our reputation, competitiveness, stock price and long-term value; increase remediation, cybersecurity protection and insurance premium costs; disrupt and affect our business operations; or have material adverse effects on our business. We are dependent on continuous access to the Internet to use our cloud-based applications. Damage or failure to our information technology systems, including as a result of any of the reasons described above, could adversely affect our results of operations as we may incur significant costs or data loss. We continually assess new and enhanced information technology solutions to manage risk of system failure or interruption. We face risks relating to expanding use of social media mediums. The use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments about us or our properties on any social networking website could damage our, or our properties’ reputations. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels. The continuing evolution of social media may present us with new challenges and risks. The considerable increase in the use of social media over recent years has greatly expanded the potential scope and scale, and increased the rapidity of the dissemination of negative publicity that could be generated by negative posts and comments. Our opportunity zone fund may fail to qualify for the tax benefits available for investments in qualified opportunity zones under the detailed rules adopted by the Internal Revenue Service. Some aspects of the Qualified Opportunity Zone rules adopted by the Internal Revenue Service remain uncertain. Legislation may be needed to clarify certain of the provisions in the Qualified Opportunity Zone rules and to give proper effect to Congressional intent as expressed in the TCJA. No assurance can be provided that additional legislation will be enacted, and even if enacted, that such additional legislation will clearly address all items that require or would benefit from clarification. It is unclear if additional guidance will be released, or in what manner the Treasury Department will resolve any remaining areas of uncertainty. Accordingly, there can be no guarantee that our opportunity zone fund will qualify under the Qualified Opportunity Zone rules as a Qualified Opportunity Zone fund or that the Company will be able to realize, through its investment in the fund, any of the desired tax benefits. We face various risks and uncertainties related to public health crises, such as the COVID-19 pandemic or other highly infectious or contagious diseases. Although the World Health Organization declared the public health emergency to be over, we face various risks and uncertainties related to public health crises, such as the global COVID- 19 pandemic, which disrupted financial markets and significantly impacted worldwide economic activity. A further -24- outbreak of COVID-19 or other future health crisis, as well as mandatory and voluntary actions taken to mitigate the public health impact of any such health crisis may have a material adverse effect on our financial condition. The COVID-19 pandemic and social and governmental responses to the pandemic caused, and may continue to cause, severe economic, market and other disruptions worldwide. Although the COVID-19 pandemic and related societal and government responses did not have a material impact on our business or financial results, the extent to which COVID-19 and other health crises may, in the future, impact our operations cannot be predicted with any degree of confidence, but they could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects. Item 1B – Unresolved Staff Comments None. Item 1C – Cybersecurity The Company’s Board of Directors (the “Board”) and its Cybersecurity Subcommittee are responsible for overseeing the Company’s risk management program and cybersecurity is a critical element of this program. Management is responsible for the day-to-day administration of the Company’s risk management program and its cybersecurity policies, processes, and practices. The Company’s cybersecurity policies, standards, processes, and practices are based on recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and other applicable industry standards and are fully integrated into the Company’s overall risk management system and processes. In general, the Company seeks to address material cybersecurity threats through a company-wide approach that addresses the confidentiality, integrity, and availability of the Company’s information systems or the information that the Company collects and stores, by assessing, identifying and managing cybersecurity issues as they occur. Cybersecurity Risk Management and Strategy The Company’s cybersecurity risk management strategy focuses on several areas: • Identification and Reporting: The Company has implemented a comprehensive, cross-functional approach to assessing, identifying and managing material cybersecurity threats and incidents. The Company’s program includes controls and procedures to properly identify, classify and escalate certain cybersecurity incidents to provide management visibility and obtain direction from management as to the public disclosure and reporting of material incidents in a timely manner. • Technical Safeguards: The Company implements technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats. The company uses a managed antivirus platform and mobile device management on all company devices to scan for viruses, manage patching and updates, and provide remote support and monitoring tools. Firewalls, web filtration, network intrusion prevention measures, monitoring nodes, and network access controls are evaluated annually and improved through vulnerability assessments. All company accounts have strong passwords, two factor authentication, and domain authentication enforced. The IT Department researches emerging cybersecurity threats and keeps employees informed on the best security practices. • Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident response, business continuity, and disaster recovery plans designed to address the Company’s response to a cybersecurity incident. The Company conducts regular tabletop exercises to test these plans and ensure personnel are familiar with their roles in a response scenario. • Third-Party Risk Management: The Company maintains a comprehensive, risk-based approach to identifying and overseeing material cybersecurity threats presented by third parties, including vendors, service providers, and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact our business in the event of a material cybersecurity incident affecting those third-party systems, including any outside auditors or consultants who advise on the Company’s cybersecurity systems. -25- • Education and Awareness: The Company provides regular, mandatory training for all levels of employees regarding cybersecurity threats as a means to equip the Company’s employees with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes, and practices. The Company conducts periodic assessment and testing of the Company’s policies, standards, processes, and practices in a manner intended to address cybersecurity threats and events. The Company conducts quarterly reviews of backup logs, access privileges, financial transactions, and application updates. Backups are tested for integrity and functionality. The company regularly conducts seminars on the rollout of new applications and features for employees, as well as administering phishing testing and security awareness training. Penetration testing is conducted annually to verify the integrity of the Company’s network security. The results of such assessments, audits, and reviews are evaluated by management and reported to the Cybersecurity Subcommittee and the Board, and the Company adjusts its cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits, and reviews. Governance The Board, in coordination with the Cybersecurity Subcommittee, oversees the Company’s risk management program, including the management of cybersecurity threats. The Board and the Cybersecurity Subcommittee each receive regular presentations and reports on developments in the cybersecurity space, including risk management practices, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends, and information security issues encountered by the Company’s peers and third parties. The Board and the Cybersecurity Subcommittee also receive prompt and timely information regarding any cybersecurity risk that meets pre-established reporting thresholds, as well as ongoing updates regarding any such risk. On an annual basis, the Board and the Cybersecurity Subcommittee discuss the Company’s approach to overseeing cybersecurity threats with the Company’s IT Department and members of senior management. The IT Department, in coordination with members of senior management including the Executive Vice President, Chief Financial Officer and Treasurer, the Executive Vice President and Chief Operating Officer and the Executive Vice President, General Counsel and Secretary, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any material cybersecurity incidents in accordance with the Company’s incident response and recovery plans. To facilitate the success of the Company’s cybersecurity program, cross-functional teams throughout the Company address cybersecurity threats and respond to cybersecurity incidents. Through ongoing communications with these teams, the IT Department and senior management are informed about and monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents in real time and report such threats and incidents to the Cybersecurity Subcommittee when appropriate. The members of the IT Department have served in various roles in information technology and information security for over 5 years. The IT Systems Administrator has experience in monitoring arising security threats, creating documented cybersecurity and technology usage policies, and bringing companies into compliance with cybersecurity regulations. The IT Systems Administrator has been certified in Network Administration and Security, Systems Administration, and Database Vulnerability Assessment via Cisco and IBM. The Company’s IT Technician has been certified via the committee on National Security Systems and National Security Agency as an Information Systems Security Professional. Material Effects of Cybersecurity Incidents Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. Item 2 – Properties UMH Properties, Inc. is engaged in the ownership and operation of manufactured home communities. As of December 31, 2023, the Company owned 135 manufactured home communities (including two communities acquired through the Company’s opportunity zone fund) containing approximately 25,800 developed sites, located in New -26- Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. The Company also has an ownership interest in and operates two communities in Florida through its joint venture relationship with Nuveen. The rents collectible from the land in our communities ultimately depend on the value of the home and land. Therefore, fewer but more expensive homes can actually produce the same or greater rents. There is a long-term trend toward larger manufactured homes. Existing manufactured home communities designed for older manufactured homes must be modified to accommodate modern, wider and longer manufactured homes. These changes may decrease the number of homes that may be accommodated in a manufactured home community. For this reason, the number of developed sites operated by the Company is subject to change, and the number of developed sites listed is always an approximate number. The following table sets forth certain information concerning the Company’s real estate investments as of December 31, 2023. Name of Community Allentown 4912 Raleigh-Millington Road Memphis, TN 38128 Arbor Estates 1081 North Easton Road Doylestown, PA 18902 Auburn Estates 919 Hostetler Road Orrville, OH 44667 Bayshore Estates 105 West Shoreway Drive Sandusky, OH 44870 Birchwood Farms 8057 Birchwood Drive Birch Run, MI 48415 Boardwalk 2105 Osolo Road Elkhart, IN 46514 Broadmore Estates 148 Broadmore Estates Goshen, IN 46528 Brookside Village 107 Skyline Drive Berwick, PA 18603 Brookview Village 2025 Route 9N, Lot 137 Greenfield Center, NY 12833 Camelot Village 2700 West 38th Street Anderson, IN 46013 Camelot Woods 124 Clairmont Drive Altoona, PA 16601 Number of Occupancy Occupancy Percentage Percentage Developed Acreage at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 434 97% 96% 89 182 $568 230 96% 96% 30 1 $852 42 93% 90% 13 -0- $443 202 86% 80% 56 -0- $388 143 98% 94% 28 -0- $557 195 98% 98% 45 -0- $470 388 92% 93% 93 19 $561 170 82% 83% 37 2 $554 183 93% 91% 50 60 $631 116 91% 86% 47 35 $359 152 63% 59% 32 -0- $352 -27- Name of Community Candlewick Court 1800 Candlewick Drive Owosso, MI 48867 Carsons 649 North Franklin Street Lot 116 Chambersburg, PA 17201 Catalina 6501 Germantown Road Middletown, OH 45042 Cedarcrest Village 1976 North East Avenue Vineland, NJ 08360 Center Manor 400 Center Manor Drive Monaca, PA 15061 Chambersburg I & II 5368 Philadelphia Avenue Lot 34 Chambersburg, PA 17201 Chelsea 459 Chelsea Lane Sayre, PA 18840 Cinnamon Woods 70 Curry Avenue Conowingo, MD 21918 City View 110 Fort Granville Lot C5 Lewistown, PA 17044 Clinton Mobile Home Resort 60 North State Route 101 Tiffin, OH 44883 Collingwood 358 Chambers Road Lot 001 Horseheads, NY 14845 Colonial Heights 917 Two Ridge Road Wintersville, OH 43953 Countryside Estates 1500 East Fuson Road Muncie, IN 47302 Countryside Estates 6605 State Route 5 Ravenna, OH 44266 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 211 84% 78% 40 -0- $569 122 96% 85% 14 4 $452 458 84% 75% 75 26 $523 283 98% 98% 71 30 $741 96 24% 35% 16 2 $500 95 92% 74% 11 -0- $434 85 99% 96% 12 -0- $504 63 98% 100% 29 48 $621 57 93% 96% 20 116 100% 97% 23 2 1 $416 $517 102 87% 87% 20 -0- $518 159 97% 97% 31 1 $396 164 95% 81% 44 20 $441 141 97% 92% 27 -0- $443 -28- Name of Community Countryside Village/Duck River Estates 200 Early Road Columbia, TN 38401 Cranberry Village 100 Treesdale Drive Cranberry Township, PA 16066 Crestview Wolcott Hollow Road & Route 220 Athens, PA 18810 Cross Keys Village 259 Brown Swiss Circle Duncansville, PA 16635 Crossroads Village 549 Chicory Lane Mount Pleasant, PA 15666 Dallas Mobile Home Community 1104 North 4th Street Toronto, OH 43964 Deer Meadows 12921 Springfield Road New Springfield, OH 44443 Deer Run 3142 Flynn Road Lot 194 Dothan, AL 36303 D & R Village 430 Route 146 Lot 65A Clifton Park, NY 12065 Evergreen Estates 425 Medina Street Lodi, OH 44254 Evergreen Manor 26041 Aurora Avenue Bedford, OH 44146 Evergreen Village 9249 State Route 44 Mantua, OH 44255 Fairview Manor 2110 Mays Landing Road Millville, NJ 08332 Fifty-One Estates Hayden Boulevard Elizabeth, PA 15037 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 422 96% 88% 117 65 $476/$503 187 95% 98% 36 -0- $701 97 96% 98% 19 -0- $453 132 92% 90% 21 2 $568 34 79% 79% 9 -0- $474 142 94% 89% 21 -0- $325 98 94% 98% 22 8 $414 184 68% 46% 33 -0- $191 235 94% 94% 44 -0- $696 55 100% 98% 10 3 $442 66 89% 90% 7 -0- $454 50 90% 90% 10 4 $467 317 95% 95% 66 132 $808 170 84% 82% 42 6 $520 -29- Name of Community Fohl Village 5729 Joleda Drive SW Canton, OH 44706 Forest Creek 855 East Mishawaka Road Elkhart, IN 46517 Forest Park Village 102 Holly Drive Cranberry Township, PA 16066 Fox Chapel Village 1 Greene Drive Cheswick, PA 15024 Frieden Manor 102 Frieden Manor Schuylkill Haven, PA 17972 Friendly Village 27696 Oregon Road Perrysburg, OH 43551 Garden View Estates (1) 100 Citrus Circle Orangeburg, SC 29115 Green Acres 4496 Sycamore Grove Road Chambersburg, PA 17201 Gregory Courts 1 Mark Lane Honey Brook, PA 19344 Hayden Heights 5501 Cosgray Road Dublin, OH 43016 Heather Highlands 109 Main Street Inkerman, PA 18640 Hidden Creek 6400 South Dixie Highway Erie, MI 48133 High View Acres 247 Murray Lane Export, PA 15632 Highland 1875 Osolo Road Elkhart, IN 46514 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 315 79% 77% 126 44 $396 167 98% 97% 37 -0- $597 247 89% 93% 79 -0- $636 121 99% 94% 23 2 $448 193 98% 97% 42 99 $591 824 58% 50% 101 -0- $472 181 34% 34% 31 8 $229 24 96% 88% 39 100% 97% 6 9 -0- -0- $456 $756 115 99% 99% 19 -0- $503 366 84% 85% 79 -0- $564 350 73% 62% 69 19 $387 154 84% 84% 43 -0- $475 246 88% 84% 42 -0- $490 -30- Name of Community Highland Estates 60 Old Route 22 Kutztown, PA 19530 Hillcrest Crossing 100 Lorraine Drive Lower Burrell, PA 15068 Hillcrest Estates 14200 Industrial Parkway Marysville, OH 43040 Hillside Estates 1722 Snyder Avenue Greensburg, PA 15601 Holiday Village 201 Sam Street Nashville, TN 37207 Holiday Village 1350 Co Road 3 Elkhart, IN 46514 Holly Acres Estates 7240 Holly Dale Drive Erie, PA 16509 Hudson Estates 100 Keenan Road Peninsula, OH 44264 Huntingdon Pointe 240 Tee Drive Tarrs, PA 15688 Independence Park 355 Route 30 Clinton, PA 15026 Iris Winds 1230 South Pike East Lot 144 Sumter, SC 29153 Kinnebrook 351 State Route 17B Monticello, NY 12701 Lake Erie Estates 3742 East Main Street, Apt 1 Fredonia, NY 14757 Lake Sherman Village 7227 Beth Avenue, SW Navarre, OH 44662 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 318 97% 98% 98 65 $716 198 91% 88% 60 16 $392 220 99% 97% 46 45 $538 88 89% 89% 33 16 $442 339 89% 85% 53 12 $569 326 93% 90% 53 153 97% 97% 30 2 9 $579 $475 159 96% 95% 19 -0- $399 82 98% 95% 45 4 $370 90 93% 95% 36 15 $476 141 84% 69% 24 -0- $202 250 100% 99% 66 32 $708 161 68% 66% 21 -0- $437 257 92% 95% 63 34 $563 -31- Name of Community Lakeview Meadows 11900 Duff Road, Lot 58 Lakeview, OH 43331 Laurel Woods 1943 St. Joseph Street Cresson, PA 16630 Little Chippewa 11563 Back Massillon Road Orrville, OH 44667 Mandell Trails 108 Bay Street Butler, PA 16002 Maple Manor 18 Williams Street Taylor, PA 18517 Marysville Estates 548 North Main Street Marysville, OH 43040 Meadowood 9555 Struthers Road New Middletown, OH 44442 Meadows 11 Meadows Nappanee, IN 46550 Meadows of Perrysburg 27484 Oregon Road Perrysburg, OH 43551 Melrose Village 4400 Melrose Drive, Lot 301 Wooster, OH 44691 Melrose West 4455 Cleveland Road Wooster, OH 44691 Memphis Blues (2) 1401 Memphis Blues Avenue Memphis, TN 38127 Mighty Oak (1) 1203 Moultrie Road Albany, GA 31705 Monroe Valley 15 Old State Road Jonestown, PA 17038 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 126 61% 100% 21 32 $453 208 84% 81% 43 -0- $512 61 93% 98% 13 -0- $412 140 76% 80% 54 15 $335 313 84% 81% 71 -0- $479 306 77% 70% 58 -0- $489 122 97% 89% 20 -0- $471 332 83% 76% 61 -0- $500 200 96% 95% 47 37 $499 293 92% 92% 71 -0- $454 29 100% 100% 27 3 $501 134 77% 66% 16 78 $497 118 1% N/A 26 -0- $450 44 100% 98% 11 -0- $634 -32- Name of Community Moosic Heights 118 1st Street Avoca, PA 18641 Mount Pleasant Village 1 Village Drive Mount Pleasant, PA 15666 Mountaintop Mountain Top Lane Narvon, PA 17555 Mountain View (3) Van Dyke Street Coxsackie, NY 12501 New Colony 3101 Homestead Duquesne Road West Mifflin, PA 15122 Northtowne Meadows 6255 Telegraph Road Erie, MI 48133 Oak Ridge Estates 1201 Country Road 15 Elkhart, IN 46514 Oak Tree 565 Diamond Road Jackson, NJ 08527 Oakwood Lake Village 308 Gruver Lake Tunkhannock, PA 18657 Olmsted Falls 26875 Bagley Road Olmsted Falls, OH 44138 Oxford Village 2 Dolinger Drive West Grove, PA 19390 Parke Place 2331 Osolo Road Elkhart, IN 46514 Perrysburg Estates 23720 Lime City Road Perrysburg, OH 43551 Pikewood Manor 1780 Lorain Boulevard Elyria, OH 44035 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 150 95% 94% 35 -0- $499 114 96% 96% 19 -0- $414 39 95% 87% 11 2 $730 -0- N/A N/A -0- 220 N/A 113 79% 71% 16 -0- $514 384 89% 90% 85 -0- $487 205 98% 97% 40 -0- $590 260 97% 98% 39 2 $490 78 76% 69% 40 -0- $568 125 98% 97% 15 -0- $521 224 98% 99% 59 2 $825 379 91% 93% 94 15 $474 133 88% 93% 26 7 $436 490 90% 87% 86 31 $510 -33- Name of Community Pine Ridge Village/Pine Manor 100 Oriole Drive Carlisle, PA 17013 Pine Valley Estates 1283 Sugar Hollow Road Apollo, PA 15613 Pleasant View Estates 6020 Fort Jenkins Lane Bloomsburg, PA 17815 Port Royal Village 485 Patterson Lane Belle Vernon, PA 15012 Redbud Estates 1800 West 38th Street Anderson, IN 46013 River Valley Estates 2066 Victory Road Marion, OH 43302 Rolling Hills Estates 14 Tip Top Circle Carlisle, PA 17015 Rostraver Estates 1198 Rostraver Road Belle Vernon, PA 15012 Saddle Creek 2390 Denton Road Dothan, AL 36303 Sandy Valley Estates 11461 State Route 800 N.E. Magnolia, OH 44643 Shady Hills 1508 Dickerson Pike #L3 Nashville, TN 37207 Somerset Estates/Whispering Pines 1873 Husband Road Somerset, PA 15501 Southern Terrace 1229 State Route 164 Columbiana, OH 44408 Southwind Village 435 E. Veterans Highway Jackson, NJ 08527 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 193 88% 87% 50 30 $655/$676 214 82% 78% 38 -0- $461 111 85% 85% 21 9 $486 477 65% 61% 101 -0- $576 570 99% 96% 128 21 $308 230 93% 89% 60 -0- $482 91 91% 87% 31 1 $474 66 85% 88% 17 66 $555 141 1% 1% 29 7 $105 363 85% 79% 102 10 $514 212 94% 93% 25 -0- $560 249 86% 84% 74 24 $480/$575 118 100% 100% 26 4 $437 250 98% 99% 36 -0- $670 -34- Name of Community Spreading Oaks Village 7140-29 Selby Road Athens, OH 45701 Springfield Meadows 4100 Troy Road Springfield, OH 45502 Suburban Estates 33 Maruca Drive Greensburg, PA 15601 Summit Estates 3305 Summit Road Ravenna, OH 44266 Summit Village 246 North 500 East Marion, IN 46952 Sunny Acres 272 Nicole Lane Somerset, PA 15501 Sunnyside 2901 West Ridge Pike Eagleville, PA 19403 Trailmont 122 Hillcrest Road Goodlettsville, TN 37072 Twin Oaks I & II 27216 Cook Road Olmsted Falls, OH 44138 Twin Pines 2011 West Wilden Avenue Goshen, IN 46528 Valley High 32 Valley High Lane Ruffs Dale, PA 15679 Valley Hills 4364 Sandy Lake Road Ravenna, OH 44266 Valley Stream 60 Valley Stream Mountaintop, PA 18707 Valley View I 1 Sunflower Drive Ephrata, PA 17522 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 148 93% 93% 37 24 $428 123 98% 99% 43 77 $453 197 95% 90% 36 -0- $464 141 95% 93% 25 1 $388 112 92% 94% 25 33 $301 207 98% 96% 55 63 87% 84% 8 3 1 $447 $829 130 98% 95% 32 -0- $572 141 99% 97% 21 -0- $628 222 89% 90% 48 2 $554 75 84% 89% 13 16 $433 267 97% 97% 66 67 $440 143 79% 79% 37 6 $430 104 98% 98% 19 -0- $644 -35- Name of Community Valley View II 1 Sunflower Drive Ephrata, PA 17522 Valley View – Honey Brook 1 Mark Lane Honey Brook, PA 19344 Voyager Estates 1002 Satellite Drive West Newton, PA 15089 Waterfalls Village 3450 Howard Road Lot 21 Hamburg, NY 14075 Wayside 1000 Garfield Avenue Bellefontaine, OH 43331 Weatherly Estates 271 Weatherly Drive Lebanon, TN 37087 Wellington Estates 247 Murray Lane Export, PA 15632 Woodland Manor 338 County Route 11, Lot 165 West Monroe, NY 13167 Woodlawn Village 265 Route 35 Eatontown, NJ 07724 Woods Edge 1670 East 650 North West Lafayette, IN 47906 Wood Valley 2 West Street Caledonia, OH 43314 Worthington Arms 5277 Columbus Pike Lewis Center, OH 43035 Youngstown Estates 999 Balmer Road Youngstown, NY 14174 Number of Occupancy Occupancy Acreage Percentage Percentage Developed at 12/31/22 Developed at 12/31/23 Sites Weighted Average Additional Monthly Rent Per Acreage Site at 12/31/23 43 100% 100% 7 -0- $668 144 99% 97% 28 13 $748 259 71% 64% 72 20 $437 196 81% 79% 35 -0- $671 81 95% 95% 15 14 $399 271 97% 100% 41 -0- $518 202 98% 88% 46 1 $373 148 78% 75% 77 -0- $447 156 92% 90% 14 -0- $766 599 63% 60% 151 50 $481 159 81% 72% 31 56 $434 221 95% 93% 36 -0- $700 89 63% 64% 14 59 $444 Total 25,766 86.7% 84.6% 5,637 2,134 $519 -36- (1) Community is owned by the opportunity zone fund. (2) Community was closed due to unusual flooding throughout the region in May 2011. We are currently working on the redevelopment of this community. The total redevelopment will be 237 sites. Phases I and II, consisting of 90 sites, are fully complete and occupied. Phase III, consisting of 44 sites, was recently completed in 2023 and in the process of being occupied. Phase IV has been approved by city council and will allow up to an additional 103 sites. (3) We are currently seeking site plan approvals for approximately 360 sites for this property. The Company also has 2,134 undeveloped acres that may be developed into approximately 8,500 sites. We have approximately 3,400 sites in various stages of the approval process that may be developed over the next 7 years. Due to the uncertainties involved in the approval and construction process, it is difficult to predict the number of sites which will be completed in a given year. In addition to the communities owned by the Company listed above, a joint venture entity owned by the Company and Nuveen Real Estate owns Sebring Square, a newly-developed all-age, manufactured home community located in Sebring, Florida, which was acquired in December 2021. This community contains 219 developed homesites situated on approximately 39 acres. In addition, this joint venture entity owns Rum Runner, a newly- developed all-age, manufactured home community, also located in Sebring, Florida, which was acquired in December 2022. This community contains 144 developed homesites situated on approximately 20 acres. In 2023, the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new joint venture entity focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. The community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. Significant Properties The Company operated manufactured home properties with an approximate cost of $1.5 billion as of December 31, 2023. These properties consist of 135 separate manufactured home communities (including two communities acquired through the opportunity zone fund) and related improvements (excluding the Sebring Square and Rum Runner communities in Florida acquired in December 2021 and 2022, respectively, which are operated by the Company and owned by a joint venture with Nuveen Real Estate). No single community constitutes more than 10% of the total assets of the Company. Our larger properties consist of: Friendly Village (Ohio) with 824 developed sites, Woods Edge (Indiana) with 599 developed sites, Redbud Estates (Indiana) with 570 developed sites, Pikewood Manor (Ohio) with 490 developed sites, and Port Royal Village (Pennsylvania) with 477 developed sites. Mortgages on Properties The Company has mortgages on many of its properties. The maturity dates of these mortgages range from 2025 to 2034, with a weighted average term of 5.3 years. Interest on these mortgages is payable at fixed rates ranging from 2.62% to 6.74%. The weighted average interest rate on our mortgages, not including the effect of unamortized debt issuance costs, was approximately 4.2% and 3.9% at December 31, 2023 and 2022, respectively. The aggregate balances of these mortgages, net of unamortized debt issuance costs, totaled $496.5 million and $508.9 million at December 31, 2023 and 2022, respectively. (For additional information, see Part IV, Item 15(a) (1) (vi), Note 7 of the Notes to Consolidated Financial Statements – Loans and Mortgages Payable). Joint Venture with Nuveen In December 2021, the Company and Nuveen Real Estate (“Nuveen” or “Nuveen Real Estate”), established a joint venture for the purpose of acquiring manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The terms of the initial joint venture entity were set forth in a Limited Liability Company Agreement dated as of December 8, 2021 (the “LLC Agreement”) entered into between a wholly owned subsidiary of the Company and an affiliate of Nuveen. The LLC Agreement called for committed capital to be funded 60% by Nuveen and 40% by the Company on a parity basis. The Company serves as managing member of the joint venture entity and is responsible for day-to-day operations of the joint venture entity and management of its properties, subject to obtaining approval of Nuveen Real Estate for major decisions (including investments, dispositions, financings, major capital expenditures and annual budgets). The Company receives property management and other fees from the joint venture entity. In December 2021, the joint venture entity closed on the acquisition of Sebring Square, a newly developed all-age manufactured home community located in Sebring, Florida for a total purchase price of $22.2 million. The Sebring Square community contains 219 developed homesites situated on approximately 39 acres. In December -37- 2022, the joint venture entity closed on the acquisition of Rum Runner, another newly developed all-age manufactured home community, also located in Sebring, Florida, for a total purchase price of $15.1 million. The Rum Runner community contains 144 developed homesites situated on approximately 20 acres. The LLC Agreement provides that until the capital contributions to the joint venture are fully funded or the joint venture is terminated, the joint venture will be the exclusive vehicle for the Company to acquire any manufactured housing community and/or recreational vehicle community that meets the joint venture’s investment guidelines. The investment guidelines of the joint venture provide for the venture to acquire manufactured housing and recreational vehicle communities that have been developed within the previous two years and are less than 20% occupied, located in certain geographic markets, projected to meet certain cash flow and internal rate of return targets, and satisfy certain other criteria. The Company agreed to offer Nuveen the opportunity to have the joint venture acquire any manufactured housing community or recreational vehicle community that meets these investment guidelines. Under the terms of the LLC Agreement, if Nuveen determines not to pursue or approve any such acquisition, the Company would be permitted to acquire the property outside the joint venture. Since the execution of the LLC Agreement, Nuveen has provided the Company with written waivers of the exclusivity provision of the LLC Agreement with regard to two property acquisitions that may have fit the investment guidelines of the joint venture, which permitted the Company to acquire them outside of the Nuveen joint venture. Except for investment opportunities that are offered to and declined by Nuveen, the Company is prohibited from developing, owning, operating or managing manufactured housing communities or recreational vehicle communities within a 10-mile radius of any community owned by the joint venture. However, this restriction does not apply with respect to investments by the Company in existing communities operated by the Company. During the time since the joint venture with Nuveen was first established in 2021, the Company and Nuveen have continued to seek, and are continuing to seek, opportunities to acquire additional manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. During 2022, the Company and Nuveen informally agreed that any future acquisitions would be made by one or more new joint venture entities to be formed for that purpose and that the original joint venture entity formed in December 2021 will not consummate additional acquisitions but will maintain its existing property portfolio, consisting of the Sebring Square and Rum Runner communities. The Company and Nuveen also informally agreed that, unless otherwise determined in connection with any specific future investment, capital for any such new joint venture entity would continue to be funded 60% by Nuveen and 40% by the Company on a parity basis and that other terms would be similar to those of the LLC Agreement entered into in 2021, except that the amounts of the parties’ respective capital commitments will be determined on a property-by-property basis. In November 2023, the Company expanded its relationship with Nuveen Real Estate and formed a new joint venture entity with Nuveen. The new joint venture entity was established to, directly or through one or more subsidiaries, identify, source, originate, acquire, hold, operate, sell, lease, mortgage, maintain, own, manage, finance, refinance, reposition, improve, renovate, develop, redevelop, pledge, hedge, exchange, and otherwise deal in and with the rental of manufactured housing and/or recreational vehicle communities that meet other investment guidelines. The terms of the new joint venture entity are set forth in a Limited Liability Company Agreement dated as of November 29, 2023 (the “Second LLC Agreement”) entered into between a wholly owned subsidiary of the Company and an affiliate of Nuveen. The Company serves as managing member of this new joint venture entity and is responsible for day-to-day operations of the joint venture entity and management of its properties, subject to obtaining approval of Nuveen Real Estate for major decisions (including investments, dispositions, financings, major capital expenditures and annual budgets). The Company receives property management oversite, development and other fees from the joint venture entity. Sixty-one acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million, was contributed to the new joint venture entity. The Company was reimbursed by Nuveen for 60% of the carrying value of this land. This new joint venture entity is focused on the development of a new manufactured housing community on this property. The community, once complete, is expected to contain 113 manufactured home sites. As with the 2021 LLC Agreement, capital contributions to the joint venture formed for this project will be funded 60% by Nuveen and 40% by the Company on a parity basis and the other terms (including restrictions on the Company’s right to acquire manufacturing housing communities that meet the LLC Agreement’s investment guidelines without first offering Nuveen an opportunity to participate in the acquisition) are similar to those set forth in the LLC Agreement entered into in 2021. References in this Annual Report to the Company’s joint venture with Nuveen are intended to refer to our ongoing relationship with Nuveen. For additional information about the Company’s joint venture with Nuveen Real Estate, see Note 5, "Investment in Joint Venture," of the Notes to Consolidated Financial Statements. -38- Opportunity Zone Fund In July 2022, the Company invested $8.0 million, representing a portion of the capital gain the Company recognized in February 2022 from its investment in Monmouth Real Estate Investment Corporation (“MREIC”) as a result of a merger of MREIC with another company, in our qualified opportunity zone fund, UMH OZ Fund, LLC (“OZ Fund”), a new entity formed by the Company. (For additional information about the MREIC merger, see Note 4, "Marketable Securities," of the Notes to Consolidated Financial Statements.) The OZ Fund was created to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The OZ Fund was designed to allow the Company and other investors in the OZ Fund to defer the tax on recently realized capital gains reinvested in the OZ Fund until December 31, 2026 and to potentially obtain certain other tax benefits. UMH manages the OZ Fund and will receive certain management fees as well as a 15% carried interest in distributions by the OZ Fund to the other investors (subject to first returning investor capital with a 5% preferred return). UMH will have a right of first offer to purchase the communities from the OZ Fund at the time of sale at their then-current appraised value. On August 10, 2022, the Company, through the OZ Fund, acquired Garden View Estates, located in Orangeburg, South Carolina, for approximately $5.2 million. On January 19, 2023, the Company acquired Mighty Oak, located in Albany, Georgia, through the OZ Fund, for approximately $3.7 million. For additional information about the Company’s opportunity zone fund, see Note 6, "Opportunity Zone Fund," of the Notes to Consolidated Financial Statements. Item 3 – Legal Proceedings The Company is subject to claims and litigation in the ordinary course of business. For additional information about legal proceedings, see Part IV, Item 15(a)(1)(vi), Note 14, “Commitments, Contingencies and Legal Matters” of the Notes to Consolidated Financial Statements. Item 4 – Mine Safety Disclosures Not Applicable. PART II Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s Series D Preferred Stock and its Common Stock are traded on the New York Stock Exchange (“NYSE”), under the symbols “UMHPRD” and “UMH”, respectively. Effective February 9, 2022, the Company’s Common Stock also began trading on the Tel Aviv Stock Exchange (“TASE”). Shareholder Information As of February 16, 2024, there were 1,239 registered shareholders of the Company’s Common Stock based on the number of record owners. Because many shares of the Company’s Common Stock are held by brokers and other institutions on behalf of their clients, we believe there are considerably more beneficial holders of our Common Stock than record holders. Dividends During the year ended December 31, 2023, the Company paid quarterly cash dividends to holders of its Common Stock of $0.205 per share, or $0.82 annually. In order to maintain our qualification as a REIT, we are required, among other things, to annually distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and any net capital gain. In addition, we intend to distribute all or substantially all of our net income so that we will generally not be subject to U.S. federal income tax on our earnings. -39- In general, our Board of Directors makes decisions regarding payment of dividends on a quarterly basis. The Board considers many factors when making these decisions, including our present and future liquidity needs, our current and projected financial condition and results of operations. See Item 1A. Risk Factors in this Form 10-K for a description of factors that may affect our ability to pay dividends. Recent Sales of Unregistered Equity Securities None. Issuer Purchases of Equity Securities On January 11, 2023, the Board of Directors reaffirmed our Common Stock Repurchase Program (the “Repurchase Program”) that authorized us to repurchase up to $25 million in the aggregate of the Company’s Common Stock. Purchases under the Repurchase Program were permitted to be made using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases would be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program did not require the Company to acquire any particular amount of Common Stock and may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Although the Repurchase Program remains in effect, the Company did not repurchase any shares of its Common Stock during 2023. Comparative Stock Performance The following line graph compares the total return of the Company’s Common Stock for the last five years to the FTSE Nareit All REITs Index published by the National Association of Real Estate Investment Trusts (“Nareit”) and to the S&P 500 Index for the same period. The graph assumes a $100 investment in our Common Stock and in each of the indexes listed below on December 31, 2018 and the reinvestment of all dividends. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information herein has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed. Our stock performance shown in the graph below is not necessarily indicative of future stock performance. 300 250 200 150 100 50 0 s r a l l o D 267 200 169 207 164 141 164 164 126 140 128 131 156 139 121 100 2018 2019 2020 2021 2022 2023 YEAR ENDED DECEMBER 31, UMH PROPERTIES, INC. FTSE Nareit ALL REITs S & P 500 -40- Item 6 – [Reserved] Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations 2023 Accomplishments During 2023, UMH made substantial progress on multiple fronts – generating solid operating results, achieving strong growth and improving our financial position. We have: • • • • • • • Increased Rental and Related Income by 11%; Increased Community Net Operating Income (“NOI”) by 14%; Increased Normalized Funds from Operations (“Normalized FFO) by 16%; Increased Same Property NOI by 13%; Increased Same Property Occupancy by 230 basis points from 86.2% to 88.5%; Improved our Same Property expense ratio from 42.2% at yearend 2022 to 40.3% at yearend 2023; Increased our rental home portfolio by 871 homes from yearend 2022 to approximately 10,000 total rental homes, representing an increase of 10% from yearend 2022; Increased Sales of Manufactured Homes by 23%; • • Acquired our first community in Georgia, containing 118 developed homesites, for a total cost of $3.7 million through our qualified opportunity zone fund; • Entered into a new joint venture agreement with Nuveen Real Estate to develop a 113-site community in Honey Brook, Pennsylvania; • Amended our unsecured credit facility to expand available borrowing capacity from $100 million to $180 million; • Entered into a $25 million term loan and a $25 million line of credit secured by rental homes and their leases; • Expanded our revolving line of credit secured by eligible notes receivable from $20 million to $35 million; • Financed eight existing communities for total proceeds of approximately $57.7 million; • Raised our quarterly common stock dividend by 2.5% to $0.205 per share or $0.82 annually; • • • Reduced our Net Debt to Total Market Capitalization from 38.2% in 2022 to 31.3% in 2023; • Increased our Total Market Capitalization by 6% to over $2 billion at yearend; Increased our Equity Market Capitalization by 12% to over $1 billion at yearend; Issued and sold approximately 9.4 million shares of Common Stock through At-the-Market Sale Programs at a weighted average price of $15.81 per share, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses; Issued and sold approximately 2.6 million shares of Series D Preferred Stock through At-the-Market Sale Programs at a weighted average price of $21.88 per share, generating gross proceeds of $56.7 million and net proceeds of $55.7 million, after offering expenses; • • Subsequent to year end, issued and sold approximately 1.2 million shares of Common Stock through our 2023 Common Stock At-the-Market Sale Program at a weighted average price of $15.37 per share, generating gross proceeds of $19.2 million and net proceeds of $18.9 million, after offering expenses; and • Subsequent to year end, issued and sold approximately 121,000 shares of Series D Preferred Stock through our 2023 Series D Preferred Stock At-the-Market Sale Program at a weighted average price of $22.85 per share, generating gross proceeds of $2.8 million and net proceeds of $2.7 million, after offering expenses. Refer to the discussion below in this Item 7, Management’s Discussion and Analysis of Financial Condition, Results of Operations, and Non-U.S. GAAP Measures, contained in this Form 10-K for information regarding the presentation of community NOI, and for the presentation and reconciliation of funds from operations and normalized funds from operations to net income (loss) attributable to common shareholders. Overview The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the historical Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-K. The Company is a Maryland corporation that operates as a self-administered, self-managed REIT with headquarters in Freehold, New Jersey. The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured home spaces on an annual or month-to-month -41- basis to residents. The Company also leases manufactured homes to residents and, through its wholly-owned taxable REIT subsidiary, S&F, sells and finances the sale of manufactured homes to residents and prospective residents of our communities and for placement on customers’ privately-owned land. During 2022, the Company also formed an opportunity zone fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The Company currently holds a 77% percentage interest in the opportunity zone fund. As of December 31, 2023, we owned and operated 135 manufactured home communities (including two communities acquired through the opportunity zone fund) containing approximately 25,800 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. UMH has continued to execute our growth strategy of purchasing well-located communities in our target markets, including the energy-rich Marcellus and Utica Shale regions. During the year ended December 31, 2023, we purchased one community located in Georgia, for an aggregate purchase price of $3.7 million, through our opportunity zone fund. This acquisition added 118 developed homesites to our portfolio. The Company also operates two communities in Florida owned by the Company’s joint venture with Nuveen Real Estate that was originally formed in December 2021. On November 30, 2023, the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new joint venture entity focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. As with the original 2021 joint venture entity, UMH has a 40% stake in the new joint venture entity and serves as the managing member, developer and operating member. The Honey Brook community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. The Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of manufactured homes, the sale and finance of manufactured homes and the brokering of home sales, self-storage leases, oil and gas leases, cable service agreements and from appreciation in the values of the manufactured home communities and vacant land owned by the Company. In addition, the Company receives property management and other fees from its joint venture arrangements with Nuveen and from its opportunity zone fund. Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources. Occupancy in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2023, total income increased 13% from the prior year due to the acquisition and rental programs, rent increases and the growth of our sales business. Community NOI (as defined below) increased 14% from the prior year. Overall occupancy increased 210 basis points from 84.6% as of December 31, 2022 to 86.7% as of December 31, 2023. Overall occupancy includes communities acquired in 2023 and 2022 with an average occupancy of 60%. Same property occupancy, which includes communities owned and operated as of January 1, 2022, increased 230 basis points from 86.2% as of December 31, 2022 to 88.5% as of December 31, 2023. (Unless expressly indicated, information in this report with respect to the Company’s properties, including financial and operating results for the year ended December 31, 2023, does not include the properties owned by the Company’s joint venture with Nuveen.) Demand for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that should result in continued high demand. The macro-economic environment and current housing fundamentals continue to favor home rentals. Due to climbing mortgage rates, the higher cost of buying a home versus renting one is at its most extreme since 1996. Rental homes in a manufactured home community allow the resident to obtain the efficiencies of factory-built housing and the amenities of community living for less than the cost of other forms of affordable housing. We continue to see strong demand for rental homes. During 2023, our portfolio of rental homes increased by 871 homes, net. Occupied rental homes represent approximately 42.0% of total occupied sites. Occupancy in rental homes continues to be strong and was at 94.0% as of December 31, 2023. We compare favorably with other types of rental housing, including apartments, and we will continue to allocate capital to rental home purchases, as demand dictates. The Company holds a portfolio of marketable equity securities of other REITs with a fair value of $34.5 million as of December 31, 2023, representing 1.9% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio provides the Company with additional diversification, liquidity and income. As of December 31, 2023, 99% consisted of REIT common stocks and 1% of the Company’s portfolio -42- consisted of REIT preferred stocks. The Company does not intend to increase its investment in the REIT securities portfolio. The Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The Company’s weighted average yield on the securities portfolio was approximately 6.7% at December 31, 2023. At December 31, 2023, the Company had unrealized losses of $39.7 million in its REIT securities portfolio. During 2023, the Company sold positions in securities, generating a net realized gain of $183,000. The Company continues to strengthen its balance sheet. During the year ended December 31, 2023, through an At-the-Market Sale Program for our Common Stock that was established in April 2023 (the “2023 Common ATM Program”) and a prior At-the-Market Sale Program established in 2022, the Company issued and sold a total of 9.4 million shares of our Common Stock, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses. Additionally, during 2023 the Company raised approximately $9.0 million in new capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”). During the year ended December 31, 2023, through an At-the-Market Sale Program for our Preferred Stock that was established in January 2023 (the “2023 Preferred ATM Program”) and a prior At-the-Market Sale Program established in 2020, the Company issued and sold a total of approximately 2.6 million shares of our Series D Preferred Stock, generating gross proceeds of $56.7 million and net proceeds of $55.7 million, after offering expenses. The Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained through the issuance of common and preferred stock and debt, will enhance shareholder returns as the properties appreciate over time. On December 31, 2023, the Company had approximately $57.3 million in cash and cash equivalents and $110 million available on our credit facility, with an additional $400 million potentially available pursuant to an accordion feature. We also had $143.5 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 homes leases. Subsequent to year end, the Company paid down approximately $20 million on its credit facility (see Note 17). The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities, that over time, are expected to yield in excess of our cost of funds and investing in physical improvements, including adding rental homes onto otherwise vacant sites. In 2022 and 2023, we added a total of eight manufactured home communities to our portfolio, encompassing approximately 1,600 developed sites. These manufactured home communities were acquired with an average occupancy rate of 60%. The Company will utilize the rental home program to increase occupancy rates and improve operating results at these communities. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through our joint venture arrangement with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that acquisition opportunities will continue to materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of the joint venture with Nuveen will depend on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties. See PART I, Item 1- Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant to the Company, the Company's lines of business and principal products and services, and the opportunities, challenges and risks on which the Company is focused. Acquisitions in 2023 and 2022 The following table lists the property acquisitions completed by the Company during the years ended December 31, 2023 and 2022: -43- Community Acquisition in 2023 Mighty Oak Total 2023 Acquisitions in 2022 Center Manor Mandell Trails Saddle Creek Hidden Creek Garden View Estates Fohl Village Oak Tree Total 2022 Date of Acquisition State Number of Sites Purchase Price (in thousands) Number of Acres Occupancy at Acquisition January 19, 2023 GA March 31, 2022 May 3, 2022 May 25, 2022 July 14, 2022 August 10, 2022 November 22, 2022 December 15, 2022 PA PA AL MI SC OH NJ 118 118 96 132 139 351 181 321 260 $3,650 $3,650 $5,800 7,375 3,878 22,000 5,200 19,070 22,900 1,480 $86,223 26 26 18 69 36 88 39 170 41 461 0% 0% 83% 70% 6% 63% 33% 77% 98% 65% Mighty Oak, acquired in January 2023, and Garden View Estates, acquired in August 2022, were acquired through the Company’s opportunity zone fund. In addition to the acquisitions shown above, in November 2023, 61 acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million, was contributed to an entity formed under our joint venture with Nuveen for the purpose of developing a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company was reimbursed by Nuveen for 60% of the carrying value of this land. Also, on December 23, 2022, an entity formed as part of our Nuveen joint venture closed on the acquisition of Rum Runner, a newly developed all-age, manufactured home community located in Sebring, Florida, for a total purchase price of $15.1 million. This community contains 144 developed homesites situated on approximately 20 acres. Results of Operations 2023 vs. 2022 Rental and related income increased from $170.4 million for the year ended December 31, 2022 to $189.7 million for the year ended December 31, 2023, or 11%. This increase was primarily due to the acquisitions made during 2022, as well as increases in rental rates, same property occupancy and additional rental homes. During 2023, the Company raised rental rates by 5% to 6% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 86.7% and 84.6% at December 31, 2023 and 2022, respectively. Overall occupancy includes communities acquired in 2023 and 2022 which had an average occupancy of 60%, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2023, we had approximately 10,000 rental homes with an occupancy rate of 94.0%. We continue to evaluate the demand for rental homes and will invest in additional homes as demand dictates. Community operating expenses increased from $75.7 million for the year ended December 31, 2022 to $81.3 million for the year ended December 31, 2023, or 8%. This increase was primarily due to expenses pertaining to recently acquired communities during 2022, as well as increases in payroll, rental home expenses, real estate taxes, waste removal, water expenses and sewer expenses. -44- Community NOI increased from $94.8 million for the year ended December 31, 2022 to $108.4 million for the year ended December 31, 2023, or 14%. This increase was primarily due to the acquisitions during 2022, and an increase in rental rates, occupancy and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) improved 150 basis points from 44.4% in 2022 to 42.9% for 2023. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership. Since most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue to improve. Due to the Company’s ability to increase its rental rates annually (subject to limitations on rent increases in certain jurisdictions), increasing costs due to inflation and changing prices have generally not had a material effect on revenue and income from continuing operations. Sales of manufactured homes increased from $25.3 million for the year ended December 31, 2022 to $31.2 million for the year ended December 31, 2023, or 23%. The total number of homes sold increased from 301 homes in 2022 to 341 homes in 2023. There were a14% increase in new homes sold from 144 new homes sold in 2022 to 164 new homes sold in 2023. The Company’s average sales price increased 8% in 2023 and was approximately $91,000 for the year ended December 31, 2023 and $84,000 for the year ended December 31, 2022. Cost of sales of manufactured homes increased from $17.6 million for the year ended December 31, 2022 to $21.1 million for the year ended December 31, 2023, or 20%. The gross profit percentage was 32% and 31% for 2023 and 2022, respectively. Selling expenses increased from $5.3 million for the year ended December 31, 2022 to $6.9 million for the year ended December 31, 2023, or 32%. Gain from the sales operations, excluding interest on the financing of inventory, increased 24% and amounted to a gain of $3.1 million and $2.5 million for the year ended December 31, 2023 and 2022, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising and promotion, are fixed. Despite an increase in mortgage rates, home prices have continued their rise as fewer sellers are listing homes and inventories decline resulting in the inherent relative affordability of our property type becoming more and more apparent, which should result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the fundamental need for affordable housing. The Company believes that sales of new homes produce new rental revenue and represent an investment in the upgrading of our communities. General and administrative expenses increased from $19.0 million for the year ended December 31, 2022 to $19.7 million for the year ended December 31, 2023, or 4%. This increase was due to an increase in payroll, personnel costs and non-cash stock-based compensation. General and administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividends and other income) was approximately 8.0% and 7.6% for the years ended December 31, 2023 and 2022, respectively. Depreciation expense increased from $48.8 million for the year ended December 31, 2022 to $55.7 million for the year ended December 31, 2023, or 14%. This increase was primarily due to the acquisitions and the increases in rental homes during 2023 and 2022. Interest income increased from $4.1 million for the year ended December 31, 2022 to $5.0 million for the year ended December 31, 2023, or 22%. This increase was primarily due to an increase in the average balance of notes receivable from $58.6 million for the year ended December 31, 2022 to $71.5 million for the year ended December 31, 2023. The weighted average interest rate earned on these notes receivables increased 30 basis points and was 7.0% and 6.7% as of December 31, 2023 and 2022, respectively Dividend income decreased from $2.9 million for the year ended December 31, 2022 to $2.3 million for the year ended December 31, 2023, or 20%. This decrease was due to reduced dividends from a combination of our smaller securities portfolio and the weighted average yield on our dividends received from our marketable securities investments decreasing 90 basis points from 7.6% in 2022 to 6.7% in 2023. The Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The Company recognized a realized gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022 primarily as a result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The decrease in fair value of marketable securities amounted to $3.6 million and $21.8 million for the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had total net unrealized losses of $39.7 million in its REIT securities portfolio. Interest expense, including amortization of financing costs, increased from $26.4 million for the year ended December 31, 2022 to $32.5 million for the year ended December 31, 2023, or 23%. This increase was mainly due to -45- the interest incurred on the $102.7 million of Series A Bonds the Company issued in 2022 in an offering to investors in Israel, an increase in the average balance of total debt and an increase in interest rates. The average balance of our total debt was approximately $734.5 million in 2023 and $637.1 million in 2022. 2022 vs. 2021 Rental and related income increased from $159.0 million for the year ended December 31, 2021 to $170.4 million for the year ended December 31, 2022, or 7%. This increase was due to the acquisitions during 2021 and 2022, as well as an increase in rental rates and additional rental homes. During 2022, the Company raised rental rates by 4% to 5% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 84.6% and 86.0% at December 31, 2022 and 2021, respectively. Overall occupancy includes communities acquired in 2022 and 2021, which had an average occupancy of 66% and 59%, respectively, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2022, we had approximately 9,100 rental homes with an occupancy rate of 93.3%. Community operating expenses increased from $68.0 million for the year ended December 31, 2021 to $75.7 million for the year ended December 31, 2022, or 11%. This increase was primarily due to new acquisitions, and increases in waste removal, tree removal, water and sewer, insurance, real estate taxes, travel and payroll and personnel costs. Community NOI increased from $91.0 million for the year ended December 31, 2021 to $94.8 million for the year ended December 31, 2022, or 4%. This increase was primarily due to the acquisitions during 2021 and 2022 and an increase in rental rates and rental homes. The operating expense ratio (defined as community operating expenses divided by rental and related income) was 42.8% in 2021 compared to 44.4% for 2022. Sales of manufactured homes decreased from $27.1 million for the year ended December 31, 2021 to $25.3 million for the year ended December 31, 2022, or 6%. The total number of homes sold in 2022 was 301 homes as compared to 370 homes in 2021. There were 144 new homes sold in 2022 as compared to 182 in 2021. The Company’s average sales price was approximately $84,000 and $73,000 for the years ended December 31, 2022 and 2021, respectively. Cost of sales of manufactured homes decreased from $20.1 million for the year ended December 31, 2021 to $17.6 million for the year ended December 31, 2022, or 13%. The gross profit percentage was 31% and 26% for 2022 and 2021, respectively. Selling expenses increased from $4.8 million for the year ended December 31, 2021 to $5.3 million for the year ended December 31, 2022, or 10%. Gain from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less selling expenses less interest on the financing of inventory) amounted to a gain of $2.0 million for the year ended December 31, 2022 and 2021, respectively. General and administrative expenses increased from $14.1 million for the year ended December 31, 2021 to $19.0 million for the year ended December 31, 2022, or 35%. These increases were mainly due to non-recurring expenses relating to the cost of previously issued special restricted stock grants for the groundbreaking Fannie Mae financing completed in 2020, expenses for the joint venture with Nuveen, the opportunity zone fund, the issuance of the Series A Bonds, early extinguishment of debt and other legal expenses. These non-recurring expenses totaled $3.5 million for the year ended December 31, 2022, compared to $2.0 million for the year ended December 31, 2021. General and administrative expenses also increased due to an increase in personnel costs, stock-based compensation and travel. General and administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividend and other income) was 7.6% and 6.2% at December 31, 2022 and 2021, respectively. Depreciation expense increased from $45.1 million for the year ended December 31, 2021 to $48.8 million for the year ended December 31, 2022, or 8%. This increase was primarily due to the acquisitions and the increase in rental homes during 2022 and 2021. Interest income increased from $3.4 million for the year ended December 31, 2021 to $4.1 million for the year ended December 31, 2022, or 22%. This increase was primarily due to an increase in the average balance of notes receivable from $48.6 million for the year ended December 31, 2021 to $58.6 million for the year ended December 31, 2022. -46- Dividend income decreased from $5.1 million for the year ended December 31, 2021 to $2.9 million for the year ended December 31, 2022, or 43%. This decrease was primarily due to reduced dividends from the reduction of our securities holdings. Dividends received from our marketable securities investments were at a weighted average yield of approximately 7.1% and 4.4% as of December 31, 2022 and 2021, respectively. The Company recognized a net gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022, primarily as a result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The Company recognized a gain on sales of marketable securities of $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair value of marketable securities decreased from an increase of $25.1 million for the year ended December 31, 2021 to a decrease of $21.8 million for the year ended December 31, 2022. As of December 31, 2022, the Company had total net unrealized losses of $36.1 million in its REIT securities portfolio. Interest expense, including amortization of financing costs, increased from $19.2 million for the year ended December 31, 2021 to $26.4 million for the year ended December 31, 2022, or 38%. This increase was mainly due to interest on the Series A Bonds issued in 2022, an increase in loans payable and an increase in interest rates. Non-U.S. GAAP Measures In addition to the results reported in accordance with U.S. GAAP, management’s discussion and analysis of financial condition and results of operations include certain non-U.S. GAAP financial measures that in management’s view of the business we believe are meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-U.S. GAAP financial measures as determined and presented by us may not be comparable to related or similarly titled measures reported by other companies, and include Community Net Operating Income (“Community NOI”), Funds from Operations Attributable to Common Shareholders (“FFO”) and Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”). We define Community NOI as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance, community salaries, utilities, insurance and other expenses. We believe that Community NOI is helpful to investors and analysts as a direct measure of the actual operating results of our manufactured home communities, rather than our Company overall. Community NOI should not be considered a substitute for the reported results prepared in accordance with U.S. GAAP. Community NOI should not be considered as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. -47- The Company’s Community NOI for the years ended December 31, 2023, 2022 and 2021 is calculated as follows (in thousands): 2023 2022 2021 Rental and Related Income Community Operating Expenses $189,749 (81,343) $170,434 (75,660) $159,034 (68,046) Community NOI $108,406 $94,774 $90,988 We assess and measure our overall operating results based upon FFO, an industry performance measure which management believes is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by NAREIT, represents net income (loss) attributable to common shareholders, as defined by accounting principles generally accepted in the U.S. (“U.S. GAAP”), excluding gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, the change in the fair value of marketable securities, and the gain or loss on the sale of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of NAREIT FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities, and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair value of marketable securities from our FFO calculation. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding certain one-time charges. FFO and Normalized FFO should be considered as supplemental measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded from FFO and Normalized FFO are significant components in understanding the Company’s financial performance. FFO and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) are not alternatives to cash flow as a measure of liquidity. FFO and Normalized FFO, as calculated by the Company, may not be comparable to similarly titled measures reported by other REITs. -48- The Company’s FFO and Normalized FFO attributable to common shareholders for the years ended December 31, 2023, 2022 and 2021 are calculated as follows (in thousands): 2023 2022 2021 Net Income (Loss) Attributable to Common Shareholders Depreciation Expense Depreciation Expense from Unconsolidated Joint Venture Loss on Sales of Investment Property and Equipment (Increase) Decrease in Fair Value of Marketable Securities Gain on Sales of Marketable Securities, net FFO Attributable to Common Shareholders Adjustments: Redemption of Preferred Stock (1) Amortization (1) Non-Recurring Other Expense (2) Normalized FFO Attributable to Common Shareholders $(8,714) 55,719 $(36,265) 48,769 692 -0- 3,555 (183) 51,069 -0- 2,135 1,329 371 169 21,839 (6,394) 28,489 12,916 1,956 3,479 $21,249 45,124 -0- 170 (25,052) (2,342) 39,149 -0- -0- 1,995 $54,533 $46,840 $41,144 (1) During 2022, the Company incurred the carrying cost of excess cash for the redemption of preferred stock. Additionally, due to the change in sources of capital, amortization expense, a non-cash expense, is expected to become more significant and is therefore included as an adjustment to Normalized FFO for the years ended December 31, 2023 and 2022. Had a similar adjustment been made for the year ended December 31, 2021, Normalized FFO Attributable to Common Shareholders would have been $42,145. (2) Consists of the previously disclosed special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which were being expensed over the vesting period ($862) and non-recurring expenses for the joint venture with Nuveen ($135), one-time legal fees ($76), fees related to the establishment of the OZ Fund ($37), and costs associated with acquisitions and financing that were not completed ($219) in 2023. Consists of special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which were being expensed over the vesting period ($1,724) and non- recurring expenses for the joint venture with Nuveen ($264), early extinguishment of debt ($320), one-time legal fees ($197), fees related to the establishment of the OZ Fund ($954), and costs associated with acquisition not completed ($20) in 2022. Consists of special bonus and restricted stock grants for the August 2020 groundbreaking Fannie Mae financing, which were being expensed over the vesting period ($1,824) and non-recurring expenses for the joint venture with Nuveen ($171) in 2021. Liquidity and Capital Resources The Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions, capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the DRIP, and access to the capital markets, including through its Common and Preferred ATM Programs. In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including acquisitions. The Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit facility or lines of credit, incur other indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital markets, including through the Company’s ATM Programs. In order to provide financial flexibility to opportunistically access the capital markets, the Company implemented a new 2023 Preferred ATM Program on January 10, 2023 that allows the Company to offer and sell shares of the Company’s 6.375% Series D Cumulative Redeemable Preferred Stock having an aggregate sales price of up to $100 million from time to time through its sales agent, B. Riley Securities, Inc. In addition, on April 4, 2023, the Company implemented a new 2023 Common ATM Program that allows the Company to offer and sell shares of the Company’s Common Stock having an aggregate sales price of up to $150 million from time to time through the distribution agents for the 2023 Common ATM Program. Additionally, the Company amended its unsecured line of credit to expand available borrowing capacity from $100 -49- million to $180 million and expanded/obtained new loans and lines of credit secured by rental homes, rental homes leases and notes receivable. The Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto otherwise vacant sites. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through our joint venture relationship with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of our joint venture will depend on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made. The Company continues to strengthen its capital and liquidity positions. During the year ended December 31, 2023, the Company issued and sold 9.4 million shares of Common Stock through our Common ATM Programs at a weighted average price of $15.81 per share, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses. Through our Preferred ATM Programs, the Company issued and sold a total of 2.6 million shares of our Series D Preferred Stock generating gross proceeds of $56.7 million and net proceeds after offering expenses of $55.7 million during the year ended December 31, 2023. As of December 31, 2023, $37.0 million of Common Stock remained available for sale under the 2023 Common ATM Program and $46.1 million in shares of Series D Preferred Stock remained available for sale under the 2023 Preferred ATM Program. Subsequent to year end, the Company issued and sold 1.2 million shares of Common Stock under the 2023 Common ATM Program for gross proceeds of $19.2 million. Subsequent to year end, the Company issued and sold a total of 121,000 shares of Preferred Stock under the 2023 Preferred ATM Program for gross proceeds of $2.8 million. In addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price of approximately 95% of market. During 2023, amounts received under the DRIP, including dividends reinvested of $2.7 million, totaled $9.0 million. The Company issued a total of 612,000 shares under the DRIP during 2023. The Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $35 million revolving line of credit for the financing of homes that was not utilized at December 31, 2023, revolving credit facilities totaling $108.5 million to finance inventory purchases, that were not utilized at December 31, 2023 and $55.0 million available on our lines of credit secured by rental homes and rental homes leases. As of December 31, 2023, the Company had $57.3 million of cash and cash equivalents and marketable securities of $34.5 million. The Company owned 135 communities (including two communities acquired through the opportunity zone fund) of which 48 are unencumbered. The Company’s non-mortgaged properties and marketable securities provide us with additional liquidity. As of December 31, 2023, the Company also held a 40% equity interest in the entities formed under its joint venture with Nuveen Real Estate, which own two newly developed communities that are unencumbered and one community in the process of being developed. The Company believes that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available on the lines of credit, together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations over the next several years. The Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through mortgages. During 2023, total investment property, including rental homes, increased 11% or $147.5 million. The Company acquired one manufactured home community totaling 118 developed sites at a purchase price of $3.7 million through the Company’s opportunity zone fund. See Note 3 of the Notes to Consolidated Financial Statements for additional information on our acquisitions and Note 7 of the Notes to Consolidated Financial Statements for related debt transactions. The Company continues to evaluate acquisition opportunities. The funds for -50- these acquisitions (including the Company’s 40% share of acquisition costs that may be incurred pursuant to its joint venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the DRIP, and private placements or public offerings of debt, Common Stock or Preferred Stock, including under the Common ATM Program or the Preferred ATM Program. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made. The Company owned approximately 10,000 rental homes, or approximately 39% of our total homesites as of December 31, 2023. During 2023, our rental home portfolio increased by 871 homes, net of rental home sales, or $93.7 million. The Company markets these rental homes for sale to existing residents. The Company estimates that in 2024 it will order approximately 800 to 900 manufactured homes to use as rental units at its properties for a total invoice cost of approximately $60 million to $65 million. Rental home rates on new homes range from approximately $790 to $2,000 per month, including lot rent, depending on size, location and market conditions. During 2023, the Company also invested approximately $30 million in other improvements to its communities. The following table summarizes cash flow activity for the years ended December 31, 2023, 2022 and 2021 (in thousands): Net Cash Provided by (Used in) Operating Activities Net Cash Used in Investing Activities Net Cash Provided by Financing Activities Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash $ $ 2023 2022 2021 $ 120,077 (165,573) 69,057 $ (7,227) (124,877) 47,954 65,187 (94,388) 125,634 23,561 $ (84,150) $ 96,433 Net cash provided by (used in) operating activities increased by $127.3 million in 2023 primarily due to a decrease in inventory. Net cash provided by (used in) operating activities decreased by $72.4 million in 2022 primarily due to an increase in inventory. Net cash used in investing activities increased by $40.7 million in 2023, primarily due to the purchase of investment property and equipment and additions to land development. Net cash used in investing activities increased by $30.5 million in 2022, primarily due to the purchase of manufactured home communities and investment property and equipment, partially offset by the proceeds from sales of marketable securities. Net cash provided by financing activities increased by $21.1 million in 2023 to $69.1 million. The Company issued and sold 9.4 million shares of its Common Stock during 2023 through the Common ATM Programs, raising net proceeds of approximately $145.8 million. The Company also received $9.0 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.6 million shares of its Series D Preferred Stock during 2023 through the Preferred ATM Programs, raising net proceeds of approximately $55.7 million. During 2023, the Company distributed to our common shareholders a total of $51.7 million, including dividends reinvested. In addition, the Company also paid $16.7 million in preferred dividends during 2023. The Company also made principal payments on its mortgages and loans, net of new debt financing, totaling $73.8 million. Net cash provided by financing activities decreased by $77.6 million in 2022 to $48.0 million. The Company obtained new debt financing totaling $238.9 million, net of principal repayments and financing costs, through mortgages, short-term borrowings and the issuance in Israel of our Series A Bonds. The Company issued and sold 5.0 million shares of its Common Stock during 2022 through the Common ATM Programs, raising net proceeds of approximately $100.8 million. The Company also received $7.8 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 406,000 shares of its Series D Preferred Stock during 2022 through the 2020 Preferred ATM Program, raising net proceeds of approximately $9.1 million. During 2022, the Company redeemed all 9.9 million issued and outstanding shares of its 6.75% Series C Preferred Stock for $247.1 million. During 2022, the Company distributed to our common shareholders a total of $43.4 million, including dividends reinvested. In addition, the Company also paid $24.6 million in preferred dividends during 2022. Cash flows were primarily used for purchases of manufactured home communities, capital improvements, payment of dividends, purchase of inventory and rental homes, loans to customers for the sales of manufactured -51- homes, and expansion of existing communities. The Company meets maturing mortgage obligations by using a combination of positive cash flows and refinancing. The dividend payments were primarily made from cash flows from operations. Cash flows used for capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured home communities that provide water or sewer service. Excluding expansions and rental home purchases, the Company is budgeting approximately $20 to $30 million in capital improvements for 2024. The Company’s significant commitments and contractual obligations relate to its mortgages, loans payable and other indebtedness, acquisitions of manufactured home communities, retirement benefits, and the lease on its corporate offices as described in Note 10 to the Consolidated Financial Statements. The Company has 2,134 acres of undeveloped land which could be developed in the future. The Company continues to analyze the best use of its vacant land. As of December 31, 2023, the Company had total assets of $1.4 billion and total liabilities of $720.8 million. Our net debt (net of cash and cash equivalents) to total market capitalization decreased 18% and as of December 31, 2023 and 2022 was approximately 31% and 38%, respectively. Our net debt, less securities (net of cash and cash equivalents and marketable securities) to total market capitalization decreased 17% and as of December 31, 2023 and 2022 was approximately 30% and 36%, respectively. The Company believes that it has the ability to meet its obligations and to generate funds for new investments. Contractual Obligations The Company has investments in entities formed under its joint venture relationship with Nuveen Real Estate which are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions for the joint venture entities. The terms of the joint venture arrangements require the Company to fund 40% and Nuveen to fund 60% of the total capital contributions made by the members. See Item 2 – “Properties” and Note 5, "Investment in Joint Venture," of the Notes to Consolidated Financial Statements for additional information. Our other primary contractual obligations relate to our loans and mortgages payable and other indebtedness, our operating lease obligations and our obligations regarding the financing of our home sales. See Note 2 “Summary of Significant Accounting Policies”, Note 7 “Loans and Mortgages Payable”, Note 10 “Related Party Transactions and Other Matters” and Note 14 “Commitments, Contingencies and Legal Matters” of the Notes to Consolidated Financial Statements for additional information. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Actual results could differ from these estimates. For additional information regarding our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements. Recent Accounting Pronouncements See Note 2 of the Notes to Consolidated Financial Statements. Item 7A – Quantitative and Qualitative Disclosures about Market Risk As of December 31, 2023, we were exposed to risks associated with adverse changes in market prices and interest rates. The Company's principal market risk exposure is interest rate risk. The Company’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Many -52- factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond the Company’s control contribute to interest rate risk. The Company mitigates this risk by maintaining prudent amounts of leverage, minimizing capital costs and interest expense while continuously evaluating all available debt and equity resources and following established risk management policies and procedures, which may include the periodic use of derivatives. The Company's primary strategy in entering into derivative contracts is to minimize the variability that changes in interest rates could have on its future cash flows. The Company generally employs derivative instruments that effectively convert a portion of its variable rate debt to fixed rate debt. The Company does not enter into derivative instruments for speculative purposes. The following table sets forth information as of December 31, 2023, concerning the Company’s mortgages and loans payable, including principal cash flow by scheduled maturity, weighted average interest rates and estimated fair value (in thousands). Mortgages Payable Loans Payable Carrying Value Weighted Average Interest Rate Carrying Value Weighted Average Interest Rate 2024 2025 2026 2027 2028 Thereafter Total Estimated Fair Value -0-% 3.99% 4.04% 4.28% 4.65% 4.12% 4.17%(1) $-0- 118,798 37,155 39,003 25,193 280,986 $501,135 $489,828 -0-% -0-% 7.27% -0-% 6.15% -0-% 6.98%(1) $-0- -0- 70,000 -0- 24,683 -0- $94,683 $94,683 (1) Weighted average interest rate, not including the effect of unamortized debt issuance costs. The weighted average interest rate, including the effect of unamortized debt issuance costs, at December 31, 2023 was 4.21% for mortgages payable and 7.07% for loans payable. All mortgage loans are at fixed rates. The Company has approximately $70 million in variable rate loans payable. If short-term interest rates increased or decreased by 1%, interest expense would have increased or decreased by approximately $700,000. In its investment portfolio, the Company has invested in equity securities of other REITs and is primarily exposed to market price risk from adverse changes in market rates and conditions. The Company’s marketable securities investments was 1.9% of undepreciated assets as of December 31, 2023. The Company does not intend to increase its investments in its REIT securities portfolio. All securities are carried at fair value. Item 8 – Financial Statements and Supplementary Data The financial statements and supplementary data listed in Part IV, Item 15(a)(1) and included immediately following the signature pages to this report are incorporated herein by reference. Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in, or any disagreements with, the Company’s independent registered public accounting firm on accounting principles and practices or financial disclosure during the years ended December 31, 2023 and 2022. -53- Item 9A – Controls and Procedures Disclosure Controls and Procedures Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rule 13a- 15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder as of December 31, 2023. Internal Control over Financial Reporting (a) Management’s Annual Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, including the possibility of collusion or improper management override of controls, internal control over financial reporting may not prevent or detect misstatements. Management assessed the Company’s internal control over financial reporting as of December 31, 2023. In 2023, Management retained the services of DLA, LLC, an independent firm, to assist management in its assessment of the Company’s internal controls over financial reporting. This assessment was based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework). Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023. PKF O’Connor Davies, LLP, the Company’s independent registered public accounting firm, has issued their report on their audit of the Company’s internal control over financial reporting, a copy of which is included herein. (b) Attestation Report of the Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of UMH Properties, Inc. Opinion on Internal Control over Financial Reporting We have audited UMH Properties, Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control–Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and our report dated February 28, 2024, expressed an unqualified opinion thereon. -54- Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ PKF O’Connor Davies, LLP February 28, 2024 New York, New York (c) Changes in Internal Control over Financial Reporting There have been no changes to our internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Item 9B – Other Information None. Item 9C – Disclosure Regarding Foreign Jurisdiction that Prevent Inspections Not applicable. -55- Item 10 – Directors, Executive Officers and Corporate Governance PART III The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2024 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A and the information included under the caption "Information about our Executive Officers" in Part I hereof, in accordance with General Instruction G(3) to Form 10-K. Item 11 – Executive Compensation The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2024 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2024 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. Item 13 – Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2024 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. Item 14 – Principal Accountant Fees and Services The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2024 annual meeting of shareholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. -56- Item 15 – Exhibits, Financial Statement Schedules PART IV (a) (1) The following Financial Statements are filed as part of this report. (i) Report of Independent Registered Public Accounting Firm (PCAOB ID No. 127) 64 Page(s) (ii) Consolidated Balance Sheets as of December 31, 2023 and 2022 (iii) (iv) (v) Consolidated Statements of Income (Loss) for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021 68-69 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 65-66 67 70 71-102 (vi) Notes to Consolidated Financial Statements (a) (2) The following Financial Statement Schedule is filed as part of this report: (i) Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2023 103-112 All other schedules are omitted for the reason that they are not required, are not applicable, or the required information is set forth in the consolidated financial statements or notes thereto. -57- (a) (3) The Exhibits set forth in the following index of Exhibits are filed as part of this Report. Exhibit No. Description (2) 2.1 (3) 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession Agreement and Plan of Merger dated as of June 23, 2003 (incorporated by reference from the Company’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on July 10, 2003, Registration No. 001-12690). Articles of Incorporation and By-Laws Articles of Incorporation of UMH Properties, Inc., a Maryland corporation (incorporated by reference from the Company’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on July 10, 2003, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the 8-K as filed by the Registrant with the Securities and Exchange Commission on April 3, 2006, Registration No. 001- 12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on May 26, 2011, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on May 26, 2011, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 10, 2012, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 10, 2012, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 31, 2012, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 31, 2012, Registration No. 001- 12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 20, 2015, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 20, 2015, Registration No. 001- 12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 5, 2016, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 5, 2016, Registration No. 001-12690). -58- Exhibit No. Description 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on August 11, 2016, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on June 5, 2017, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on July 26, 2017, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on July 26, 2017, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 22, 2018, Registration No. 001- 12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 29, 2019, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 29, 2019, Registration No. 001-12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 22, 2019, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 22, 2019, Registration No. 001- 12690). Amendment to Articles of Incorporation (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on May 18, 2020, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on July 16, 2020, Registration No. 001-12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 10, 2023, Registration No. 001- 12690). Articles Supplementary (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on May 19, 2023, Registration No. 001-12690). Bylaws of the Company, as amended and restated, dated March 31, 2014 (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on March 31, 2014, Registration No. 001-12690). (4) Instruments Defining the Rights of Security Holders, Including Indentures -59- Exhibit No. 4.1 4.2 4.3 Description Specimen certificate of Common Stock of UMH Properties, Inc. (incorporated by reference to Exhibit 4.1 to the Form S-3 as filed by the Registrant with the Securities and Exchange Commission on December 21, 2010, Registration No. 333-171338). Specimen certificate representing the Series D Preferred Stock of UMH Properties, Inc. (incorporated by reference to Exhibit 4.2 to the Form 8-A12B as filed by the Registrant with the Securities and Exchange Commission on January 22, 2018, Registration No. 001-12690). Deed of Trust for the 4.72% Series A Bonds due 2027 between UMH Properties, Inc. and Reznik Paz Nevo Trusts Ltd., as trustee, dated as of January 31, 2022 (incorporated by reference to Exhibit 4.4 to the Form 10-K as filed by the Registrant with the Securities and Exchange Commission on February 24, 2022, Registration No. 001-12690). 4.4 * Description of the Company’s Securities Registered Under Section 12 of the Securities Exchange Act of 1934. (10) 10.1 10.2 10.3 10.4 10.5 + + + + + 10.6 + 10.7 10.8 + + Material Contracts Employment Agreement with Mr. Eugene W. Landy dated December 14, 1993 (incorporated by reference to the Company’s 1993 Form 10-K as filed with the Securities and Exchange Commission on March 28, 1994). Amendment to Employment Agreement with Mr. Eugene W. Landy effective January 1, 2004 (incorporated by reference to the Company’s 2004 Form 10-K/A as filed with the Securities and Exchange Commission on March 30, 2005, Registration No. 001-12690). Second Amendment to Employment Agreement of Eugene W. Landy, dated April 14, 2008 (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 16, 2008, Registration No. 001-12690). Third Amendment to Employment Agreement with Mr. Eugene W. Landy effective October 1, 2014 (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on October 8, 2014, Registration No. 001-12690). Amended and Restated Employment Agreement effective January 1, 2023, between UMH Properties, Inc. and Samuel A. Landy (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 13, 2023, Registration No. 001-12690). Amended and Restated Employment Agreement effective January 1, 2023, between UMH Properties, Inc. and Anna T. Chew (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 13, 2023, Registration No. 001-12690). Employment Agreement effective January 1, 2023, between UMH Properties, Inc. and Craig Koster (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 13, 2023, Registration No. 001-12690). Employment Agreement effective January 1, 2023, between UMH Properties, Inc. and Brett Taft (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 13, 2023, Registration No. 001-12690). -60- Exhibit No. 10.9 + 10.10 + 10.11 + 10.12 10.13 10.14 10.15 10.16 (21) (23) (31.1) (31.2) (32) * * * * * Description Form of Indemnification Agreement between UMH Properties, Inc. and its Directors and Executive Officers (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 23, 2012, Registration No. 001-12690). UMH Properties, Inc. Amended and Restated 2013 Incentive Award Plan (incorporated by reference to the Company’s Definitive Proxy Statement (DEF 14A) as filed with the Securities and Exchange Commission on April 16, 2021, Registration No. 001-12690). UMH Properties, Inc. 2023 Equity Incentive Plan (incorporated by reference to the Company’s Definitive Proxy Statement (DEF 14A) as filed with the Securities and Exchange Commission on March 31, 2023, Registration No. 001-12690). Dividend Reinvestment and Stock Purchase Plan (incorporated by reference to the Company’s Registration Statement filed on Form S-3D as filed with the Securities and Exchange Commission on June 17, 2019, Registration No. 333-232162). Equity Distribution Agreement by and between UMH Properties, Inc. and BMO Capital Markets Corp., J.P. Morgan Securities LLC, B. Riley Securities, Inc., Compass Point Research & Trading LLC, and Janney Montgomery Scott LLC, (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on April 4, 2023, Registration No. 001-12690). Second Amended and Restated Credit Agreement by and among UMH Properties, Inc. and Bank of Montreal, as Administrative Agent, dated as of November 7, 2022 (incorporated by reference to the Form 10-Q as filed by the Registrant with the Securities and Exchange Commission on November 8, 2022, Registration No. 001-12690). First Amendment to Second Amended and Restated Credit Agreement by and among UMH Properties, Inc. and Bank of Montreal, as Administrative Agent, dated as of February 24, 2023 (incorporated by reference to the Form 10-K as filed by the Registrant with the Securities and Exchange Commission on February 28, 2023, Registration No. 001-12690). At-the-Market Sales Agreement by and between UMH Properties, Inc. and B. Riley Securities, Inc. (incorporated by reference to the Form 8-K as filed by the Registrant with the Securities and Exchange Commission on January 11, 2023, Registration No. 001-12690). Subsidiaries of the Registrant. Consent of PKF O’Connor Davies, LLP. Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (97) * + Compensation Clawback Policy. (101) Interactive Data File ++ Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) -61- Exhibit No. Description 101.SCH ++ 101.CAL ++ 101.LAB ++ ++ 101.PRE ++ 101.DEF ++ 104 Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Document Inline XBRL Taxonomy Extension Label Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Cover Page Interactive Data File (embedded within the Inline XBRL document) * + ++ Filed herewith. Denotes a management contract or compensatory plan or arrangement. Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, is deemed not “filed” for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections. Item 16 – Form 10-K Summary Not applicable. -62- Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES UMH PROPERTIES, INC. BY: /s/Samuel A. Landy SAMUEL A. LANDY President, Chief Executive Officer and Director (Principal Executive Officer) BY: /s/Anna T. Chew ANNA T. CHEW Executive Vice President, Chief Financial Officer, Treasurer and Director (Principal Financial and Accounting Officer) Dated: February 28, 2024 Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this report has been duly signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/Eugene W. Landy EUGENE W. LANDY /s/Samuel A. Landy SAMUEL A. LANDY /s/Anna T. Chew ANNA T. CHEW /s/Amy Butewicz AMY BUTEWICZ /s/Jeffrey A. Carus JEFFREY A. CARUS /s/Kiernan Conway KIERNAN CONWAY /s/Matthew Hirsch MATTHEW HIRSCH /s/Michael P. Landy MICHAEL P. LANDY /s/Stuart Levy STUART LEVY /s/William Mitchell WILLIAM MITCHELL /s/Angela D. Pruitt-Marriott ANGELA PRUITT /s/Kenneth K. Quigley, Jr. KENNETH K. QUIGLEY Title Chairman of the Board Date February 28, 2024 President, Chief Executive Officer and Director February 28, 2024 Executive Vice President, Chief Financial Officer, Treasurer and Director February 28, 2024 Director Director Director Director Director Director Director Director Director -63- February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 February 28, 2024 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of UMH Properties Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of UMH Properties, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and schedule listed in the Index at Item 15(a)(2)(i) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2024, expressed an unqualified opinion. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to those charged with governance and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ PKF O’Connor Davies, LLP February 28, 2024 New York, New York We have served as the Company’s auditor since 2008. -64- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 and 2022 (in thousands except per share amounts) -ASSETS- 2023 2022 Investment Property and Equipment Land Site and Land Improvements Buildings and Improvements Rental Homes and Accessories Total Investment Property Equipment and Vehicles Total Investment Property and Equipment Accumulated Depreciation Net Investment Property and Equipment Other Assets Cash and Cash Equivalents Marketable Securities at Fair Value Inventory of Manufactured Homes Notes and Other Receivables, net Prepaid Expenses and Other Assets Land Development Costs Investment in Joint Venture Total Other Assets $ 86,497 896,568 39,506 516,470 1,539,041 29,126 1,568,167 (416,309) 1,151,858 $ 86,619 846,218 35,933 422,818 1,391,588 26,721 1,418,309 (363,098) 1,055,211 57,320 34,506 32,940 81,071 11,729 33,302 24,851 275,719 29,785 42,178 88,468 67,271 20,011 23,250 18,422 289,385 TOTAL ASSETS $ 1,427,577 $ 1,344,596 See Accompanying Notes to Consolidated Financial Statements -65- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) AS OF DECEMBER 31, 2023 and 2022 (in thousands except per share amounts) - LIABILITIES AND SHAREHOLDERS’ EQUITY - 2023 2022 LIABILITIES: Mortgages Payable, net of unamortized debt issuance costs $ 496,483 $ 508,938 Other Liabilities: Accounts Payable Loans Payable, net of unamortized debt issuance costs Series A Bonds, net of unamortized debt issuance costs Accrued Liabilities and Deposits Tenant Security Deposits Total Other Liabilities Total Liabilities Commitments and Contingencies Shareholders’ Equity: Series D – 6.375% Cumulative Redeemable Preferred Stock, $0.10 par value per share, 13,700 and 9,300 shares authorized as of December 31, 2023 and 2022, respectively; 11,607 and 9,015 shares issued and outstanding as of December 31, 2023 and 2022, respectively Common Stock - $0.10 par value per share, 153,714 and 154,048 shares authorized as of December 31, 2023 and 2022, respectively; 67,978 and 57,595 shares issued and outstanding as of December 31, 2023 and 2022, respectively Excess Stock - $0.10 par value per share, 3,000 shares authorized; no shares issued or outstanding as of December 31, 2023 and 2022 Additional Paid-In Capital Undistributed Income (Accumulated Deficit) Total UMH Properties, Inc. Shareholders’ Equity Non-Controlling Interest in Consolidated Subsidiaries Total Shareholders’ Equity 6,106 93,479 100,055 15,117 9,543 224,300 720,783 6,387 153,531 99,207 16,852 8,485 284,462 793,400 290,180 225,379 6,798 5,760 -0- 433,106 (25,364) 704,720 2,074 706,794 -0- 343,189 (25,364) 548,964 2,232 551,196 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,427,577 $ 1,344,596 See Accompanying Notes to Consolidated Financial Statements -66- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 and 2021 (in thousands) INCOME: Rental and Related Income Sales of Manufactured Homes 2023 2022 2021 $ 189,749 31,176 $ 170,434 25,342 $ 159,034 27,089 Total Income 220,925 195,776 186,123 EXPENSES: Community Operating Expenses Cost of Sales of Manufactured Homes Selling Expenses General and Administrative Expenses Depreciation Expense 81,343 21,089 6,949 19,703 55,719 75,660 17,562 5,282 18,979 48,769 68,046 20,091 4,807 14,095 45,124 Total Expenses 184,803 166,252 152,163 OTHER INCOME (EXPENSE): Interest Income Dividend Income Gain on Sales of Marketable Securities, net Increase (Decrease) in Fair Value of Marketable Securities Other Income Loss on Investment in Joint Venture Interest Expense 4,984 2,318 183 (3,555) 1,082 (808) (32,475) 4,085 2,903 6,394 (21,839) 1,240 (671) (26,439) 3,362 5,098 2,342 25,052 626 (24) (19,158) Total Other Income (Expense) (28,271) (34,327) 17,298 Income (Loss) Before Loss on Sales of Investment Property and Equipment Loss on Sales of Investment Property and Equipment Net Income (Loss) Preferred Dividends Redemption of Preferred Stock Loss Attributable to Non-Controlling Interest Net Income (Loss) Attributable to Common Shareholders Net Income (Loss) Attributable to Common Shareholders Per Share Basic Diluted Weighted Average Common Shares Outstanding: Basic Diluted 7,851 -0- 7,851 (16,723) -0- 158 (4,803) (169) (4,972) (23,221) (8,190) 118 51,258 (170) 51,088 (29,839) -0- -0- $(8,714) $(36,265) $21,249 $(0.15) $(0.15) 63,068 63,068 $(0.67) $(0.67) 54,389 54,389 $0.46 $0.45 46,332 47,432 See Accompanying Notes to Consolidated Financial Statements -67- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 and 2021 (in thousands) Common Stock Issued and Outstanding Number Amount Preferred Stock Series C Preferred Stock Series D Balance December 31, 2020 41,920 $4,192 $247,100 $160,854 Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Distributions Stock Compensation Expense Net Income 503 297 710 8,221 -0- -0- -0- -0- 50 30 71 822 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- 54,365 -0- -0- -0- Balance December 31, 2021 51,651 5,165 247,100 215,219 Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Redemption of Preferred Stock Distributions Stock Compensation Expense Investment from Non-Controlling Interest Net Loss 430 124 404 44 12 40 4,986 499 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- (247,100) -0- -0- -0- -0- Balance December 31, 2022 57,595 5,760 Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Distributions Stock Compensation Expense Net Income 612 302 71 9,398 -0- -0- -0- -0- 61 30 7 940 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- 10,160 -0- -0- -0- -0- -0- 225,379 -0- -0- -0- -0- 64,801 -0- -0- -0- Balance December 31, 2023 67,978 $6,798 $-0- $290,180 See Accompanying Notes to Consolidated Financial Statements -68- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 and 2021 (in thousands) Balance December 31, 2020 $115,026 $(25,364) $-0- $501,808 Additional Paid-In Capital Undistributed Income (Accumulated Deficit) Non-Controlling Interest in Consolidated Subsidiary Total Shareholders’ Equity Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Distributions Stock Compensation Expense Net Income 9,723 (30) 8,530 178,247 (1,152) (13,771) 3,447 -0- -0- -0- -0- -0- -0- (51,088) -0- 51,088 Balance December 31, 2021 300,020 (25,364) Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Redemption of Preferred Stock Distributions Stock Compensation Expense Investment from Non-Controlling Interest Net Loss 7,764 (12) 4,155 100,253 (1,085) 8,185 (81,061) 4,970 -0- -0- -0- -0- -0- -0- -0- (8,185) 13,039 -0- -0- (4,854) Balance December 31, 2022 343,189 (25,364) Common Stock Issued with the DRIP Common Stock Issued through Restricted/ Unrestricted Stock Awards Common Stock Issued through Stock Options Common Stock Issued in connection with At-The-Market Offerings, net Preferred Stock Issued in connection with At-The-Market Offerings, net Distributions Stock Compensation Expense Net Income 8,985 (30) 727 144,849 (9,072) (60,438) 4,896 -0- -0- -0- -0- -0- -0- (8,009) -0- 8,009 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- 2,350 (118) 2,232 -0- -0- -0- -0- -0- -0- -0- (158) 9,773 -0- 8,601 179,069 53,213 (64,859) 3,447 51,088 742,140 7,808 -0- 4,195 100,752 9,075 (247,100) (68,022) 4,970 2,350 (4,972) 551,196 9,046 -0- 734 145,789 55,729 (68,447) 4,896 7,851 Balance December 31, 2023 $433,106 $(25,364) $2,074 $706,794 See Accompanying Notes to Consolidated Financial Statements -69- UMH PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 and 2021 (in thousands) 2023 2022 2021 $ 7,851 $ (4,972) $ 51,088 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) Non-cash items included in Net Income (Loss): Depreciation Amortization of Financing Costs Stock Compensation Expense Provision for Uncollectible Notes and Other Receivables Gain on Sales of Marketable Securities, net Decrease (Increase) in Fair Value of Marketable Securities Loss on Sales of Investment Property and Equipment Loss from Joint Venture Changes in Operating Assets and Liabilities: Inventory of Manufactured Homes Notes and Other Receivables, net of notes acquired with acquisitions Prepaid Expenses and Other Assets Accounts Payable Accrued Liabilities and Deposits Tenant Security Deposits Net Cash Provided by (Used in) Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Manufactured Home Communities, net of mortgages assumed Purchase of Investment Property and Equipment Proceeds from Sales of Investment Property and Equipment Additions to Land Development Costs Purchase of Marketable Securities Proceeds from Sales of Marketable Securities Investment in Joint Venture Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgages, net of mortgages assumed Net Proceeds (Payments) from Short Term Borrowings Principal Payments of Mortgages and Loans Proceeds from Bond Issuance Financing Costs on Debt Investments from Non-Controlling Interest Proceeds from At-The-Market Preferred Equity Program, net of offering costs Payments on Redemption of Preferred Stock Proceeds from At-The-Market Common Equity Program, net of offering costs Proceeds from Issuance of Common Stock in the DRIP, net of dividend reinvestments Proceeds from Exercise of Stock Options Preferred Dividends Paid Common Dividends Paid, net of dividend reinvestments Net Cash Provided by Financing Activities Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash Cash, Cash Equivalents and Restricted Cash at Beginning of Year 55,719 2,135 4,896 2,061 (183) 3,555 -0- 1,026 55,528 (15,861) 4,308 (281) (1,735) 1,058 120,077 (3,679) (123,860) 3,049 (37,928) (23) 4,323 (7,455) (165,573) 57,743 (59,542) (70,317) -0- (1,678) -0- 55,729 -0- 48,769 1,956 4,970 1,497 (6,394) 21,839 169 756 (64,809) (12,740) (636) 2,113 (310) 565 (7,227) (65,562) (81,112) 3,098 (27,185) (19) 56,144 (10,241) (124,877) 59,801 107,280 (24,294) 102,670 (6,561) 2,350 9,075 (247,100) 45,124 1,001 3,447 1,213 (2,342) (25,052) 170 24 1,791 (9,957) (1,557) (116) (134) 487 65,187 (18,405) (59,270) 2,859 (27,428) (18) 16,835 (8,961) (94,388) 6,070 (40,448) (25,618) -0- (167) -0- 53,213 -0- 145,789 100,752 179,069 6,394 734 (16,723) (49,072) 69,057 23,561 40,876 5,025 4,195 (24,611) (40,628) 47,954 (84,150) 125,026 6,267 8,601 (29,839) (31,514) 125,634 96,433 28,593 CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR $ 64,437 $ 40,876 $ 125,026 See Accompanying Notes to Consolidated Financial Statements -70- UMH PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 and 2022 NOTE 1 – ORGANIZATION UMH Properties, Inc., a Maryland corporation, and its subsidiaries (“we”, “our”, “us” or “the Company”) operates as a real estate investment trust (“REIT”) deriving its income primarily from real estate rental operations. The Company, through its wholly-owned taxable subsidiary, UMH Sales and Finance, Inc. (“S&F”), also sells manufactured homes to residents and prospective residents in our communities. Inherent in the operations of manufactured home communities are site vacancies. S&F was established to fill these vacancies and enhance the value of the communities. The Company also holds a 77% controlling interest in an opportunity zone fund which it created to acquire, develop and redevelop manufactured housing communities located in areas designated as Qualified Opportunity Zones by the U.S. Treasury Department to encourage long-term investment in economically distressed areas. Management views the Company as a single segment based on its method of internal reporting in addition to its allocation of capital and resources. Description of the Business As of December 31, 2023, the Company owned and operated 135 manufactured home communities (including two communities acquired through the opportunity zone fund) containing approximately 25,800 developed sites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. These manufactured home communities are listed by trade names as follows: MANUFACTURED HOME COMMUNITY LOCATION Allentown Arbor Estates Auburn Estates Bayshore Estates Birchwood Farms Boardwalk Broadmore Estates Brookside Village Brookview Village Camelot Village Camelot Woods Candlewick Court Carsons Catalina Cedarcrest Village Center Manor Chambersburg I & II Chelsea Cinnamon Woods City View Clinton Mobile Home Resort Collingwood Colonial Heights Countryside Estates Countryside Estates Countryside Village/ Duck River Cranberry Village Crestview Cross Keys Village Crossroads Village Memphis, Tennessee Doylestown, Pennsylvania Orrville, Ohio Sandusky, Ohio Birch Run, Michigan Elkhart, Indiana Goshen, Indiana Berwick, Pennsylvania Greenfield Center, New York Anderson, Indiana Altoona, Pennsylvania Owosso, Michigan Chambersburg, Pennsylvania Middletown, Ohio Vineland, New Jersey Monaca, Pennsylvania Chambersburg, Pennsylvania Sayre, Pennsylvania Conowingo, Maryland Lewistown, Pennsylvania Tiffin, Ohio Horseheads, New York Wintersville, Ohio Muncie, Indiana Ravenna, Ohio Columbia, Tennessee Cranberry Township, Pennsylvania Athens, Pennsylvania Duncansville, Pennsylvania Mount Pleasant, Pennsylvania -71- MANUFACTURED HOME COMMUNITY LOCATION Dallas Mobile Home Community Deer Meadows Deer Run D & R Village Evergreen Estates Evergreen Manor Evergreen Village Fairview Manor Fifty-One Estates Fohl Village Forest Creek Forest Park Village Fox Chapel Village Frieden Manor Friendly Village Garden View Estates Green Acres Gregory Courts Hayden Heights Heather Highlands Hidden Creek High View Acres Highland Highland Estates Hillcrest Crossing Hillcrest Estates Hillside Estates Holiday Village Holiday Village Holly Acres Estates Hudson Estates Huntingdon Pointe Independence Park Iris Winds Kinnebrook Lake Erie Estates Lake Sherman Village Lakeview Meadows Laurel Woods Little Chippewa Mandell Trails Maple Manor Marysville Estates Meadowood Meadows Meadows of Perrysburg Melrose Village Melrose West Memphis Blues Mighty Oak Monroe Valley Moosic Heights Mount Pleasant Village Mountaintop New Colony Northtowne Meadows Toronto, Ohio New Springfield, Ohio Dothan, Alabama Clifton Park, New York Lodi, Ohio Bedford, Ohio Mantua, Ohio Millville, New Jersey Elizabeth, Pennsylvania Canton, Ohio Elkhart, Indiana Cranberry Township, Pennsylvania Cheswick, Pennsylvania Schuylkill Haven, Pennsylvania Perrysburg, Ohio Orangeburg, South Carolina Chambersburg, Pennsylvania Honey Brook, Pennsylvania Dublin, Ohio Inkerman, Pennsylvania Erie, Michigan Export, Pennsylvania Elkhart, Indiana Kutztown, Pennsylvania Lower Burrell, Pennsylvania Marysville, Ohio Greensburg, Pennsylvania Nashville, Tennessee Elkhart, Indiana Erie, Pennsylvania Peninsula, Ohio Tarrs, Pennsylvania Clinton, Pennsylvania Sumter, South Carolina Monticello, New York Fredonia, New York Navarre, Ohio Lakeview, Ohio Cresson, Pennsylvania Orrville, Ohio Butler, Pennsylvania Taylor, Pennsylvania Marysville, Ohio New Middletown, Ohio Nappanee, Indiana Perrysburg, Ohio Wooster, Ohio Wooster, Ohio Memphis, Tennessee Albany, Georgia Jonestown, Pennsylvania Avoca, Pennsylvania Mount Pleasant, Pennsylvania Narvon, Pennsylvania West Mifflin, Pennsylvania Erie, Michigan -72- MANUFACTURED HOME COMMUNITY LOCATION Oak Ridge Estates Oak Tree Oakwood Lake Village Olmsted Falls Oxford Village Parke Place Perrysburg Estates Pikewood Manor Pine Ridge Village/Pine Manor Pine Valley Estates Pleasant View Estates Port Royal Village Redbud Estates River Valley Estates Rolling Hills Estates Rostraver Estates Saddle Creek Sandy Valley Estates Shady Hills Somerset Estates/Whispering Pines Southern Terrace Southwind Village Spreading Oaks Village Springfield Meadows Suburban Estates Summit Estates Summit Village Sunny Acres Sunnyside Trailmont Twin Oaks I & II Twin Pines Valley High Valley Hills Valley Stream Valley View I Valley View II Valley View – Honey Brook Voyager Estates Waterfalls Village Wayside Weatherly Estates Wellington Estates Woodland Manor Woodlawn Village Woods Edge Wood Valley Worthington Arms Youngstown Estates Elkhart, Indiana Jackson, New Jersey Tunkhannock, Pennsylvania Olmsted Falls, Ohio West Grove, Pennsylvania Elkhart, Indiana Perrysburg, Ohio Elyria, Ohio Carlisle, Pennsylvania Apollo, Pennsylvania Bloomsburg, Pennsylvania Belle Vernon, Pennsylvania Anderson, Indiana Marion, Ohio Carlisle, Pennsylvania Belle Vernon, Pennsylvania Dothan, Alabama Magnolia, Ohio Nashville, Tennessee Somerset, Pennsylvania Columbiana, Ohio Jackson, New Jersey Athens, Ohio Springfield, Ohio Greensburg, Pennsylvania Ravenna, Ohio Marion, Indiana Somerset, Pennsylvania Eagleville, Pennsylvania Goodlettsville, Tennessee Olmsted Falls, Ohio Goshen, Indiana Ruffs Dale, Pennsylvania Ravenna, Ohio Mountaintop, Pennsylvania Ephrata, Pennsylvania Ephrata, Pennsylvania Honey Brook, Pennsylvania West Newton, Pennsylvania Hamburg, New York Bellefontaine, Ohio Lebanon, Tennessee Export, Pennsylvania West Monroe, New York Eatontown, New Jersey West Lafayette, Indiana Caledonia, Ohio Lewis Center, Ohio Youngstown, New York In addition to the manufactured home communities owned by the Company listed above, entities formed under the Company’s joint venture with Nuveen Real Estate, in which the Company holds a 40% interest and serves as managing member, own two manufactured home communities located in Sebring, Florida, Sebring Square (which was acquired in December 2021) and Rum Runner (which was acquired in December 2022) and one community under development located in Honey Brook, Pennsylvania. See Note 5. -73- NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company prepares its financial statements under the accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s subsidiaries are all 100% wholly-owned, except for its investment in its qualified opportunity zone fund, which is 77% owned by the Company (see Note 6). The consolidated financial statements of the Company include all of these subsidiaries, including its qualified opportunity zone fund. All intercompany transactions and balances have been eliminated in consolidation. A subsidiary of the Company is the managing member of the Company’s joint venture with Nuveen Real Estate. Use of Estimates In preparing the consolidated financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as contingent assets and liabilities as of the dates of the consolidated balance sheets and revenue and expenses for the years then ended. These estimates and assumptions include the allowance for doubtful accounts, valuation of inventory, depreciation, valuation of securities, accounting for land development, reserves and accruals, and stock compensation expense. Actual results could differ from these estimates and assumptions. Investment Property and Equipment and Depreciation Property and equipment are carried at cost less accumulated depreciation. Depreciation for Sites and Buildings is computed principally on the straight-line method over the estimated useful lives of the assets (ranging from 15 to 27.5 years). Depreciation of improvements to sites and buildings, rental homes and equipment and vehicles is computed principally on the straight-line method over the estimated useful lives of the assets (ranging from 3 to 27.5 years). Land development costs are not depreciated until they are put in use, at which time they are capitalized as buildings and improvements or site and land improvements. Interest expense pertaining to land development costs are capitalized. Maintenance and repairs are charged to expense as incurred and improvements are capitalized. The Company uses its professional judgement in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Company’s business plan includes the purchase of value-add communities, redevelopment, development and expansion of communities. During 2023 and 2022, we acquired 8 value-add communities containing 1,598 sites and developed 441 expansions sites. The Company capitalizes payroll for those individuals responsible for and who spend their time on the execution and supervision of development activities and capital projects. Salaries and benefits capitalized to land development were approximately $3.4 million and $3.7 million for the years ended December 31, 2023 and 2022, respectively. The costs and related accumulated depreciation of property sold or otherwise disposed of are removed from the financial statements and any gain or loss is reflected in the current year’s results of operations. The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10, Property, Plant & Equipment (“ASC 360-10”) to measure impairment in real estate investments. The Company’s primary indicator of potential impairment is based on net operating income trends year over year. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than the carrying value under its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other than temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded. The Company conducted a comprehensive review of all real estate asset classes in accordance with ASC 360-10-35-21. The process entailed the analysis of property for instances where the net book value exceeded the -74- estimated fair value. The Company reviewed its operating properties in light of the requirements of ASC 360-10 and determined that, as of December 31, 2023, no impairment charges were required. Acquisitions The Company accounts for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and allocates the purchase price of the property based upon the fair value of the assets acquired, which generally consist of land, site and land improvements, buildings and improvements and rental homes. The Company allocates the purchase price of an acquired property generally determined by internal evaluation as well as third-party appraisal of the property obtained in conjunction with the purchase. In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business”. ASU 2017-01 seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, intangible assets and consolidation. The adoption of ASU 2017-01 was effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective dates. Early adoption is permitted. The Company adopted this standard effective January 1, 2017, on a prospective basis. The Company evaluated its acquisitions and has determined that its acquisitions of manufactured home communities during 2022 and 2023 should be accounted for as acquisitions of assets. As such, transaction costs, primarily consisting of broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related to acquisitions are capitalized as part of the cost of the acquisitions, which is then subject to a purchase price allocation based on relative fair value. Prior to the adoption of ASU 2017-01, the Company’s acquisitions were considered an acquisition of a business and therefore, the acquisition costs were expensed. Investment in Joint Venture The Company accounts for its investment in entities formed under its joint venture with Nuveen Real Estate under the equity method of accounting in accordance with ASC 323, Investments – Equity Method and Joint Ventures. The Company has the ability to exercise significant influence, but not control, over the operating and financial decisions of the joint venture entities. Under the equity method of accounting, the cost of an investment is adjusted for the Company’s share of the equity in net income or loss from the date of acquisition, reduced by distributions received and increased by contributions made. The income or loss is allocated in accordance with the provisions of the operating agreement. The carrying value of the investment in joint venture is reviewed for other than temporary impairment whenever events or changes in circumstances indicate a possible impairment. Financial condition, operational performance, and other economic trends are among the factors that are considered in evaluation of the existence of impairment indicators (See Note 5). Cash and Cash Equivalents Cash and cash equivalents include all cash and investments with an original maturity of three months or less. The Company maintains its cash in bank accounts in amounts that may exceed federally insured limits. The Company has not experienced any losses in these accounts in the past. The fair value of cash and cash equivalents approximates their current carrying amounts since all such items are short-term in nature. Marketable Securities Investments in marketable securities consist of marketable common and preferred stock securities of other REITs. These marketable securities are all publicly traded and purchased on the open market, through private transactions or through dividend reinvestment plans. The Company normally holds REIT securities on a long-term basis and has the ability and intent to hold securities to recovery, therefore as of December 31, 2023 and 2022, gains or losses on the sale of securities are based on average cost and are accounted for on a trade date basis. As of December 31, 2023, the securities portfolio represented 1.9% of undepreciated assets. The Company does not intend to increase its investments in its REIT securities portfolio. -75- Inventory of Manufactured Homes Inventory of manufactured homes is valued at the lower of cost or net realizable value and is determined by the specific identification method. All inventory is considered finished goods. Accounts and Notes Receivables The Company’s accounts, notes and other receivables are stated at their outstanding balance and reduced by an allowance for uncollectible accounts. The Company evaluates the recoverability of its receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the notes receivable or lease agreements. The collectability of notes receivable is measured based on the present value of the expected future cash flow discounted at the notes receivable effective interest rate or the fair value of the collateral if the notes receivable is collateral dependent. At December 31, 2023 and 2022, the reserves for uncollectible accounts, notes and other receivables were $2.8 million and $2.6 million, respectively. For the years ended December 31, 2023, 2022 and 2021 the provisions for uncollectible notes and other receivables were $2.1 million, $1.5 million and $1.2 million, respectively. Charge- offs and other adjustments related to repossessed homes for the years ended December 31, 2023, 2022 and 2021 amounted to $1.9 million, $1.0 million and $712,000, respectively. The Company accounts for its receivables in accordance with ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and supportable forecasts that affect the collectability of the reported amount. As of December 31, 2023 and 2022, the Company had notes receivable of $77.1 million and $63.0 million, net of a fair value adjustment of $1.6 million and $1.3 million, respectively. Notes receivables are presented as a component of notes and other receivables, net on our consolidated balance sheets. These receivables represent balances owed to us for previously completed performance obligations for sales of manufactured homes. The Company’s notes receivable primarily consists of installment loans collateralized by manufactured homes with principal and interest payable monthly. As of December 31, 2023, the weighted average interest rate on these loans were approximately 7.0% and the average maturity was approximately 7 years. As of December 31, 2022, the weighted average interest rate on these loans were approximately 6.7% and the average maturity was approximately 8 years. Unamortized Financing Costs Costs incurred in connection with obtaining mortgages and other financings and refinancings are deferred and presented in the consolidated balance sheet as a direct deduction from the carrying amount of that debt liability. These costs are amortized on a straight-line basis which approximates the effective interest method over the term of the related obligations, and included as a component of interest expense. Unamortized costs are charged to expense upon prepayment of the obligation. Upon amendment of the line of credit or refinancing of mortgage debt, unamortized deferred financing fees are accounted for in accordance with ASC 470-50-40, Modifications and Extinguishments. As of December 31, 2023 and 2022, accumulated amortization amounted to $11.2 million and $9.1 million, respectively. The Company estimates that aggregate amortization expense will be approximately $2.2 million for 2024, $2.0 million for 2025, $1.8 million for 2026, $724,000 for 2027, $556,000 for 2028 and $1.1 million thereafter. Leases The Company accounts for its leases under ASC 842, “Leases.” Our primary source of revenue is generated from lease agreements for our sites and homes, where we are the lessor. These leases are generally for one-year or month-to-month terms and renewable by mutual agreement from us and the resident, or in some cases, as provided by jurisdictional statute. The Company is the lessee in other arrangements, primarily for our corporate office and a ground lease at one community expiring April 12, 2099, with an option to extend for another 99-year term. As of December 31, 2023 -76- and 2022, the right-of-use assets and corresponding lease liabilities of $3.3 million and $3.6 million, respectively, are included in prepaid expenses and other assets and accrued liabilities and deposits on the consolidated balance sheets. Future minimum lease payments under these leases over the remaining lease terms, exclusive of renewal options are as follows (in thousands): 2024 2025 2026 2027 2028 Thereafter Total Lease Payments $ 460 460 460 257 111 18,503 $ 20,251 The weighted average remaining lease term for these leases, including renewal options is 162 years. The right of use assets and lease liabilities was calculated using an interest rate of 5%. Restricted Cash The Company’s restricted cash consists of amounts primarily held in deposit for tax, insurance and repair escrows held by lenders in accordance with certain debt agreements. Restricted cash is included in prepaid expenses and other assets on the consolidated balance sheets. The following table reconciles beginning of period and end of period balances of cash, cash equivalents and restricted cash for the periods shown (in thousands): 12/31/23 12/31/22 12/31/21 12/31/20 $57,320 7,117 $29,785 11,091 $116,175 8,851 $15,336 13,257 $64,437 $40,876 $125,026 $28,593 Cash and Cash Equivalents Restricted Cash Cash, Cash Equivalents And Restricted Cash Revenue Recognition The Company accounts for its Sales of Manufactured Homes in accordance with Accounting Standards Update (“ASU”) 2014-09 "Revenue from Contracts with Customers (Topic 606)" (ASC 606). For transactions in the scope of ASC 606, we recognize revenue when control of goods or services transfers to the customer, in the amount that we expect to receive for the transfer of goods or provision of services. Rental and related income is generated from lease agreements for our sites and homes. The lease component of these agreements is accounted for under ASC 842 “Leases.” The non-lease components of our lease agreements consist primarily of utility reimbursements, which are accounted for with the site lease as a single lease under ASC 842. Revenue from sales of manufactured homes is recognized in accordance with the core principle of ASC 606, at the time of closing when control of the home transfers to the customer. After closing of the sale transaction, we generally have no remaining performance obligation. Interest income is primarily from notes receivables for the previous sales of manufactured homes. Interest income on these receivables is accrued based on the unpaid principal balances of the underlying loans on a level yield basis over the life of the loans. -77- Dividend income and gain (loss) on sales of marketable securities are from our investments in marketable securities and are presented separately but are not in the scope of ASC 606. Other income primarily consists of brokerage commissions for arranging for the sale of a home by a third party and other miscellaneous income. This income is recognized when the transactions are completed and our performance obligations have been fulfilled. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period (63.1 million, 54.4 million and 46.3 million in 2023, 2022 and 2021, respectively). Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding plus the weighted average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. In periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive. For the year ended December 31, 2023, employee stock options to purchase 4.7 million shares of Common Stock were excluded from the computation of Diluted Net Loss per Share as their effect would be anti- dilutive. For the year ended December 31, 2022, employee stock options to purchase 3.5 million shares of Common Stock were excluded from the computation of Diluted Net Loss per Share as their effect would be anti-dilutive. For the year ended December 31, 2021, Common Stock equivalents resulting from employee stock options to purchase 3.3 million shares of Common Stock amounted to 1.1 million shares, which were included in the computation of Diluted Net Income per Share. Stock Compensation Plan The Company accounts for awards of stock, stock options and restricted stock in accordance with ASC 718- 10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants are determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock are recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards are equal to the fair value of the Company’s stock on the grant date. Compensation costs, which is included in general and administrative expenses, of $4.9 million, $5.0 million and $3.4 million have been recognized in 2023, 2022 and 2021, respectively. During 2023, 2022 and 2021, compensation costs included a one-time charge of $233,000, $433,000 and $44,000, respectively, for restricted stock and stock option grants awarded to participants who were of retirement age and therefore the entire amount of measured compensation cost has been recognized at grant date. Included in Note 8 to these consolidated financial statements are the assumptions and methodology used to calculate the fair value of stock options and restricted stock awards. Income Tax The Company has elected to be taxed as a REIT under the applicable provisions of Sections 856 to 860 of the Internal Revenue Code. Under such provisions, the Company will not be taxed on that portion of its income which is distributed to shareholders, provided it distributes at least 90% of its taxable income, has at least 75% of its assets in real estate or cash-type investments and meets certain other requirements for qualification as a REIT. The Company has and intends to continue to distribute all of its income currently, and therefore no provision has been made for income or excise taxes. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent taxable years. The Company is also subject to certain state and local income, excise or franchise taxes. In addition, the Company has a taxable REIT Subsidiary (“TRS”) which is subject to federal and state income taxes at regular corporate tax rates (See Note 13). In December 2017, the Tax Cuts and Jobs Act of 2017 (the TCJA), Code Section 199A, was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, individual taxpayers and trusts and estates may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or qualified dividend income. -78- The Company follows the provisions of ASC Topic 740, Income Taxes, that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of December 31, 2023. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of December 31, 2023, the tax years 2020 through and including 2023 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress. Reclassifications Certain amounts in the consolidated financial statements for the prior years have been reclassified to conform to the financial statement presentation for the current year. Other Recent Accounting Pronouncements Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements. NOTE 3 – INVESTMENT PROPERTY AND EQUIPMENT Acquisitions in 2023 On January 19, 2023, the Company acquired Mighty Oak, a newly developed manufactured home community located in Albany, Georgia, for approximately $3.7 million, through its qualified opportunity zone fund (See Note 6). This community contains a total of 118 newly developed homesites that are situated on approximately 26 total acres. Acquisitions in 2022 On March 31, 2022, the Company acquired Center Manor, located in Monaca, Pennsylvania, for approximately $5.8 million. This community contains a total of 96 developed homesites that are situated on approximately 18 total acres. At the date of acquisition, the average occupancy for this community was approximately 83%. On May 3, 2022, the Company acquired Mandell Trails, located in Butler, Pennsylvania, for approximately $7.4 million. This community contains a total of 132 developed homesites that are situated on approximately 69 total acres. At the date of acquisition, the average occupancy for this community was approximately 70%. On May 25, 2022, the Company acquired Saddle Creek, located in Dothan, Alabama, for approximately $3.9 million. This community contains a total of 139 developed homesites that are situated on approximately 36 total acres. At the date of acquisition, the average occupancy for this community was approximately 6%. On July 14, 2022, the Company acquired Hidden Creek, located in Erie, Michigan, for approximately $22.0 million. This community contains a total of 351 developed homesites that are situated on approximately 88 total acres. At the date of acquisition, the average occupancy for this community was approximately 63%. On August 10, 2022, the Company acquired Garden View Estates, located in Orangeburg, South Carolina, for approximately $5.2 million, through its qualified opportunity zone fund (See Note 6). This community contains a total of 181 developed homesites that are situated on approximately 39 total acres. At the date of acquisition, the average occupancy for this community was approximately 33%. On November 22, 2022, the Company acquired Fohl Village, located in Canton, Ohio, for approximately $19.1 million. This community contains a total of 321 developed homesites that are situated on approximately 170 total acres. At the date of acquisition, the average occupancy for this community was approximately 77%. On December 15, 2022, the Company acquired Oak Tree, located in Jackson, New Jersey, for approximately $22.9 million. This community contains a total of 260 developed homesites that are situated on approximately 41 total acres. At the date of acquisition, the average occupancy for this community was approximately 98%. -79- The Company has evaluated these acquisitions and has determined that they should be accounted for as acquisitions of assets. As such, we have allocated the total cash consideration, including transaction costs of approximately $29,000 for 2023 and $852,000 for 2022, to the individual assets acquired on a relative fair value basis. The following table summarizes our purchase price allocation for the assets acquired for the years ended December 31, 2023 and 2022, respectively (in thousands): 2023 Acquisitions 2022 Acquisitions Assets Acquired: Land Depreciable Property Notes Receivable and Other Total Assets Acquired $ $ $ 234 3,445 -0- 3,679 $ 6,379 80,027 656 87,062 Total income, community net operating income (“Community NOI”)* and net loss for communities acquired in 2023 and 2022, which are included in our consolidated statements of income (loss) for the years ended December 31, 2023 and 2022, are as follows (in thousands): 2023 Acquisitions 2023 2022 Acquisitions 2023 2022 Total Income Community NOI * Net Loss $ $ $ 286 81 (157) $ $ $ 4,895 2,448 (2,676) $ $ $ 1,376 610 (781) *Community NOI is defined as rental and related income less community operating expenses. See Note 7 for additional information relating to loans and mortgages payable and Note 18 for the unaudited pro forma financial information relating to these acquisitions. Accumulated Depreciation The following is a summary of accumulated depreciation by major classes of assets (in thousands): Site and land improvements Buildings and improvements Rental homes and accessories Equipment and vehicles Total accumulated depreciation NOTE 4 – MARKETABLE SECURITIES December 31, 2023 December 31, 2022 $ 255,928 12,690 124,493 23,198 $ 416,309 $ 225,926 11,294 104,481 21,397 $ 363,098 The Company’s marketable securities primarily consist of common and preferred stock of other REITs. The Company does not own more than 10% of the outstanding shares of any of these securities, nor does it have controlling financial interest. The REIT securities portfolio provides the Company with additional diversification, liquidity and income. As of December 31, 2023, the securities portfolio represented 1.9% of undepreciated assets. The Company does not intend to increase its investments in its REIT securities portfolio. -80- The following is a listing of marketable securities at December 31, 2023 (in thousands): Interest Number of Shares Series Rate Cost Market Value Equity Securities: Preferred Stock: Cedar Realty Trust, Inc. Cedar Realty Trust, Inc. Pennsylvania Real Estate Investment Trust Pennsylvania Real Estate Investment Trust Total Preferred Stock Common Stock: Diversified HealthCare Trust Franklin Street Properties Corporation Industrial Logistics Properties Trust Kimco Realty Corporation Office Properties Income Trust Orion Office REIT, Inc. Pennsylvania Real Estate Investment Trust Realty Income Corporation Regency Centers Corporation Total Common Stock B C B D 7.250% 6.500% 7.375% 6.875% 13 20 40 20 171 220 87 880 562 18 15 145 17 $278 494 1,000 498 2,270 2,920 2,219 1,729 16,490 36,418 293 2,316 8,527 1,024 71,936 $169 254 16 8 447 639 563 410 18,753 4,110 106 7 8,309 1,162 34,059 Total Marketable Securities $74,206 $34,506 -81- The following is a listing of marketable securities at December 31, 2022 (in thousands): Interest Number of Shares Series Rate Cost Market Value Equity Securities: Preferred Stock: Cedar Realty Trust, Inc. Cedar Realty Trust, Inc. Centerspace Pennsylvania Real Estate Investment Trust Pennsylvania Real Estate Investment Trust Total Preferred Stock Common Stock: Alerislife Inc. Diversified HealthCare Trust Franklin Street Properties Corporation Industrial Logistics Properties Trust Kimco Realty Corporation Office Properties Income Trust Orion Office REIT, Inc. Pennsylvania Real Estate Investment Trust Realty Income Corporation Urstadt Biddle Properties, Inc. Total Common Stock B C C B D 7.250% 6.500% 6.625% 7.375% 6.875% 12 20 20 40 20 12 171 220 87 890 562 18 15 185 100 $257 494 500 1,000 498 2,749 45 2,920 2,219 1,729 16,677 36,418 293 2,316 10,910 2,049 75,576 $168 235 505 97 38 1,043 6 111 601 285 18,850 7,496 158 17 11,716 1,895 41,135 Total Marketable Securities $78,325 $42,178 Gain on sales of marketable securities, net amounted to approximately $183,000, $6.4 million and $2.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. During 2022, Monmouth Real Estate Investment Corporation (“MREIC”) was acquired by a third party pursuant to an all-cash merger approved by the shareholders of MREIC, which resulted in the Company and MREIC’s other shareholders receiving a cash payment of $21.00 per share in cancellation of their MREIC common shares. The Company’s securities portfolio included 2.7 million shares of common stock of MREIC, representing 2.7% of the total MREIC shares outstanding. The Company’s Chairman of the Board was also the Chairman of MREIC and there were three other Company Directors who were also directors and shareholders of MREIC. The merger consideration received by the Company totaled approximately $55.7 million, which resulted in a gain of approximately $30.7 million. During 2022, the Company also sold other securities in its portfolio with a total cost of $24.7 million at a loss of $24.3 million. As of December 31, 2023, 2022 and 2021, the securities portfolio had net unrealized holding losses of $39.7 million, $36.1 million and $14.3 million, respectively. NOTE 5- INVESTMENT IN JOINT VENTURE In December 2021, the Company and Nuveen Real Estate (“Nuveen” or “Nuveen Real Estate”), established a joint venture for the purpose of acquiring manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The terms of the initial joint venture entity were set forth in a Limited Liability Company Agreement dated as of December 8, 2021 (the “LLC Agreement”) entered into between a wholly owned subsidiary of the Company and an affiliate of Nuveen. The LLC Agreement provided for the parties to initially fund up to $70 million of equity capital for acquisitions during a 24- month commitment period, with Nuveen having the option, subject to certain conditions, to elect to increase the parties’ total commitments by up to an additional $100 million and to extend the commitment period for up to an additional four years. The LLC Agreement called for committed capital to be funded 60% by Nuveen and 40% by the Company on a parity basis. The Company serves as managing member of the joint venture entity and is responsible for day-to-day operations of the joint venture entity and management of its properties, subject to obtaining approval of Nuveen Real Estate for major decisions (including investments, dispositions, financings, major capital expenditures -82- and annual budgets). The Company receives property management, asset management and other fees from the joint venture entity. In addition, once each member has recouped its invested capital and received a 7.5% net unlevered internal rate of return, 80% of distributable cash will be allocated pro rata in accordance with the members’ respective percentage interests and the Company and Nuveen will receive a promote percentage equal to 70% (in the case of the Company) and 30% (in the case of Nuveen) of the remaining 20% of distributable cash. After 7 years the Company may elect to consummate the crystallization of the promote. Under the terms of the LLC Agreement, after December 8, 2024 or, if later, the second anniversary of the acquisition and placing in service of a manufactured housing or recreational vehicle community, Nuveen will have a right to initiate the sale of one or more of the communities owned by the joint venture entity. If Nuveen elects to initiate such a sale process, the Company may exercise a right of first refusal to acquire Nuveen’s interest in the community or communities to be sold for a purchase price corresponding to the greater of the appraised value of such communities or the amount required to provide a 7.5% net unlevered internal rate of return on Nuveen’s investment. In addition, the Company will have the right to buy out Nuveen’s interest in the joint venture entity at any time after December 8, 2031 at a purchase price corresponding to the greater of the appraised value of the portfolio or the amount required to provide a 7.5% net unlevered internal rate of return on Nuveen’s investment. The LLC Agreement between the Company and Nuveen provided that until the capital contributions to the joint venture are fully funded or the joint venture is terminated, the joint venture will be the exclusive vehicle for the Company to acquire any manufactured housing communities and/or recreational vehicle communities that meet the joint venture’s investment guidelines. These guidelines called for the joint venture to acquire manufactured housing and recreational vehicle communities that have been developed within the previous two years and are less than 20% occupied, are located in certain geographic markets, are projected to meet certain cash flow and internal rate of return targets, and satisfy certain other criteria. The Company agreed to offer Nuveen the opportunity to have the joint venture acquire any manufactured housing community or recreational vehicle community that meets these investment guidelines. Under the terms of the LLC Agreement, if Nuveen determines not to pursue or approve any such acquisition, the Company would be permitted to acquire the property outside the joint venture. Since the execution of the LLC Agreement, Nuveen has provided the Company with written waivers of the exclusivity provision of the LLC Agreement with regard to two property acquisitions that may have fit the investment guidelines of the joint venture, which permitted the Company to acquire them outside of the Nuveen joint venture. Except for investment opportunities that are offered to and declined by Nuveen, the Company is prohibited from developing, owning, operating or managing manufactured housing communities or recreational vehicle communities within a 10-mile radius of any community owned by the joint venture. However, this restriction does not apply with respect to investments by the Company in existing communities operated by the Company. The LLC Agreement provides that Nuveen will have the right to remove and replace the Company as managing member of the joint venture and manager of the joint venture’s properties if the Company breaches certain obligations or certain events occur. Upon such removal, Nuveen may elect to buy out the Company’s interest in the joint venture at 98% of the value of the Company’s interest in the joint venture. If Nuveen does not exercise such buy-out right, the Company may, at specified times, elect to initiate a sale of the communities owned by the joint venture, subject to a right of first refusal on the part of Nuveen. The LLC Agreement contains restrictions on a party’s right to transfer its interest in the joint venture without the approval of the other party. The LLC Agreement requires the Company to offer Nuveen the opportunity to have the joint venture acquire a manufactured housing community or recreational vehicle community that meets the investment guidelines. If Nuveen decides not to acquire the community through the joint venture, however, the Company is free to purchase the community on its own outside of the joint venture. In December 2021, the joint venture entity closed on the acquisition of Sebring Square, a newly developed all-age, manufactured home community located in Sebring, Florida, for a total purchase price of $22.2 million. This community contains 219 developed homesites situated on approximately 39 acres. In December 2022, the joint venture entity closed on the acquisition of Rum Runner, another newly developed all-age, manufactured home community also located in Sebring, Florida for a total purchase price of $15.1 million. This community contains 144 developed homesites situated on approximately 20 acres. The Company manages these communities on behalf of the joint venture entity. During the time since the joint venture with Nuveen was first established in 2021, the Company and Nuveen have continued to seek opportunities to acquire additional manufactured housing and/or recreational vehicle -83- communities that are under development and/or newly developed and meet certain other investment guidelines. During 2022, the Company and Nuveen informally agreed that any future acquisitions would be made by one or more new joint venture entities to be formed for that purpose and that the original joint venture entity formed in December 2021 will not consummate additional acquisitions but will maintain its existing property portfolio, consisting of the Sebring Square and Rum Runner communities. The Company and Nuveen also informally agreed that, unless otherwise determined in connection with any specific future investment, capital for any such new joint venture entity would continue to be funded 60% by Nuveen and 40% by the Company on a parity basis and that other terms would be similar to those of the LLC Agreement entered into in 2021, except that the amounts of the parties’ respective capital commitments will be determined on a property-by-property basis. In November 2023, the Company expanded its relationship with Nuveen Real Estate and formed a new joint venture entity with Nuveen. The new joint venture entity was established to, directly or through one or more subsidiaries, identify, source, originate, acquire, hold, operate, sell, lease, mortgage, maintain, own, manage, finance, refinance, reposition, improve, renovate, develop, redevelop, pledge, hedge, exchange, and otherwise deal in and with the rental of manufactured housing and/or recreational vehicle communities that meet other investment guidelines. The terms of the new joint venture entity are set forth in a Limited Liability Company Agreement dated as of November 29, 2023 (the “Second LLC Agreement”) entered into between a wholly owned subsidiary of the Company and an affiliate of Nuveen. The Company serves as managing member of this new joint venture entity and is responsible for day-to-day operations of the joint venture entity and management of its properties, subject to obtaining approval of Nuveen Real Estate for major decisions (including investments, dispositions, financings, major capital expenditures and annual budgets). The Company receives property management oversite, development and other fees from the joint venture entity. Sixty-one acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million, was contributed to the new joint venture entity. The Company was reimbursed by Nuveen for 60% of the carrying value of this land. This new joint venture entity is focused on the development of a new manufactured housing community on this property. The community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. References in this report to the Company’s joint venture relationship with Nuveen are intended to refer to its ongoing relationship with Nuveen. The Company accounts for its joint venture with Nuveen Real Estate under the equity method of accounting in accordance with ASC 323, “Investments – Equity Method and Joint Ventures”. NOTE 6 - OPPORTUNITY ZONE FUND In July 2022, the Company invested $8.0 million, representing a portion of the capital gain the Company recognized as a result of the MREIC merger, in UMH OZ Fund, LLC (“OZ Fund”), a new entity formed by the Company. The OZ Fund was created to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs Act to encourage long-term investment in economically distressed areas. The OZ Fund was designed to allow the Company and other investors in the OZ Fund to defer the tax on recently realized capital gains reinvested in the OZ Fund until December 31, 2026 and to potentially obtain certain other tax benefits. UMH manages the OZ Fund and will receive certain management fees as well as a 15% carried interest in distributions by the OZ Fund to the other investors (subject to first returning investor capital with a 5% preferred return). UMH will have a right of first offer to purchase the communities from the OZ Fund at the time of sale at their then-current appraised value. On August 10, 2022, the Company, through the OZ Fund, acquired Garden View Estates, located in Orangeburg, South Carolina, for approximately $5.2 million. On January 19, 2023, the Company, through the OZ Fund, acquired Mighty Oak, located in Albany, Georgia, for approximately $3.7 million (See Note 3). As of December 31, 2023, the Company’s investment in the OZ Fund represented 77% of the total capital contributed to the OZ Fund and is consolidated in the Company’s Consolidated Financial Statements. Other investors in the OZ Fund include certain officers, directors and employees of the Company. -84- NOTE 7 – LOANS AND MORTGAGES PAYABLE Loans Payable The following is a summary of our loans payable as of December 31, 2023 and 2022 (in thousands): December 31, 2023 Amount Rate December 31, 2022 Amount Rate (1) (2) (3) (4) (5) (6) (7) Margin loan Unsecured line of credit Floorplan inventory financing FirstBank rental home loan FirstBank rental home line of credit Triad rental home loan OceanFirst notes receivable financing Total Loans Payable Unamortized debt issuance costs Loans Payable, net of unamortized debt issuance costs $-0- 70,000 -0- 24,683 -0- -0- -0- 94,683 (1,204) N/A 7.27% N/A 6.15% N/A N/A N/A 6.98% $-0- 75,000 64,126 -0- 5,100 -0- 10,000 154,226 (695) N/A 5.88% 7.70% N/A 6.50% N/A 7.50% 6.76% $93,479 7.07% $153,531 6.79% (1) (2) (3) (4) (5) (6) Collateralized by the Company’s securities portfolio and is due on demand. The Company must maintain a coverage ratio of approximately 2 times. Represents an unsecured line of credit facility syndicated with two banks. Interest is based on the Company’s overall leverage ratio and is equal to the Secured Overnight Financing Rate (“SOFR”) plus 1.5% to 2.20%, or BMO’s prime lending rate plus 0.50% to 1.20%, and maturity is November 7, 2026. Represents revolving credit agreements totaling $108.5 million with 21st Mortgage Corporation (“21st Mortgage”), Customers Bank, Northpoint Commercial Finance and Triad Financial Services (“Triad”) to finance inventory purchases. Interest rates on these agreements range from prime minus 0.75% to SOFR plus 4%. Represents a term loan secured by rental homes and rental home leases, with a fixed interest rate of 6.15% and a maturity of date of May 10, 2028. Represents a $25 million revolving line of credit secured by rental homes and their leases with a 5-year term and a variable interest rate of prime. Represents a $30 million revolving line of credit secured by rental homes and rental home leases, with an interest rate of prime plus 0.25%, with a minimum of 5%. (7) Represents a revolving line of credit secured by eligible notes receivable, with an interest rate of prime with a floor of 4.75%. On March 9, 2023, the Company entered into a $30 million revolving line of credit with Triad secured by rental homes and rental home leases, with an interest rate of prime plus 0.25%, with a minimum of 5%. The Company had a $20 million revolving line of credit with OceanFirst Bank (“OceanFirst Line”) secured by the Company’s eligible notes receivable. Interest was at prime with a floor of 3.25% with a maturity date which was extended to June 1, 2023. On July 19, 2023, the Company amended the OceanFirst Line from $20 million to $35 million. Interest is at prime with a floor of 4.75%. This line is secured by the Company’s eligible notes receivable. The amendment also extended the maturity date to June 1, 2025. The Company had a $20 million revolving line of credit with FirstBank secured by rental homes and rental home leases in several of our manufactured home communities, expandable to $30 million with an accordion feature. The facility had a maturity date of November 29, 2022, which was extended to November 29, 2023. Interest was payable at prime plus 25 basis points with a floor of 3.5%, adjusted on the first day of each calendar quarter. On May 12, 2023, the Company entered into a $25 million term loan with FirstBank. The term loan has a 5-year term with a fixed interest rate of 6.15%. The term loan is secured by rental homes, and their leases, in various communities throughout our portfolio. Additionally, the Company entered into a new $25 million revolving line of credit secured by rental homes and their leases. This new line of credit also has a 5-year term and a variable rate tied to Prime, adjusted on the first day of each calendar quarter. -85- Unsecured Line of Credit On November 7, 2022, the Company entered into the Second Amended and Restated Credit Agreement (the “Amendment”) to expand and extend its existing unsecured revolving credit facility (the “Facility”). The expanded Facility is syndicated with two banks, BMO and JPMorgan, as joint arrangers and joint book runners, with Bank of Montreal as administrative agent. The Second Amended Credit Agreement provides for an increase from $75 million in available borrowings to $100 million in available borrowings with a $400 million accordion feature, bringing the total potential availability up to $500 million, subject to certain conditions including obtaining commitments from additional lenders. The Second Amended Credit Agreement also extends the maturity date of the Facility from November 29, 2022 to November 7, 2026, with a further one-year extension available at the Company’s option, subject to certain conditions including payment of an extension fee. Availability under the amended Facility is limited to 60% of the value of the unencumbered communities which the Company has placed in the Facility’s unencumbered asset pool (“Borrowing Base”). The value of the Borrowing Base communities is based on a capitalization rate of 6.5% applied to the Net Operating Income (“NOI”) generated by the communities in the Borrowing Base. Interest rates on borrowings are based on the Company’s overall leverage ratio and are equal to the Secured Overnight Financing Rate (“SOFR”) plus 1.50% to 2.20%, or BMO’s prime lending rate plus 0.50% to 1.20%, which results in an interest rate of 7.27% and 5.88% at December 31, 2023 and 2022, respectively. On February 24, 2023, the Company amended the Facility to expand available borrowing capacity from $100 million to $180 million. The aggregate principal payments of all loans payable, including the Credit Facility, are scheduled as follows (in thousands): Year Ended December 31, 2024 2025 2026 2027 2028 Thereafter Total Loans Payable Unamortized debt issuance costs Loans Payable, net of unamortized debt issuance costs Series A Bonds $ 651 697 70,741 789 21,805 -0- 94,683 (1,204) $ 93,479 On February 6, 2022, the Company issued $102.7 million of its new 4.72% Series A Bonds due 2027, or the 2027 Bonds, in an offering to investors in Israel. The Company received $98.7 million, net of offering expenses. The 2027 Bonds are unsecured obligations of the Company denominated in Israeli shekels (NIS) and were issued pursuant to a Deed of Trust dated January 31, 2022 between the Company and Reznik Paz Nevo Trusts Ltd., an Israeli trust company, as trustee. The 2027 Bonds pay interest at a rate of 4.72% per year. Interest on the 2027 Bonds is payable semi-annually on August 31, 2022, and on February 28 and August 31 of the years 2023-2026 (inclusive) and on the final maturity date of February 28, 2027. The principal and interest will be linked to the U.S. Dollar. In the event of a future downgrade by two or more notches in the rating of the 2027 Bonds or a failure by the Company to comply with certain covenants in the Deed of Trust, the interest rate on the 2027 Bonds will be subject to increase. However, any such increases, in the aggregate, would not exceed 1.25% per annum. As of December 31, 2023, the Company is in compliance with these covenants. Under the Deed of Trust, the Company has the right to redeem the 2027 Bonds, in whole or in part, at any time on or after 60 days from February 9, 2022, the date on which the 2027 Bonds were listed for trading on the Tel Aviv Stock Exchange (the “TASE”). Any such voluntary early redemption by the Company will require payment of the applicable early redemption amount calculated in accordance with the Deed of Trust. The Company does not currently intend to redeem the 2027 Bonds. Upon the occurrence of an event of default or certain other events, including a delisting of the 2027 Bonds by the TASE, the Company may be required to effect an early repayment or redemption of all or a portion of the 2027 Bonds at their par value plus accrued and unpaid interest. The Deed of Trust permits the Company, subject to certain conditions, to issue additional 2027 Bonds without obtaining approval of the holders of the 2027 Bonds. -86- The 2027 Bonds are general unsecured obligations of the Company and rank equal in right of payment with all of the Company’s existing and future unsecured indebtedness. The Deed of Trust includes certain customary covenants, including financial covenants requiring the Company to maintain certain ratios of debt to net operating income, to shareholders’ equity and to earnings, and customary events of default. The 2027 Bonds were offered solely to investors outside the United States and were not offered to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act of 1933). Mortgages Payable Mortgages Payable represents the principal amounts outstanding, net of unamortized debt issuance costs. Interest is payable on these mortgages at fixed rates ranging from 2.62% to 6.74%. The weighted average interest rate was 4.2% and 4.0% as of December 31, 2023 and 2022, respectively, including the effect of unamortized debt issuance costs. The weighted average interest rate was 4.2% and 3.9% as of December 31, 2023 and 2022, respectively, not including the effect of unamortized debt issuance costs. The weighted average loan maturity of the mortgages payable was 5.3 and 5.1 years at December 31, 2023 and 2022, respectively. -87- The following is a summary of mortgages payable at December 31, 2023 and 2022 (in thousands): Property At December 31, 2023 Due Date Interest Rate Balance at December 31, 2022 2023 Allentown Brookview Village Candlewick Court Catalina Cedarcrest Village Clinton Mobile Home Resort Cranberry Village D & R Village Fairview Manor Fohl Village Forest Park Village Friendly Village Hayden Heights Highland Estates Holiday Village Holiday Village- IN Holly Acres Estates Kinnebrook Village Lake Erie Estates Lake Sherman Village Northtowne Meadows Oak Tree Olmsted Falls Oxford Village Perrysburg Estates Pikewood Manor Shady Hills Suburban Estates Sunny Acres Trailmont Twin Oaks Valley Hills Waterfalls Weatherly Estates Wellington Estates Woods Edge Worthington Arms Various (2 properties) Various (2 properties) Various (2 properties) Various (4 properties) Various (4 properties)+ Various (6 properties) Various (8 properties) Various (13 properties) Various (28 properties)* Various (28 properties) Total Mortgages Payable Unamortized debt issuance costs Total Mortgages Payable, net of unamortized debt issuance costs 10/01/25 04/01/25 09/01/25 08/19/25 04/01/25 10/01/25 04/01/25 03/01/25 11/01/26 11/22/32 09/01/25 06/06/23 04/01/25 06/01/27 09/01/25 11/01/25 09/01/31 04/01/25 07/06/25 09/01/25 09/06/26 12/15/32 04/01/25 07/01/29 09/06/25 11/29/28 04/01/25 10/01/25 10/01/25 04/01/25 10/01/29 06/01/26 06/01/26 04/01/25 02/01/23 01/07/26 09/01/25 02/01/27 08/01/28 07/01/29 07/01/23 10/01/32 08/01/27 01/01/34 03/01/23 09/01/30 09/01/30 4.06% 3.92% 4.10% 3.00% 3.71% 4.06% 3.92% 3.85% 3.85% 5.93% 4.10% 4.618% 3.92% 4.12% 4.10% 3.96% 3.21% 3.92% 5.16% 4.10% 4.45% 5.60% 3.98% 3.41% 4.98% 6.74% 3.92% 4.06% 4.06% 3.92% 3.37% 4.32% 4.38% 3.92% 6.35% 3.25% 4.10% 4.56% 4.27% 3.41% 4.975% 5.24% 4.18% 5.97% 4.065% 4.25% 2.62% $11,676 2,405 3,897 4,028 10,357 3,064 6,595 6,635 14,024 9,373 7,266 -0- 1,812 14,727 6,915 7,413 5,785 3,503 2,491 4,805 11,057 11,843 1,814 14,321 1,459 13,049 4,320 4,868 5,419 2,880 5,553 3,005 4,096 7,028 -0- 4,973 8,147 12,512 12,145 20,936 -0- 33,467 11,765 57,743 -0- 23,949 98,015 501,135 (4,652) $496,483 $11,992 2,473 4,002 4,311 10,662 3,147 6,783 6,828 14,388 9,490 7,463 6,382 1,864 15,080 7,102 7,616 5,910 3,603 2,549 4,935 11,322 12,000 1,865 14,659 1,493 13,414 4,444 5,000 5,566 2,963 5,683 3,080 4,197 7,229 2,144 5,306 8,369 12,799 12,408 21,430 7,230 34,027 12,048 -0- 43,037 24,935 100,481 513,709 (4,771) $508,938 + Represents one mortgage payable secured by four properties and one mortgage payable secured by the rental homes therein. * Rental home addition to the Fannie Mae credit facility consisting of 28 properties. -88- At December 31, 2023 and 2022, mortgages were collateralized by real property with a carrying value of $1.0 billion and $1.1 billion, respectively, before accumulated depreciation and amortization. Interest costs amounting to $5.0 million, $2.7 million and $1.5 million were capitalized during 2023, 2022 and 2021, respectively, in connection with the Company’s expansion program. At December 31, 2023, the Company owned 135 communities of which 48 are unencumbered. Recent Financing Transactions During the year ended December 31, 2023 On December 14, 2023, the Company completed the addition of eight communities to its Fannie Mae credit facility through Wells Fargo Bank, N.A., for total proceeds of approximately $57.7 million. This interest only 5.97% fixed rate loan has a 10-year term with a maturity date of January 1, 2034. During the year ended December 31, 2022 In August 2020, the Company financed 28 of its previously unencumbered communities, containing approximately 4,100 sites, under a Fannie Mae credit facility through Wells Fargo Bank, N.A. for total proceeds of approximately $106 million. On March 15, 2022, the Company completed the addition of approximately 1,100 homes to this credit facility for total proceeds of approximately $25.6 million. This addition is coterminous with the remaining term of the existing facility, which matures in 2030. Interest is at a fixed rate of 4.25%. On September 26, 2022, the Company completed the addition of two tranches to its Fannie Mae credit facility through Wells Fargo Bank, N.A., for total proceeds of approximately $34.0 million. One tranche consists of four communities (the “Community Tranche”) and the other tranche consists of approximately 250 homes located in those communities (the “Home Tranche”). Both tranches have a loan term of 10 years with the Community Tranche amortizing over 30 years and the Home Tranche amortizing over 17 years. Interest is at a fixed rate of 5.24%. On November 22, 2022, in conjunction with the acquisition of Fohl Village (See Note 3), the Company obtained a mortgage totaling $9.5 million with OceanFirst Bank. The initial interest rate on this mortgage is fixed at 5.93% until November 22, 2027 and then adjusted by adding 200 basis points to the weekly average yield on the U.S. Treasury Securities, adjusted to a constant maturity of 5 years, with a floor of 4.5%, through maturity date. This mortgage matures on November 22, 2032, with principal repayments based on a 30-year amortization schedule. On December 15, 2022, in conjunction with the acquisition of Oak Tree (see Note 3), the Company obtained a mortgage totaling $12.0 million with OceanFirst Bank. The initial interest rate on this mortgage is fixed at 5.6% until December 15, 2027 and then adjusted by adding 200 basis points to the weekly average yield on the U.S. Treasury Securities, adjusted to a constant maturity of 5 years, with a floor of 4.5%, through maturity date. This mortgage matures on December 15, 2032, with principal repayments based on a 30-year amortization schedule. The aggregate principal payments of all mortgages payable are scheduled as follows (in thousands): Year Ended December 31, 2024 2025 2026 2027 2028 Thereafter Total $ 11,983 138,373 37,967 42,673 19,089 251,050 $ 501,135 NOTE 8 – STOCK COMPENSATION PLAN On May 31, 2023, the shareholders approved the UMH Properties, Inc. 2023 Equity Incentive Award Plan (the “2023 Plan”), authorizing the grant of options, restricted stock or other stock-based awards to participants. The maximum number of shares available for grant under the 2023 Plan is 2.2 million shares. The maximum number of shares underlying awards that may be granted in any one year to a participant is 300,000 shares. Option awards are -89- exercisable after one year of continued employment or service to the Company from the date of grant and typically vest over five years, 20% per year on each anniversary date of grant. The option price shall not be below the fair market value at date of grant. The 2023 Plan replaced the Company’s Amended and Restated 2013 Incentive Award Plan (“A&R 2013 Plan”), which by its terms terminated with respect to new awards on June 13, 2023. Outstanding grants under the A&R 2013 Plan will continue to be subject to the terms of the A&R 2013 Plan. No future awards will be granted under the A&R 2013 Plan, except for those shares previously reserved for outstanding performance-based grants under the A&R 2013 Plan. The Compensation Committee has the exclusive authority to administer and construe the 2023 Plan and shall determine, among other things: persons eligible for awards and who shall receive them; the terms and conditions of the awards; the time or times and conditions subject to which awards may become vested, deliverable, exercisable, or as to which any may apply, be accelerated or lapse; and amend or modify the terms and conditions of an award with the consent of the participant. Generally, the term of any stock option may not be more than 10 years from the date of grant. The option price may not be below the fair market value at date of grant. If and to the extent that an award made under the 2023 Plan is forfeited, expire unexercised, or settled in cash in lieu of Shares, such Shares shall, to the extent of such forfeiture, expiration, or cash settlement, be available for future grants of awards under the 2023 Plan. The Company accounts for stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). Stock Options During the year ended December 31, 2023, sixty-nine employees were granted options to purchase a total of 1.4 million shares. During the year ended December 31, 2022, forty-six employees were granted options to purchase a total of 570,800 shares. During the year ended December 31, 2021, forty-six employees were granted options to purchase a total of 767,900 shares. These grants vest ratably over five years. The fair value of these options for the years ended December 31, 2023, 2022 and 2021 was approximately $4.2 million, $2.6 million and $2.1 million, respectively, based on assumptions noted below and is being amortized over the vesting period. The remaining unamortized stock option expense was $6.0 million as of December 31, 2023, which will be expensed ratably through 2028. The Company calculates the fair value of each option grant on the grant date using the Black-Scholes option- pricing model which requires the Company to provide certain inputs, as follows: • The assumed dividend yield is based on the Company’s expectation of an annual dividend rate for regular dividends over the estimated life of the option. • Expected volatility is based on the historical volatility of the Company’s stock over a period relevant to the related stock option grant. • The risk-free interest rate utilized is the interest rate on U.S. Government Bonds and Notes having the same life as the estimated life of the Company’s option awards. • Expected life of the options granted is estimated based on historical data reflecting actual hold periods. • Estimated forfeiture is based on historical data reflecting actual forfeitures. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the following years: -90- Dividend yield Expected volatility Risk-free interest rate Expected lives Estimated forfeitures 2023 2022 2021 3.94% 27.14% 3.59% 10 -0- 3.47% 25.09% 2.63% 10 -0- 4.66% 24.59% 1.44% 10 -0- During the year ended December 31, 2023, options to thirteen employees to purchase a total of 71,000 shares were exercised. During the year ended December 31, 2022, options to fourteen employees to purchase a total of 404,160 shares were exercised. During the year ended December 31, 2021, options to thirty-five employees to purchase a total of 709,980 shares were exercised. During the year ended December 31, 2023, options to two employees to purchase a total of 35,500 shares were expired or forfeited. During the year ended December 31, 2021, options to one employee to purchase a total of 400 shares were forfeited. A summary of the status of the stock options outstanding under the Company’s stock compensation plans as of December 31, 2023, 2022 and 2021 and changes during the years then ended are as follows (in thousands): 2023 2022 2021 Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Shares Weighted- Average Exercise Price Shares Outstanding at beginning of year Granted Exercised Forfeited Expired Outstanding at end of year Options exercisable at end of year Weighted average fair value of options granted during the year 3,490 1,359 (71) (16) (20) $15.96 14.36 10.34 18.15 9.82 3,324 570 (404) -0- -0- $14.25 22.88 10.38 -0- -0- 3,266 768 (710) -0- -0- $12.03 21.90 12.11 19.36 -0- 4,742 15.74 3,490 15.96 3,324 14.25 2,195 1,879 2,556 $3.10 $4.50 $2.77 -91- The following is a summary of stock options outstanding as of December 31, 2023 (in thousands): Date of Grant Number of Employees Number of Shares Option Price Expiration Date 04/05/16 01/19/17 04/04/17 04/02/18 07/09/18 12/10/18 01/02/19 04/02/19 01/17/20 03/25/20 05/20/20 03/18/21 07/14/21 03/28/22 09/09/22 03/21/23 7 2 18 15 4 1 2 19 1 38 2 40 45 44 1 68 184 60 397 281 40 25 60 404 10 * 588 * 10 * 157 * 605 * 467 * 100 * 1,354 * 4,742 9.77 14.25 15.04 13.09 15.75 12.94 11.42 13.90 16.37 9.70 11.80 19.36 22.57 23.81 18.52 14.36 04/05/24 01/19/27 04/04/27 04/02/28 07/09/28 12/10/28 01/02/29 04/02/29 01/17/30 03/25/30 05/20/30 03/18/31 07/14/31 03/28/32 09/09/32 03/21/33 * From the date of grant, 20% becomes exercisable each year, over 5 years. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s Common Stock for the options that were in-the-money. The aggregate intrinsic value of options outstanding as of December 31, 2023, 2022 and 2021 was $7.3 million, $8.2 million and $42.9 million, respectively, of which $4.5 million, $5.5 million and $39.9 million relate to options exercisable. The intrinsic value of options exercised in 2023, 2022 and 2021 was $418,000, $373,000 and $3.6 million, respectively, determined as of the date of option exercise. The weighted average remaining contractual term of the above options was 6.8, 6.7 and 7.6 years as of December 31, 2023, 2022 and 2021, respectively. For the years ended December 31, 2023, 2022 and 2021, amounts charged to stock compensation expense relating to stock option grants, which is included in general and administrative expenses, totaled $1.8 million, $1.3 million and $325,000, respectively. Restricted Stock On January 29, 2021, the Company awarded special restricted stock grants totaling 146,572 shares to five employees for their successful efforts on the August 2020 groundbreaking Federal National Mortgage Association (“Fannie Mae”) financing at 2.62%, the proceeds of which were used to redeem our 8% Series B Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share. The grant date fair value of the restricted stock grants awarded on January 29, 2021 was $4.3 million, which was expensed over the vesting period. Vesting of these grants was subject to both time and performance-based vesting criteria as follows: Vesting Date Performance Goal to be Met (1) Percent of Shares Vested June 30, 2023 Growth in cumulative Normalized Funds from Operations (“Normalized FFO”) over the past 3 years is 2% or greater 100% June 30, 2023 Growth in cumulative Normalized FFO over the past 3 years is 5% or greater June 30, 2023 Growth in cumulative Normalized FFO over the past 3 years is 20% or greater Bonus of 50% of the Restricted Stock (total of 150%) Bonus of 100% of the Restricted Stock (total of 200%) (1) Growth in cumulative Normalized FFO is measured as the trailing 12-month Normalized FFO per share at June 30, 2023 divided by the trailing 12-month Normalized FFO per share at June 30, 2020, which amount is $0.64/share at June 30, 2020. -92- As of June 30, 2023, the growth in cumulative Normalized FFO per share over the past 3 years was over 20%. The original grant of 146,572 shares vested on August 10, 2023 with a bonus of 100%. On January 11, 2023, the Company awarded a total of 25,000 shares of restricted stock to five employees. On March 21, 2023, the Company awarded a total of 98,500 shares of restricted stock to two employees, pursuant to their employment agreements. On January 12, 2022, the Company awarded a total of 25,000 shares of restricted stock to five employees. On March 25, 2022, the Company awarded a total of 78,000 shares of restricted stock to two employees, pursuant to their employment agreements. On January 13, 2021, the Company awarded a total of 25,000 shares of restricted stock to five employees. On March 18, 2021, the Company awarded a total of 108,500 shares of restricted stock to four employees. The grant date fair value of the restricted stock grants awarded to participants (other than the performance based awards granted in January 2021) was $1.8 million, $2.5 million and $2.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. These grants primarily vest ratably over five years. As of December 31, 2023, there remained a total of $4.4 million of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 3.2 years. For the years ended December 31, 2023, 2022 and 2021, amounts charged to stock compensation expense related to restricted stock grants, which is included in general and administrative expenses, totaled $3.1 million, $3.7 million and $3.1 million, respectively. A summary of the status of the Company’s non-vested restricted stock awards as of December 31, 2023, 2022 and 2021, and changes during the year ended December 31, 2023, 2022 and 2021 are presented below (in thousands): 2023 2022 2021 Weighted- Average Grant Date Fair Value Weighted- Average Grant Date Fair Value Shares Shares Weighted- Average Grant Date Fair Value Shares Non-vested at beginning of year Granted Dividend Reinvested Shares Vested 471 124 24 (262) $17.58 16.52 14.57 15.65 Non-vested at end of year 357 $18.41 434 103 20 (86) 471 $16.66 23.98 18.10 20.69 $17.58 212 280 15 (73) 434 $13.69 16.51 21.68 8.48 $16.66 Other Stock-Based Awards Effective June 20, 2018, a portion of our quarterly directors’ fee was paid with our unrestricted Common Stock. During 2023, 32,346 unrestricted shares of Common Stock were granted as directors’ fees with a weighted average fair value on the grant date of $15.31 per share. During 2022, 21,492 unrestricted shares of Common Stock were granted as directors’ fees with a weighted average fair value on the grant date of $20.94 per share. During 2021, 16,500 unrestricted shares of Common Stock were granted as directors’ fees with a weighted average fair value on the grant date of $14.78 per share. As of December 31, 2023, there were 2.2 million shares available for grant as stock options, restricted stock or other stock-based awards under the 2023 Plan. Subsequent to year end, on January 10, 2024, the Company awarded 26,000 shares of restricted stock to six employees. These grants vest ratably over five years. NOTE 9 – 401(k) PLAN All full-time employees who are over 21 years old are eligible for the Company’s 401(k) Plan (“Plan”). Under this Plan, an employee may elect to defer his/her compensation, subject to certain maximum amounts, and have it contributed to the Plan. Employer contributions to the Plan are at the discretion of the Company. During 2023, -93- 2022 and 2021, the Company made matching contributions to the Plan of up to 100% of the first 3% of employee salary and 50% of the next 2% of employee salary. The total expense relating to the Plan, including matching contributions amounted to $991,000, $984,000 and $752,000 in 2023, 2022 and 2021, respectively. NOTE 10 – RELATED PARTY TRANSACTIONS AND OTHER MATTERS Transactions with Monmouth Real Estate Investment Corporation During 2022, the Company realized a gain of approximately $30.7 million as a result of the MREIC merger (See Note 4). Employment Agreements On January 11, 2023, the Company entered into employment agreements with Mr. Samuel A. Landy, Ms. Anna T. Chew, Mr. Craig Koster and Mr. Brett Taft. The agreements are effective as of January 1, 2023 and have initial terms of three years which will be renewed automatically thereafter for additional successive one (1) year terms commencing on the third anniversary and each subsequent anniversary of the effective date unless otherwise terminated pursuant to the terms of each agreement. The agreements provide for base compensation, incentive cash bonuses, long term equity compensation awards, which shall be subject to performance-based and time-based vesting requirements, compensation on termination, including a termination not for cause or voluntary resignation for good reason following a change of control, and certain customary fringe benefits, including vacation, life insurance and health benefits and the right to participate in the Company’s 401(k) retirement plan. Other Matters Mr. Eugene W. Landy, the Founder and Chairman of the Board of Directors of the Company, owned a 24% interest in the entity that is the landlord of the property where the Company’s corporate office space is located. As of January 2023, Mr. Eugene Landy transferred this ownership to his son, Mr. Samuel A. Landy, the President and Chief Executive Officer and a director of the Company, and other family members. The lease of the Company’s corporate office space extends through April 30, 2027 and requires monthly lease payments of $23,098 through April 30, 2022 and $23,302 from May 1, 2022 through April 30, 2027. The Company is also responsible for its proportionate share of real estate taxes and common area maintenance. Management believes that the aforesaid rents are no more than what the Company would pay for comparable space elsewhere. Further, Mr. Eugene W. Landy owns a 9.6% interest, Mr. Samuel A. Landy owns a 4.8% interest, Mr. Daniel Landy, who is also an officer of the Company and is Samuel A. Landy’s son, owns a 0.96% interest, and the Samuel Landy Family Limited Partnership (of which Daniel Landy is the sole general partner) owns a 0.96% interest in the OZ Fund. In addition, one of the Company’s independent directors owns a 0.96% interest in the OZ Fund. In November 2023, sixty-one acres of land located in Honey Brook, Pennsylvania, previously owned by the Company, with a carrying value cost basis of $3.8 million was contributed to the new joint venture entity with Nuveen for the development of a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company was reimbursed by Nuveen for 60% of the carrying value of this land. NOTE 11 – SHAREHOLDERS’ EQUITY On January 10, 2023, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (“SDAT”) articles supplementary reclassifying and designating 4,400,000 shares of the Company’s Common Stock, par value $0.10 per share (“Common Stock”) as shares of Series D Preferred Stock, par value $0.10 per share (“Series D Preferred Stock”). On May 18, 2023, the Company filed with the SDAT articles supplementary reclassifying 199,331 authorized unissued shares of the Corporation's 8.00% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”) and 3,866,000 authorized unissued shares of the Corporation's 6.75% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) as authorized shares of the Corporation's Common Stock. After giving effect to these articles supplementary, the authorized capital stock of the Company consisted of 170,413,800 shares, classified as 153,713,800 shares of Common Stock, 13,700,000 shares of Series D Preferred Stock, and 3,000,000 shares of excess stock, par value $0.10 per share. The excess stock is designed to help us protect our status as a REIT under the Internal Revenue Code. -94- Common Stock On February 8, 2022, the Company’s Common Stock was approved for listing on the TASE. Trading of the Common Stock on the TASE began on February 9, 2022. The Company’s Common Stock continues to be listed on the NYSE. The Company has a Dividend Reinvestment and Stock Purchase Plan (“DRIP”), as amended. Under the terms of the DRIP, shareholders who participate may reinvest all or part of their dividends in additional shares of the Company at a discounted price (approximately 95% of market value) directly from the Company, from authorized but unissued shares of the Company’s Common Stock. Shareholders may also purchase additional shares at this discounted price by making optional cash payments monthly. Optional cash payments must be not less than $500 per payment nor more than $1,000 unless a request for waiver has been accepted by the Company. Amounts received in connection with the DRIP for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands): 2023 2022 2021 Amounts Received Less: Dividends Reinvested Amounts Received, net Number of Shares Issued $9,046 (2,652) $6,394 612 $7,808 (2,783) $5,025 430 $9,773 (3,506) $6,267 503 Common Stock At-The-Market Sales Program On March 7, 2022, the Company entered into an Equity Distribution Agreement (the “2022 Common ATM Program”) with BMO Capital Markets Corp., J.P. Morgan Securities LLC, B. Riley Securities, Inc., Compass Point Research & Trading, LLC and Janney Montgomery Scott LLC, as distribution agents (the “Distribution Agents”) under which the Company was permitted to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million from time to time through the Distribution Agents, as agents or principals. Sales of the shares of Common Stock under the 2022 Common ATM Program were made in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the New York Stock Exchange (the “NYSE”) or any other existing trading market for the Common Stock or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. The 2022 Common ATM Program replaced the Company’s previous Common Stock ATM Program. During 2023, 2.1 million shares of Common Stock were issued and sold under the 2022 Common ATM Program at a weighted average price of $16.77 per share, generating gross proceeds of $35.6 million and net proceeds of $35.1 million, after offering expenses. On April 4, 2023, the Company entered into a new equity distribution agreement (the “2023 Common ATM Program”) with the Distribution Agents and terminated the 2022 Common ATM Program. Under the 2023 Common ATM Program, the Company may offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million from time to time through the Distribution Agents, as agents or principals. Sales of the shares of Common Stock under the 2023 Common ATM Program are made in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE or any other existing trading market for the Common Stock or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. The Distribution Agents are not required to sell any specific number or dollar amount of securities, but will use commercially reasonable efforts consistent with their normal trading and sales practices, on mutually agreed terms between the Distribution Agents and the Company. The Company began selling shares under the 2023 Common ATM Program on April 4, 2023 and through December 31, 2023, 7.3 million shares of Common Stock were issued and sold at a weighted average price of $15.53 per share, generating gross proceeds of $113.0 million and net proceeds of $110.7 million, after offering expenses. Under both the 2022 Common ATM Program and the 2023 Common ATM Program, for the year ended December 31, 2023, a total of 9.4 million shares of Common Stock were issued and sold at a weighted average price -95- of $15.81 per share, generating gross proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses. As of December 31, 2023, $37.0 million of common stock remained eligible for sale under the 2023 Common ATM Program. Issuer Purchases of Equity Securities On January 11, 2023, the Board of Directors reaffirmed our Common Stock Repurchase Program (the “Repurchase Program”) that authorized us to repurchase up to $25 million in the aggregate of the Company’s Common Stock. Purchases under the Repurchase Program were permitted to be made using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases would be based on business, market and other conditions and factors, including price, regulatory and contractual requirements or consents, and capital availability. The Repurchase Program did not require the Company to acquire any particular amount of Common Stock and may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice. Although the Repurchase Program remains in effect, the Company did not make any repurchases of Common Stock during 2023. Preferred Stock 6.75% Series C Cumulative Redeemable Preferred Stock On July 26, 2022, the Company voluntarily redeemed all 9.9 million issued and outstanding shares of its 6.75% Series C Preferred Stock at a redemption price equal to the $25.00 per share liquidation preference plus accrued and unpaid dividends to, but not including, the July 26, 2022 redemption date in an amount of $0.2578 per share, for a total payment of $25.2578 per share, or $249.6 million in aggregate. As a result of our redemption, the Company recognized a preferred share redemption charge of approximately $8.2 million in 2022, primarily related to the original issuance costs. 6.375% Series D Cumulative Redeemable Preferred Stock On January 22, 2018, the Company issued 2 million shares of its Series D Preferred Stock at an offering price of $25.00 per share in an underwritten registered public offering. The Company received net proceeds from the sale of these 2 million shares, after deducting the underwriting discount and other estimated offering expenses, of approximately $48.2 million and has used the net proceeds of the offering for general corporate purposes, which included the purchase of manufactured homes for sale or lease to customers, expansion of its existing communities, acquisitions of additional properties and repayment of indebtedness on a short-term basis. Dividends on the Series D Preferred Stock shares are cumulative from January 22, 2018 and are payable quarterly in arrears on March 15, June 15, September 15, and December 15 at an annual rate of $1.59375 per share. The Series D Preferred Stock, par value $0.10 per share, has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. On and after January 22, 2023, the Series D Preferred Stock is redeemable at the Company’s option for cash, in whole or, from time to time, in part, at a price per share equal to $25.00, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption. Upon the occurrence of a Delisting Event or Change of Control, each as defined in the Prospectus pursuant to which the shares of Series D Preferred Stock were offered, each holder of the Series D Preferred Stock will have the right to convert all or part of the shares of the Series D Preferred Stock held into Common Stock of the Company, unless the Company elects to redeem the Series D Preferred Stock. Holders of the Series D Preferred Stock generally have no voting rights, except if the Company fails to pay dividends for nine or more quarterly periods, whether or not consecutive, or with respect to certain specified events. During 2023, 2022 and 2021, the Company sold additional shares of Series D Preferred Stock pursuant to its at-the-market sales programs, and amended its charter in connection therewith, as described below. -96- Preferred Stock At-The-Market Sales Programs On July 22, 2020, the Company entered into a Preferred Stock At-The-Market Sales Program (the “2020 Preferred ATM Program”) with B. Riley Securities, Inc., as distribution agent (“B. Riley”), under which the Company may offer and sell shares of the Company’s Series C Preferred Stock and/or Series D Preferred Stock, having an aggregate sales price of up to $100 million. Sales of shares under the 2020 Preferred ATM Program are made in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the Series C Preferred Stock or Series D Preferred Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. On July 26, 2022, the Company redeemed all of its issued and outstanding shares of its Series C Preferred Stock and therefore, in light of the redemption, disclosed that the Company does not intend to issue any new shares of Series C Preferred Stock. During January 2023, the Company issued and sold 126,000 shares of Series D Preferred Stock under the 2020 Preferred ATM Program at a weighted average price of $22.25 per share, generating total gross and net proceeds, of $2.8 million. On January 10, 2023, the Company entered into a new At Market Issuance Sales Agreement (the “2023 Preferred ATM Program”) with B. Riley and terminated the use of the 2020 Preferred ATM Program. Under the 2023 Preferred ATM Program, the Company may offer and sell shares of the Company’s Series D Preferred Stock, having an aggregate sales price of up to $100 million from time to time through B. Riley, as agent or principal. Sales of the shares of Series D Preferred Stock in the 2023 Preferred ATM Program will be in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE or on any other existing trading market for the Series D Preferred Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. B. Riley is not required to sell any specific number or dollar amount of securities, but will use its commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between B. Riley and the Company. The Company began selling shares under the 2023 Preferred ATM Program on January 10, 2023 and through December 31, 2023, 2.5 million shares of Series D Preferred Stock were issued and sold at a weighted average price of $21.86 per share, generating gross proceeds of $53.9 million and net proceeds of $52.9 million, after offering expenses. Under both the 2020 Preferred ATM Program and the 2023 Preferred ATM Program, for the year ended December 31, 2023, a total of 2.6 million shares of Series D Preferred Stock were issued and sold at a weighted average price of $21.88 per share, generating gross proceeds of $56.7 million and net proceeds of $55.7 million, after offering expenses. As of December 31, 2023, $46.1 million in shares of Series D Preferred Stock remained eligible for sale under the 2023 Preferred ATM Program. NOTE 12 – DISTRIBUTIONS Common Stock The following cash distributions, including dividends reinvested, were paid to common shareholders during the years ended December 31, 2023, 2022 and 2021 (in thousands except per share amounts): Quarter Ended Amount Per Share Amount Per Share Amount Per Share 2023 2022 2021 March 31 June 30 September 30 December 31 $12,226 12,460 13,419 13,619 $0.205 0.205 0.205 0.205 $10,406 10,890 10,960 11,154 $0.20 0.20 0.20 0.20 $8,048 8,629 9,016 9,327 $51,724 $0.82 $43,410 $0.80 $35,020 These amounts do not include the discount on shares purchased through the Company’s DRIP. $0.19 0.19 0.19 0.19 $0.76 -97- On January 10, 2024, the Board of Directors declared a quarterly dividend of $0.205 per share on the Company's Common Stock payable March 15, 2024 to shareholders of record as of the close of business on February 15, 2024. Preferred Stock The following dividends were paid to holders of our Series C Preferred Stock during the years ended December 31, 2022 and 2021 (in thousands except per share amounts): Declaration Date Record Date Payment Date Dividend 1/12/2022 4/1/2022 7/1/2022 2/15/2022 5/16/2022 8/15/2022 3/15/2022 6/15/2022 9/15/2022 $4,170 4,170 2,548 Dividend per Share $0.421875 0.421875 0.257800 1/15/2021 4/1/2021 7/1/2021 10/1/2021 2/16/2021 5/17/2021 8/15/2021 11/15/2021 3/15/2021 6/15/2021 9/15/2021 12/15/2021 $10,888 $1.101550 $4,170 4,170 4,170 4,170 $0.421875 0.421875 0.421875 0.421875 $16,680 $1.68750 The following dividends were paid to holders of our Series D Preferred Stock during the years ended December 31, 2023, 2022 and 2021 (in thousands except per share amounts): Declaration Date Record Date Payment Date Dividend 1/15/2023 4/1/2023 7/1/2023 10/3/2023 1/12/2022 4/1/2022 7/1/2022 10/3/2022 1/15/2021 4/1/2021 7/1/2021 10/1/2021 2/15/2023 5/15/2023 8/15/2023 11/15/2023 2/15/2022 5/16/2022 8/15/2022 11/15/2022 2/16/2021 5/17/2021 8/15/2021 11/15/2021 3/15/2023 6/15/2023 9/15/2023 12/15/2023 3/15/2022 6/15/2022 9/15/2022 12/15/2022 3/15/2021 6/15/2021 9/15/2021 12/15/2021 -98- Dividend per Share $0.3984375 0.3984375 0.3984375 0.3984375 $3,836 4,051 4,364 4,472 $16,723 $1.59375 $3,430 3,430 3,430 3,433 $0.3984375 0.3984375 0.3984375 0.3984375 $13,723 $1.59375 $2,869 3,430 3,430 3,430 $0.3984375 0.3984375 0.3984375 0.3984375 $13,159 $1.59375 On January 10, 2024, the Board of Directors declared a quarterly dividend of $0.3984375 per share for the period from December 1, 2023 through February 29, 2024, on the Company's Series D Preferred Stock payable March 15, 2024 to shareholders of record as of the close of business on February 15, 2024. NOTE 13 – FEDERAL INCOME TAXES Characterization of Distributions The following table characterizes the distributions paid for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Amount Percent Amount Percent Amount Percent Common Stock Ordinary income $ Capital gains Return of capital 0.22256 -0- 0.59744 27.14% $ -0-% 72.86% -0- -0- 0.80 -0-% $ -0-% 100.00% 0.024636 0.002008 0.733356 3.24% 0.26% 96.50% $ 0.82 100.00% $ 0.80 100.00% $ 0.76 100.00% Preferred Stock - Series C Ordinary income $ Capital gains Return of capital $ -0- -0- -0- -0- Preferred Stock - Series D Ordinary income $ Capital gains Return of capital 1.593750 -0- -0- -0-% $ -0-% -0-% 0.432071 -0- 0.669479 39.22% $ -0-% 60.78% 1.560268 0.127232 -0- 92.46% 7.54% -0-% -0-% $ 1.101550 100.00% $ 1.687500 100.00% 100.0% $ -0-% -0-% 0.625130 -0- 0.968620 39.22% $ -0-% 60.78% 1.473586 0.120164 -0- 92.46% 7.54% -0-% $ 1.593750 100.00% $ 1.593750 100.00% $ 1.593750 100.00% In addition to the above, taxable income from non-REIT activities conducted by S&F, a Taxable REIT Subsidiary (“TRS”), is subject to federal, state and local income taxes. Deferred income taxes pertaining to S&F are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and other factors. For the years ended December 31, 2023 and 2021, S&F had operating losses for financial reporting purposes of $648,000 and $1.4 million, respectively. For the year ended December 31, 2022, S&F had operating income for financial reporting purposes of $71,000. Therefore, a valuation allowance has been established against any deferred tax assets relating to S&F. For the years ended December 31, 2023, 2022 and 2021, S&F recorded $68,000, $16,000 and $10,000, respectively, in federal, state and franchise taxes. NOTE 14 – COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS The Company is subject to claims and litigation in the ordinary course of business. Management does not believe that any such claim or litigation will have a material adverse effect on the business, assets, or results of operations of the Company. -99- The Company had an agreement with 21st Mortgage under which 21st Mortgage provided financing for home purchasers in the Company’s communities. The Company did not receive referral fees or other cash compensation under the agreement. If 21st Mortgage made loans to purchasers and those purchasers defaulted on their loans and 21st Mortgage repossessed the homes securing such loans, the Company agreed to purchase from 21st Mortgage each such repossessed home for a price equal to 80% to 95% of the amount under each such loan, subject to certain adjustments. As of December 31, 2023, the total loan balance under this agreement was approximately $2.4 million. Additionally, 21st Mortgage previously made loans to purchasers in certain communities we acquired. In conjunction with these acquisitions, the Company has agreed to purchase from 21st Mortgage each repossessed home, if those purchasers default on their loans. The purchase price ranges from 55% to 100% of the amount under each such loan, subject to certain adjustments. As of December 31, 2023, the total loan balance owed to 21st Mortgage with respect to homes in these acquired communities was approximately $668,000. This program was terminated on June 22, 2023. The Company’s repurchase obligations for the outstanding loans that were originated by 21st Mortgage remain in effect. The Company entered into a Manufactured Home Retailer Agreement (the “MHRA”) with 21st Mortgage on January 24, 2023, under which 21st Mortgage provides financing for home purchasers in the Company’s communities. 21st Mortgage has no recourse against the Company under the MHRA except in instances where the Customer defaults before two scheduled monthly payments are paid by the purchaser and the default is based on any dispute between S&F surrounding the terms or execution of the purchase and sale of the home. Upon such a default, S&F is to take assignment of the loan from 21st Mortgage for the unpaid principal balance plus accrued interest. As of December 31, 2023, no loans have been originated under the MHRA. S&F entered into a Chattel Loan Origination, Sale and Servicing Agreement (“COP Program”) with Triad Financial Services, effective January 1, 2016. Neither the Company, nor S&F, receive referral fees or other cash compensation under the agreement. Customer loan applications are initially submitted to Triad for consideration by Triad’s portfolio of outside lenders. If a loan application does not meet the criteria for outside financing, the application is then considered for financing under the COP Program. If the loan is approved under the COP Program, then it is originated by Triad, assigned to S&F and then assigned by S&F to the Company. Included in Notes and Other Receivables is approximately $73.6 million of loans that the Company acquired under the COP Program as of December 31, 2023. The Company and one of its subsidiaries are parties to a Limited Liability Company Agreement dated as of December 8, 2021 with an affiliate of Nuveen, which governs the initial joint venture entity between the Company and Nuveen. The LLC Agreement provided for the parties to initially fund up to $70 million of equity capital for acquisitions during a 24-month commitment period, with Nuveen having the option, subject to certain conditions, to elect to increase the parties’ total commitments by up to an additional $100 million and to extend the commitment period for up to an additional four years. The Company is required to fund 40% of the committed capital and Nuveen is required to fund 60%. All such funding will be on a parity basis. Since the execution of the LLC Agreement, this joint venture entity has acquired two properties. The Company and Nuveen have continued to seek, and are continuing to seek, opportunities to acquire additional manufactured housing and/or recreational vehicle communities that are under development and/or newly developed and meet certain other investment guidelines. The Company and Nuveen have informally agreed that any future acquisitions would be made by one or more new joint venture entities to be formed for that purpose and that the existing joint venture entity formed in December 2021 will not consummate additional acquisitions but will maintain its existing property portfolio. The Company and Nuveen also informally agreed that, unless otherwise determined in connection with any specific future investment, capital for any such new joint venture entity would continue to be funded 60% by Nuveen and 40% by the Company on a parity basis and that other terms would be similar to those of the LLC Agreement entered into in 2021, except that the amounts of the parties’ respective capital commitments will be determined on a property-by-property basis. In 2023, the Company and Nuveen formed a new joint venture entity, governed by a new joint venture agreement, focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. The community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. As with the 2021 LLC Agreement, capital contributions to the joint venture entity formed for this project will be funded 60% by Nuveen and 40% by the Company on a parity basis and the other terms (including restrictions on the Company’s right to acquire manufacturing housing communities that meet the LLC Agreement’s investment guidelines without first offering Nuveen an opportunity to participate in the acquisition) are similar to those set forth in the LLC Agreement entered into in 2021 (See Note 5). -100- On July 26, 2023, the Company entered into an agreement to purchase two manufactured home communities, located in Maryland, for approximately $12.5 million. As of February 28, 2024 this transaction remains pending. NOTE 15 - FAIR VALUE MEASUREMENTS The Company follows ASC 825, Fair Value Measurements, for financial assets and liabilities recognized at fair value on a recurring basis. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including marketable securities. The fair value of these certain financial assets and liabilities was determined using the following inputs at December 31, 2023 and 2022 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2023: Equity Securities - Preferred Stock Equity Securities - Common Stock Total December 31, 2022: Equity Securities - Preferred Stock Equity Securities - Common Stock Total Total $447 34,059 $34,506 $1,043 41,135 $42,178 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) $447 34,059 $34,506 $1,043 41,135 $42,178 $-0- -0- $-0- $-0- -0- $-0- $-0- -0- $-0- $-0- -0- $-0- In addition to the Company’s investment in marketable securities at fair value, the Company is required to disclose certain information about fair values of its other financial instruments, as defined in ASC 825-10, Financial Instruments. Estimates of fair value are made at a specific point in time, based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. All of the Company’s marketable securities have quoted market prices. However, for a portion of the Company's other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties, future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only and, therefore, cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates. The fair value of cash and cash equivalents and notes receivable approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable rate loans payable approximate their current carrying amounts since such amounts payable are at approximately a weighted-average current market rate of interest. As of December 31, 2023, the estimated fair value of fixed rate mortgages payable amounted to $489.8 million and the carrying value of fixed rate mortgages payable amounted to $501.1 million. NOTE 16 – SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest during the years ended December 31, 2023, 2022 and 2021 was $35.5 million, $27.0 million and $19.7 million, respectively. Interest cost capitalized to land development during the years ended December 31, 2023, 2022 and 2021 was $5.0 million, $2.7 million and $1.5 million, respectively. During the years ended December 31, 2023, 2022 and 2021, land development costs of $27.9 million, $26.3 million and $25.9 million, respectively were transferred to investment property and equipment and placed in service. -101- During the years ended December 31, 2023, 2022 and 2021, the Company had dividend reinvestments of $2.7 million, $2.8 million and $3.5 million, respectively, which required no cash transfers. NOTE 17 – SUBSEQUENT EVENTS Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were issued. Common ATM Program Since January 1, 2024, the Company issued and sold an additional 1.2 million shares of its Common Stock under the 2023 Common ATM Program at a weighted average price of $15.37 per share, generating gross proceeds of $19.2 million and net proceeds of $18.9 million, after offering expenses. As of February 28, 2024, $17.8 million of Common Stock remained eligible for sale under the 2023 Common ATM Program. Preferred ATM Program Since January 1, 2024, the Company issued and sold an additional 121,000 shares of its Preferred Stock under the 2023 Preferred ATM Program at a weighted average price of $22.85 per share, generating gross proceeds of $2.8 million and net proceeds of $2.7 million, after offering expenses. As of February 28, 2024, $43.3 million of Preferred Stock remained eligible for sale under the 2023 Preferred ATM Program. Restricted Stock Awards On January 10, 2024, the Company awarded 26,000 shares of restricted stock to six employees. The grant date fair value of these grants was $411,000. These grants vest ratably over five years. Stock Option Awards On January 10, 2024, the Company awarded stock options to purchase 99,000 shares of common stock to nine non-employee members of our Board of Directors. These grants vest ratably over five years. Loans and Mortgages Payable On February 1, 2024, the Company paid down $20 million on its unsecured line of credit. NOTE 18– PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The following unaudited pro forma condensed financial information reflects the acquisitions during 2022 and through 2023. This information has been prepared utilizing the historical financial statements of the Company and the effect of additional revenue and expenses from the properties acquired during this period, after giving effect to certain adjustments including (a) rental and related income; (b) community operating expenses; (c) interest expense resulting from the assumed increase in mortgages and loans payable related to the new acquisitions and (d) depreciation expense related to the new acquisitions. The unaudited pro forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions reflected herein been consummated on the dates indicated or that will be achieved in the future (in thousands). Rental and Related Income Community Operating Expenses Net Loss Attributable to Common Shareholders Net Loss Attributable to Common Shareholders per Share: Basic and Diluted For the years ended December 31, 2023 2022 $189,749 81,345 (8,727) $173,984 77,216 (39,451) (0.14) (0.73) -102- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column B Name Location Encumbrances Land Column C Initial Cost Site, Land Column D & Building Improvements and Rental Homes Capitalization Subsequent to Acquisition Memphis, TN Doylestown, PA Orrville, OH Sandusky, OH Birch Run, MI Elkhart, IN Goshen, IN Berwick, PA Greenfield Ctr, NY Anderson, IN Altoona, PA Owosso, MI Chambersburg, PA Middletown, OH Vineland, NJ Monaca, PA Chambersburg, PA Sayre, PA Conowingo, MD Lewistown, PA Tiffin, OH Horseheads, NY Wintersville, OH Muncie, IN Ravenna, OH Columbia, TN Cranberry Twp, PA Athens, PA Duncansville, PA Mount Pleasant, PA Clifton Park, NY Allentown Arbor Estates Auburn Estates Bayshore Estates Birchwood Farms Boardwalk Broadmore Estates Brookside Brookview Camelot Village Camelot Woods Candlewick Court Carsons Catalina Cedarcrest Center Manor Chambersburg Chelsea Cinnamon Woods City View Clinton Collingwood Colonial Heights Countryside Estates Countryside Estates Countryside Village Cranberry Crestview Cross Keys Crossroads Village D&R Village Dallas Mobile Home Toronto, OH Deer Meadows Deer Run Evergreen Estates Evergreen Manor Evergreen Village Fairview Manor Fifty-One Estates Fohl Village Forest Creek Forest Park Fox Chapel Village Frieden Manor Friendly Village Garden View Estates Green Acres Gregory Courts New Springfield, OH Dothan, AL Lodi, OH Bedford, OH Mantua, OH Millville, NJ Elizabeth, PA Canton, OH Elkhart, IN Cranberry Twp, PA Cheswick, PA Schuylkill Haven, PA Perrysburg, OH Orangeburg, SC Chambersburg, PA Honey Brook, PA 2,569 $ 8,266 1,174 9,553 2,797 4,768 11,136 4,776 233 2,480 2,767 7,087 2,411 11,735 1,866 5,602 2,397 2,049 2,116 613 3,302 2,318 2,383 1,926 2,896 6,917 1,923 2,258 378 1,403 704 2,729 2,299 4,242 1,121 2,372 1,277 1,167 5,746 18,052 7,004 977 4,082 5,294 18,141 5,044 584 1,220 22,559 3,554 1,433 5,390 4,940 410 14,124 4,806 14,268 3,005 3,736 9,128 3,452 19,197 4,007 480 2,294 2,761 1,309 1,755 553 4,501 8,726 8,256 6,800 19,718 4,497 3,526 5,355 230 3,968 4,419 5,079 12,397 703 1,677 2,781 11,896 3,907 621 3,280 11,385 5,321 6,686 22,428 2,167 183 1,349 $ 250 $ 2,650 114 561 70 1,796 1,120 372 38 824 573 159 176 1,008 320 198 108 124 1,884 137 142 196 67 174 205 394 182 188 61 183 392 276 226 298 99 49 105 216 1,214 1,018 440 75 372 643 1,215 156 63 370 $ 11,676 -0- -0- -0- (2) 12,512 (6) -0- 2,405 (4) (7) -0- 3,897 23,949 (1) 4,028 10,357 -0- (1) (3) (1) -0- 3,064 (1) (2) -0- (1) 98,015 (1) 6,595 (1) -0- 6,635 (1) (1) (1) -0- (1) -0- (1) (1) 14,024 9,373 (2) 7,266 -0- 11,765 (3) -0- -0- -0- -0- -103- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column B Name Location Encumbrances Land Column C Initial Cost Column D Site, Land & Building Improvements and Rental Homes Capitalization Subsequent to Acquisition Dublin, OH Inkerman, PA Erie, MI Export, PA Elkhart, IN Kutztown, PA Lower Burrell, PA Marysville, OH Greensburg, PA Nashville, TN Elkhart, IN Erie, PA Peninsula, OH Tarrs, PA Clinton, PA Sumter, SC Monticello, NY Fredonia, NY Navarre, OH Lakeview, OH Cresson, PA Orrville, OH Butler, PA Taylor, PA Marysville, OH New Middletown, OH Nappanee, IN Hayden Heights Heather Highlands Hidden Creek High View Acres Highland Highland Estates Hillcrest Crossing Hillcrest Estates Hillside Estates Holiday Village Holiday Village Holly Acres Hudson Estates Huntingdon Pointe Independence Park Iris Winds Kinnebrook Lake Erie Estates Lake Sherman Lakeview Meadows Laurel Woods Little Chippewa Mandell Trails Maple Manor Marysville Estates Meadowood Meadows Meadows of Perrysburg Perrysburg, OH Melrose Village Melrose West Memphis Blues Mighty Oak Monroe Valley Moosic Heights Mount Pleasant Village Mount Pleasant, PA Narvon, PA Mountaintop West Mifflin, PA New Colony Erie, MI Northtowne Meadows Elkhart, IN Oak Ridge Jackson, NJ Oak Tree Tunkhannock, PA Oakwood Lake Olmsted Falls, OH Olmsted Falls West Grove, PA Oxford Elkhart, IN Parke Place Perrysburg, OH Perrysburg Estates Pikewood Manor Elyria, OH Pine Ridge/Pine Manor Carlisle, PA Apollo, PA Pine Valley Bloomsburg, PA Pleasant View Belle Vernon, PA Port Royal Anderson, IN Redbud Estates Marion, OH River Valley Carlisle, PA Rolling Hills Estates Belle Vernon, PA Rostraver Estates Dothan, AL Saddle Creek Magnolia, OH Sandy Valley Nashville, TN Shady Hills Somerset, PA Somerset/Whispering Wooster, OH Wooster, OH Memphis, TN Albany, GA Jonestown, PA Avoca, PA $ 1,812 -0- -0- $ (1) -0- 14,727 (1) (1) (5) 6,915 7,413 5,785 (1) (1) (5) -0- 3,503 2,491 4,805 (1) -0- -0- -0- 33,467 (4) (1) (2) -0- -0- -0- -0- -0- -0- (3) (4) (1) (3) (1) 11,057 (2) 11,843 -0- 1,814 14,321 (6) 1,459 13,049 -0- -0- (4) -0- 12,145 (7) -0- (1) (5) -0- -0- 4,320 (1) -104- 248 $ 573 614 825 510 145 961 1,277 484 1,632 491 194 141 399 686 121 236 104 290 574 433 113 2,470 674 810 152 549 2,146 767 94 78 232 114 330 280 134 429 1,272 500 1,134 379 569 175 4,317 399 1,053 38 670 282 150 1,739 236 301 814 713 270 337 1,485 2,148 $ 2,152 20,717 4,264 7,084 1,695 1,464 3,034 2,679 5,618 13,808 3,591 3,516 865 2,784 3,324 1,403 4,391 1,458 1,104 2,070 1,135 4,905 9,433 4,556 3,191 6,721 5,541 5,429 1,040 810 3,418 994 3,794 3,502 1,665 4,129 23,859 7,524 21,766 1,639 3,031 991 10,341 4,047 22,068 198 1,337 2,175 2,492 15,091 785 1,419 2,204 3,165 1,941 3,379 2,050 1,357 17,357 8,172 1,014 7,215 12,696 12,172 6,154 4,083 17,481 12,667 1,487 6,736 2,965 6,911 9,127 15,161 4,066 16,797 4,665 8,402 2,811 1,374 9,996 12,700 6,720 12,782 4,232 9,658 152 17,697 428 805 5,317 1,845 2,073 3,167 6,717 4,294 481 3,204 2,905 3,014 7,624 6,957 20,405 11,671 15,925 3,620 19,417 8,726 10,636 3,628 2,983 1,334 16,815 5,708 10,517 UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column B Name Location Encumbrances Land Column C Initial Cost Column D Site, Land & Building Improvements and Rental Homes Capitalization Subsequent to Acquisition Southern Terrace Southwind Spreading Oaks Springfield Meadows Suburban Estates Summit Estates Summit Village Sunny Acres Sunnyside Trailmont Twin Oaks Twin Pines Valley High Valley Hills Valley Stream Valley View HB Valley View I Valley View II Voyager Estates Waterfalls Wayside Weatherly Estates Wellington Estates Wood Valley Woodland Manor Woodlawn Woods Edge Worthington Arms Youngstown Estates Columbiana, OH Jackson, NJ Athens, OH Springfield, OH Greensburg, PA Ravenna, OH Marion, IN Somerset, PA Eagleville, PA Goodlettsville, TN Olmsted Falls, OH Goshen, IN Ruffs Dale, PA Ravenna, OH Mountaintop, PA Honey Brook, PA Ephrata, PA Ephrata, PA West Newton, PA Hamburg, NY Bellefontaine, OH Lebanon, TN Export, PA Caledonia, OH West Monroe, NY Eatontown, NJ West Lafayette, IN Lewis Center, OH Youngstown, NY $ (2) $ 20,936 (8) -0- -0- 4,868 (1) -0- 5,419 -0- 2,880 5,553 57,743 (2) (5) 3,005 -0- (2) (3) (3) (1) (1) 4,096 7,028 -0- -0- (1) (8) 4,973 8,147 -0- 501,135 $ $ 63 $ 100 67 3,387 $ 603 1,327 1,230 299 198 522 287 450 411 823 650 284 996 323 1,380 191 72 742 424 196 1,184 896 260 77 157 1,808 437 269 73,440 $ 3,093 5,837 2,779 2,821 6,114 2,674 1,867 3,527 6,307 2,267 6,542 3,191 5,348 4,359 1,746 3,143 3,812 1,080 4,034 6,179 1,753 841 281 13,321 12,706 1,606 587,633 $ 897 3,507 5,291 3,207 6,071 5,477 5,080 4,550 1,157 4,207 2,456 7,347 2,682 12,851 1,323 5,460 1,251 92 7,624 7,353 3,625 4,430 8,463 7,827 6,682 2,531 14,137 8,825 1,963 866,406 -105- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column E (9) (10) Gross Amount at Which Carried at 12/31/23 Column F Site, Land & Building Improvements Accumulated Name Location Land and Rental Homes Total Depreciation $ Allentown Arbor Estates Auburn Estates Bayshore Estates Birchwood Farms Boardwalk Broadmore Estates Brookside Brookview Camelot Village Camelot Woods Candlewick Court Carsons Catalina Cedarcrest Center Manor Chambersburg Chelsea Cinnamon Woods City View Clinton Collingwood Colonial Heights Countryside Estates Countryside Estates Countryside Village Cranberry Crestview Cross Keys Crossroads Village D&R Village Dallas Mobile Home Deer Meadows Deer Run Evergreen Estates Evergreen Manor Evergreen Village Fairview Manor Fifty-One Estates Fohl Village Forest Creek Forest Park Fox Chapel Village Frieden Manor Friendly Village Garden View Estates Green Acres Gregory Courts Hayden Heights Heather Highlands Hidden Creek High View Acres Highland Memphis, TN Doylestown, PA Orrville, OH Sandusky, OH Birch Run, MI Elkhart, IN Goshen, IN Berwick, PA Greenfield Ctr, NY Anderson, IN Altoona, PA Owosso, MI Chambersburg, PA Middletown, OH Vineland, NJ Monaca, PA Chambersburg, PA Sayre, PA Conowingo, MD Lewistown, PA Tiffin, OH Horseheads, NY Wintersville, OH Muncie, IN Ravenna, OH Columbia, TN Cranberry Twp, PA Athens, PA Duncansville, PA Mount Pleasant, PA Clifton Park, NY Toronto, OH New Springfield, OH Dothan, AL Lodi, OH Bedford, OH Mantua, OH Millville, NJ Elizabeth, PA Canton, OH Elkhart, IN Cranberry Twp, PA Cheswick, PA Schuylkill Haven, PA Perrysburg, OH Orangeburg, SC Chambersburg, PA Honey Brook, PA Dublin, OH Inkerman, PA Erie, MI Export, PA Elkhart, IN 1,500 2,650 114 562 70 1,796 1,120 372 123 828 766 159 176 1,008 408 201 118 124 1,884 137 142 196 67 174 205 609 182 362 61 183 392 276 226 301 119 49 105 2,535 1,330 1,023 440 75 372 1,420 1,266 158 63 370 248 573 618 825 510 $ 23,878 $ 11,820 2,607 14,942 7,737 5,178 25,260 9,582 14,416 5,481 6,310 16,215 5,863 30,932 5,785 6,079 4,681 4,810 3,425 2,368 3,855 6,819 11,109 10,182 9,696 26,420 6,420 5,610 5,733 1,633 4,672 7,148 7,378 16,636 1,804 4,049 4,058 10,744 9,537 18,668 10,284 12,362 9,403 11,203 40,518 7,209 767 2,569 3,505 19,509 28,885 5,278 14,299 25,378 14,470 2,721 15,504 7,807 6,974 26,380 9,954 14,539 6,309 7,076 16,374 6,039 31,940 6,193 6,280 4,799 4,934 5,309 2,505 3,997 7,015 11,176 10,356 9,901 27,029 6,602 5,972 5,794 1,816 5,064 7,424 7,604 16,937 1,923 4,098 4,163 13,279 10,867 19,691 10,724 12,437 9,775 12,623 41,784 7,367 830 2,939 3,753 20,082 29,503 6,103 14,809 $ (8,684) (3,935) (685) (1,153) (2,379) (1,237) (8,568) (3,197) (4,466) (689) (599) (4,475) (1,622) (7,427) (3,431) (396) (1,270) (1,445) (683) (785) (1,591) (1,850) (3,158) (2,579) (2,716) (7,467) (3,830) (1,641) (2,211) (406) (2,548) (1,757) (1,835) (1,056) (564) (1,242) (823) (6,849) (1,318) (777) (4,097) (5,204) (1,563) (3,446) (4,836) (336) (269) (907) (1,036) (8,176) (1,249) (1,099) (5,221) -106- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column E (9) (10) Gross Amount at Which Carried at 12/31/23 Column F Site, Land & Building Improvements Name Location Land and Rental Homes Total $ $ Highland Estates Hillcrest Crossing Hillcrest Estates Hillside Estates Holiday Village Holiday Village Holly Acres Hudson Estates Huntingdon Pointe Independence Park Iris Winds Kinnebrook Lake Erie Estates Lake Sherman Lakeview Meadows Laurel Woods Little Chippewa Mandell Trails Maple Manor Marysville Estates Meadowood Meadows Meadows of Perrysburg Melrose Village Melrose West Memphis Blues Mighty Oak Monroe Valley Moosic Heights Mount Pleasant Village Mountaintop New Colony Northtowne Meadows Oak Ridge Oak Tree Oakwood Lake Olmsted Falls Oxford Parke Place Perrysburg Estates Pikewood Manor Pine Ridge/Pine Manor Pine Valley Pleasant View Port Royal Redbud Estates River Valley Rolling Hills Estates Rostraver Estates Saddle Creek Sandy Valley Shady Hills Somerset/Whispering Kutztown, PA Lower Burrell, PA Marysville, OH Greensburg, PA Nashville, TN Elkhart, IN Erie, PA Peninsula, OH Tarrs, PA Clinton, PA Sumter, SC Monticello, NY Fredonia, NY Navarre, OH Lakeview, OH Cresson, PA Orrville, OH Butler, PA Taylor, PA Marysville, OH New Middletown, OH Nappanee, IN Perrysburg, OH Wooster, OH Wooster, OH Memphis, TN Albany, GA Jonestown, PA Avoca, PA Mount Pleasant, PA Narvon, PA West Mifflin, PA Erie, MI Elkhart, IN Jackson, NJ Tunkhannock, PA Olmsted Falls, OH West Grove, PA Elkhart, IN Perrysburg, OH Elyria, OH Carlisle, PA Apollo, PA Bloomsburg, PA Belle Vernon, PA Anderson, IN Marion, OH Carlisle, PA Belle Veron, PA Dothan, AL Magnolia, OH Nashville, TN Somerset, PA 404 961 1,277 484 1,632 491 194 141 399 686 122 509 140 290 726 433 113 2,537 674 818 152 549 4,500 767 94 336 234 114 330 280 249 448 1,311 500 1,150 379 569 155 4,317 407 1,071 145 732 307 505 1,753 236 517 814 718 270 337 1,489 14,132 13,636 9,188 6,762 23,099 26,475 5,078 10,252 3,830 9,695 12,450 16,291 8,421 18,255 5,617 10,472 3,946 6,212 19,429 17,248 9,911 19,503 7,419 15,087 1,192 18,249 3,844 1,799 9,111 5,347 3,623 7,277 30,537 11,818 22,231 4,843 5,936 4,025 17,965 10,996 42,455 11,762 17,200 5,770 21,554 23,803 11,421 4,831 5,187 4,494 18,756 9,087 12,563 $ 14,536 14,597 10,465 7,246 24,731 26,966 5,272 10,393 4,229 10,381 12,572 16,800 8,561 18,545 6,343 10,905 4,059 8,749 20,103 18,066 10,063 20,052 11,919 15,854 1,286 18,585 4,078 1,913 9,441 5,627 3,872 7,725 31,848 12,318 23,381 5,222 6,505 4,180 22,282 11,403 43,526 11,907 17,932 6,077 22,059 25,556 11,657 5,348 6,001 5,212 19,026 9,424 14,052 Accumulated Depreciation $ (8,937) (2,236) (1,796) (1,912) (5,295) (6,878) (1,466) (2,967) (740) (2,161) (826) (7,835) (918) (7,174) (742) (3,772) (1,062) (307) (6,798) (2,780) (2,789) (4,824) (1,176) (3,969) (412) (4,235) (129) (611) (2,860) (1,302) (1,017) (975) (4,880) (4,219) (872) (1,348) (1,878) (2,501) (4,920) (1,763) (6,779) (5,496) (4,712) (1,769) (9,878) (4,020) (5,079) (1,381) (1,509) (230) (7,088) (3,147) (5,687) -107-  UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (in thousands) Column A Description Column E (9) (10) Gross Amount at Which Carried at 12/31/23 Column F Site, Land & Building Improvements Name Location Land and Rental Homes Total $ $ Southern Terrace Southwind Spreading Oaks Springfield Meadows Suburban Estates Summit Estates Summit Village Sunny Acres Sunnyside Trailmont Twin Oaks Twin Pines Valley High Valley Hills Valley Stream Valley View HB Valley View I Valley View II Voyager Estates Waterfalls Wayside Weatherly Estates Wellington Estates Wood Valley Woodland Manor Woodlawn Woods Edge Worthington Arms Youngstown Estates Columbiana, OH Jackson, NJ Athens, OH Springfield, OH Greensburg, PA Ravenna, OH Marion, IN Somerset, PA Eagleville, PA Goodlettsville, TN Olmsted Falls, OH Goshen, IN Ruffs Dale, PA Ravenna, OH Mountaintop, PA Honey Brook, PA Ephrata, PA Ephrata, PA West Newton, PA Hamburg, NY Bellefontaine, OH Lebanon, TN Export, PA Caledonia, OH West Monroe, NY Eatontown, NJ West Lafayette, IN Lewis Center, OH Youngstown, NY 63 100 67 1,230 299 198 522 287 662 411 998 650 284 996 323 1,380 280 72 742 424 538 1,184 896 260 77 135 1,808 437 269 4,284 4,110 6,618 6,300 11,908 8,256 7,901 10,664 3,619 6,074 5,808 13,654 4,949 19,393 4,514 10,808 5,521 1,838 10,767 11,165 4,363 8,464 14,642 9,580 7,523 2,834 27,458 21,531 3,569 $ 4,347 4,210 6,685 7,530 12,207 8,454 8,423 10,951 4,281 6,485 6,806 14,304 5,233 20,389 4,837 12,188 5,801 1,910 11,509 11,589 4,901 9,648 15,538 9,840 7,600 2,969 29,266 21,968 3,838 Accumulated Depreciation $ (1,610) (2,467) (2,822) (1,224) (4,268) (2,280) (2,061) (3,940) (1,253) (2,050) (2,172) (4,505) (1,409) (5,160) (1,218) (3,406) (2,161) (737) (2,179) (5,658) (733) (4,613) (2,575) (4,208) (2,290) (1,174) (6,578) (5,289) (1,040) $ 83,949 $ 1,443,530 $ 1,527,479 $ (391,920) -108- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 Column A Description Name Location Allentown Arbor Estates Auburn Estates Bayshore Estates Birchwood Farms Boardwalk Broadmore Estates Brookside Brookview Camelot Village Camelot Woods Candlewick Court Carsons Catalina Cedarcrest Center Manor Chambersburg Chelsea Cinnamon Woods City View Clinton Collingwood Colonial Heights Countryside Estates Countryside Estates Countryside Village Cranberry Crestview Cross Keys Crossroads Village D&R Village Dallas Mobile Home Deer Meadows Deer Run Evergreen Estates Evergreen Manor Evergreen Village Fairview Manor Fifty-One Estates Fohl Village Forest Creek Forest Park Fox Chapel Village Frieden Manor Friendly Village Garden View Estates Green Acres Gregory Courts Hayden Heights Heather Highlands Hidden Creek High View Acres Highland Memphis, TN Doylestown, PA Orrville, OH Sandusky, OH Birch Run, MI Elkhart, IN Goshen, IN Berwick, PA Greenfield Ctr, NY Anderson, IN Altoona, PA Owosso, MI Chambersburg, PA Middletown, OH Vineland, NJ Monaca, PA Chambersburg, PA Sayre, PA Conowingo, MD Lewistown, PA Tiffin, OH Horseheads, NY Wintersville, OH Muncie, IN Ravenna, OH Columbia, TN Cranberry Twp, PA Athens, PA Duncansville, PA Mount Pleasant, PA Clifton Park, NY Toronto, OH New Springfield, OH Dothan, AL Lodi, OH Bedford, OH Mantua, OH Millville, NJ Elizabeth, PA Canton, OH Elkhart, IN Cranberry Twp, PA Cheswick, PA Schuylkill Haven, PA Perrysburg, OH Orangeburg, SC Chambersburg, PA Honey Brook, PA Dublin, OH Inkerman, PA Erie, MI Export, PA Elkhart, IN Column G Column H Column I Date Acquired Depreciable Life 1986 2013 2013 2021 2013 2017 2013 2010 1977 2018 2020 2015 2012 2015 1986 2022 2012 2012 2017 2011 2011 2012 2012 2012 2014 2011 1986 2012 1979 2017 1978 2014 2014 2021 2014 2014 2014 1985 2019 2022 2013 1982 2017 2012 2019 2022 2012 2013 2014 1992 2022 2017 2013 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 Date of Construction prior to 1980 1959 1971/1985/1995 1969 1976-1977 1995-1996 1950/1990 1973-1976 prior to 1970 1998 1999 1975 1963 1968-1976 1973 1957 1955 1972 2005 prior to 1980 1968/1987 1970 1972 1996 1972 1988/1992 1974 1964 1961 1955/2004 1972 1950-1957 1973 1960 1965 1960 1960 prior to 1980 1970's 1972 1996-1997 prior to 1980 1975 1969 1970 1962 1978 1970 1973 1970 1993 1984 1969 -109- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 Column A Description Name Location Highland Estates Hillcrest Crossing Hillcrest Estates Hillside Estates Holiday Village Holiday Village Holly Acres Hudson Estates Huntingdon Pointe Independence Park Iris Winds Kinnebrook Lake Erie Estates Lake Sherman Lakeview Meadows Laurel Woods Little Chippewa Mandell Trails Maple Manor Marysville Estates Meadowood Meadows Meadows of Perrysburg Melrose Village Melrose West Memphis Blues Might Oak Monroe Valley Moosic Heights Mount Pleasant Village Mountaintop New Colony Northtowne Meadows Oak Ridge Oak Tree Oakwood Lake Olmsted Falls Oxford Parke Place Perrysburg Estates Pikewood Manor Pine Ridge/Pine Manor Pine Valley Pleasant View Port Royal Redbud Estates River Valley Rolling Hills Estates Rostraver Estates Saddle Creek Sandy Valley Shady Hills Somerset/Whispering Southern Terrace Southwind Spreading Oaks Kutztown, PA Lower Burrell, PA Marysville, OH Greensburg, PA Nashville, TN Elkhart, IN Erie, PA Peninsula, OH Tarrs, PA Clinton, PA Sumter, SC Monticello, NY Fredonia, NY Navarre, OH Lakeview, OH Cresson, PA Orrville, OH Butler, PA Taylor, PA Marysville, OH New Middletown, OH Nappanee, IN Perrysburg, OH Wooster, OH Wooster, OH Memphis, TN Albany, GA Jonestown, PA Avoca, PA Mount Pleasant, PA Narvon, PA West Mifflin, PA Erie, MI Elkhart, IN Jackson, NJ Tunkhannock, PA Olmsted Falls, OH West Grove, PA Elkhart, IN Perrysburg, OH Elyria, OH Carlisle, PA Apollo, PA Bloomsburg, PA Belle Vernon, PA Anderson, IN Marion, OH Carlisle, PA Belle Veron, PA Dothan, AL Magnolia, OH Nashville, TN Somerset, PA Columbiana, OH Jackson, NJ Athens, OH Column G Column H Column I Date Acquired Depreciable Life 1979 2017 2017 2014 2013 2015 2015 2014 2015 2014 2021 1988 2020 1987 2016 2001 2013 2022 2010 2017 2012 2015 2018 2013 2013 1985 2023 2012 2010 2017 2012 2019 2019 2013 2022 2010 2012 1974 2017 2018 2018 1969 1995 2010 1983 2018 1986 2013 2014 2022 1985 2011 2004 2012 1969 1996 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 Date of Construction 1971 1971 1995 1980 1967 1966 1977/2007 1956 2000 1987 1972 1972 1965-1975 prior to 1980 1995 prior to 1980 1968 1969 1972 1960s to 2015 1957 1965-1973 1998 1970-1978 1995 1955 2023 1969 1972 1977-1986 1972 1975 1988, 1995, 1999 1990 1958 1972 1953/1970 1971 1995-1996 1972 1962 1961 prior to 1980 1960's 1973 1966/1998/2003 1950 1972-1975 1970 1972 prior to 1980 1954 prior to 1980 1983 1969 prior to 1980 -110-  UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 Column A Description Column G Column H Column I Name Location Date of Construction Date Acquired Depreciable Life Springfield Meadows Suburban Estates Summit Estates Summit Village Sunny Acres Sunnyside Trailmont Twin Oaks Twin Pines Valley High Valley Hills Valley Stream Valley View HB Valley View I Valley View II Voyager Estates Waterfalls Wayside Weatherly Estates Wellington Estates Wood Valley Woodland Manor Woodlawn Woods Edge Worthington Arms Youngstown Estates Springfield, OH Greensburg, PA Ravenna, OH Marion, IN Somerset, PA Eagleville, PA Goodlettsville, TN Olmsted Falls, OH Goshen, IN Ruffs Dale, PA Ravenna, OH Mountaintop, PA Honey Brook, PA Ephrata, PA Ephrata, PA West Newton, PA Hamburg, NY Bellefontaine, OH Lebanon, TN Export, PA Caledonia, OH West Monroe, NY Eatontown, NJ West Lafayette, IN Lewis Center, OH Youngstown, NY 1970 1968/1980 1969 2000 1970 1960 1964 1952/1997 1956/1990 1974 1960-1970 1970 1970 1961 1999 1968 prior to 1980 1960 1997 1970/1996 prior to 1980 prior to 1980 1964 1974 1968 1963 2016 2010 2014 2018 2010 2013 2011 2012 2013 2014 2014 2015 2013 2012 2012 2015 1997 2016 2006 2017 1996 2003 1978 2015 2015 2013 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 5 to 27.5 -111- UMH PROPERTIES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2023 (1) Represents one mortgage payable secured by twenty-eight properties and one mortgage payable secured by the rental homes therein. (2) Represents one mortgage payable secured by eight properties. (3) Represents one mortgage payable secured by six properties. (4) Represents one mortgage payable secured by four properties and one mortgage payable secured by the rental homes therein. (5) Represents one mortgage payable secured by four properties. (6) Represents one mortgage payable secured by two properties. (7) Represents one mortgage payable secured by two properties. (8) Represents one mortgage payable secured by two properties. (9) Reconciliation /----------FIXED ASSETS-----------/ (in thousands) 12/31/22 12/31/23 12/31/21 Balance – Beginning of Year $1,379,527 $1,198,104 $1,100,256 Additions: Acquisitions Improvements Total Additions Deletions 3,650 151,495 155,145 85,553 108,544 194,097 (7,193) (12,674) 8,546 94,213 102,759 (4,911) Balance – End of Year $1,527,479 $1,379,527 $1,198,104 /-----ACCUMULATED DEPRECIATION-----/ (in thousands) 12/31/22 12/31/21 12/31/23 Balance – Beginning of Year $340,776 $295,740 $254,369 Additions: Depreciation Total Additions Deletions 53,685 53,685 (2,541) 46,650 46,650 (1,614) 43,064 43,064 (1,693) Balance – End of Year $391,920 $340,776 $295,740 (10) The aggregate cost for Federal tax purposes approximates historical cost. -112- BOARD OF DIRECTORS OFFICERS & EXECUTIVE MANAGEMENT AMY L. BUTEWICZ Doctor of Pharmacy Realtor of Keller Williams Princeton Real Estate JEFFREY A. CARUS Founder and Managing Partner of JAC Partners, LLC ANNA T. CHEW Executive Vice President, Chief Financial Officer and Treasurer KIERNAN CONWAY Principal of KCnomics, LLC CCIM Institute Chief Economist Instructor to Bank Regulatory Federal Financial Institutions Examination Council (FFIEC) MATTHEW I. HIRSCH Attorney-At-Law Law Office of Matthew I. Hirsch EUGENE W. LANDY Founder and Chairman of the Board MICHAEL P. LANDY Former President and Chief Executive Officer of Monmouth Real Estate Investment Corporation SAMUEL A. LANDY President and Chief Executive Officer STUART LEVY Vice President of Real Estate Finance of Helaba-Landesbank Hessen-Thüringen WILLIAM E. MITCHELL Partner of Strategy Capital LLC ANGELA D. PRUITT-MARRIOTT Crisis Communication Specialist of Sitrick and Company KENNETH K. QUIGLEY, JR. Attorney-At-Law President Emeritus of Curry College EUGENE W. LANDY Founder and Chairman of the Board ABBY KARNOFSKY Vice President of Marketing SAMUEL A. LANDY President and Chief Executive Officer GEORGE KLINE Vice President of Corporate Security ANNA T. CHEW Executive Vice President, Chief Financial Officer and Treasurer JEREMY LANDY Vice President of Community Media Relations CRAIG KOSTER Executive Vice President, General Counsel and Secretary BRETT TAFT Executive Vice President and Chief Operating Officer DANIEL LANDY Executive Vice President of UMH and President of UMH OZ Fund, LLC JEFFREY V. YORICK Executive Vice President of Engineering REGINA BEASLEY Senior Vice President AYAL DREIFUSS Senior Vice President of Rental Operations CHRISTINE LINDSEY Senior Vice President ROBERT VAN SCHUYVER Senior Vice President JEFFREY WOLFE Senior Vice President of Field Operations KRISTIN LANGLEY Vice President and Controller JAMES O. LYKINS Vice President of Capital Markets NELLI MADDEN Vice President of Investor Relations AARON POTTER Vice President of ESG T.C. SHEPPARD Vice President of Consumer Finance ALAN PATTERSON Assistant Vice President of Engineering BRITTNEE SPERLING Assistant Controller KEVIN MILLER Chief Financial Officer of UMH OZ Fund, LLC BECKY COLERIDGE Vice President of Investor Relations and Controller of UMH OZ Fund, LLC CORPORATE INFORMATION CORPORATE OFFICE 3499 Route 9N, Suite 3C Freehold, NJ 07728 TRANSFER AGENT & REGISTRAR EQ PO Box 500 Newark, NJ 07101 INDEPENDENT AUDITORS PKF O’Connor Davies, LLP 245 Park Avenue New York, NY 10167 PRESS CONTACT amarriott@sitrick.com WEBSITE ADDRESS www.umh.reit COMMON STOCK LISTINGS NYSE: UMH TASE: UMH EMAIL ADDRESS ir@umh.com UMH PROPERTIES, INC. Established in 1968 3499 Route 9 North | Freehold, NJ 07728 www.umh.reit 732.577.9997 NYSE: UMH TASE: UMH 

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