UMH Properties Inc (UMH) 2014 Q4 法說會逐字稿

Good morning, and welcome to the UMH Properties fourth quarter and year end 2014 earnings conference call.

(Operator Instructions)

Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Susan Jordan, Director of Investor Relations. Thank you, Ms. Jordan, you may begin.

Thank you very much, operator. Our 10-K that we filed with the SEC yesterday is available on the Company's website at IR.UMH.com. I would like to remind everyone that certain statements made during this conference call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties.

Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the Company's annual 2014 earnings release and filings with the Securities and Exchange Commission. The Company disclaims any obligation to update its forward-looking statements.

Having said that, I'd like to introduce Management with us today. Eugene Landy, Chairman; Samuel Landy, President and Chief Executive Officer; and Anna Chew, Chief Financial Officer. It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you very much, Susan. Good morning, everyone, and thank you for joining us. We are pleased to report our results for the year ended December 31, 2014. UMH continued to execute its growth strategy of using debt preferred stock and equity raised through the DRIP and SIP to purchase well-located communities in our target markets including the energy rich Marcellus and Utica shale regions.

We believe this strategy will result in increased funds from operations per share and will result in substantial share appreciation over time. During 2014, we acquired 14 manufactured home communities containing approximately 1,600 developed homesites for a total purchase price of $42.6 million. This represents a 12% increase in total homesites over the prior year.

Additionally, subsequent to year end, we acquired an additional community containing 141 developed homesites in Erie, Pennsylvania, for a purchase price of $3.8 million. Over the past 5 years, we have more than doubled our portfolio by acquiring a total of 61 communities containing over 8,300 developed homesites. Our portfolio is now comprised of 89 communities with 15,200 developed homesites located throughout seven states. We have opportunistically executed our growth strategy as competition has increased over the past year and prices for communities have risen substantially.

We continue to seek acquisitions in our target markets, and in addition to the acquisition just completed, we have definitive agreements to purchase three manufactured home communities in Pennsylvania with a total of 482 developed homesites for approximately $9.1 million. These transactions are anticipated to close during the second quarter of 2015. We are currently in various stages of negotiations for additional community acquisitions.

Our growth strategy is to purchase communities in strong geographic areas, make appropriate capital improvements including rental homes, add sales staff and marketing, and thereby increase income and occupancy. We believe our business plan will substantially increase the value of these communities. We anticipate adding an additional $100 million in communities over the next few years. While community acquisitions often require additional investments in time and capital to bring these communities up to our high standards, we are confident that these transactions will have a favorable impact in delivering long-term value to our shareholders.

With regards to occupancy, overall occupancy increased 80 basis points from 81.5% at year-end 2013 to 82.3% currently. Same store occupancy increased 170 basis points from 81.5% to 83.2% currently. Occupancy increases have been driven by home rentals. Over the past two years, we have added approximately 1,500 rental units to our community. At year end, we had a total of 2,600 rental units. Occupancy in rental units continues to be strong and is currently 91.5%.

Much of the existing vacancies is related to the time it takes to set up homes after they are purchased or to upgrading rentals acquired in acquisitions. Occupied rental units now represent approximately 19% of total sites. Modern manufactured homes are a fantastic form of rental housing. We can provide a 1,000 square foot, three bedroom, two bath house in most of our communities for $800 per month. At that price, our homes are very attractive and generate occupancy and revenue increases.

Rental homes should continue to generate revenue for the life of the home, which we believe will be at least 40 years. Rental homes efficiently use our on-site leasing and maintenance staff to generate increased profits from our communities. Our sales of manufactured homes remain at low levels with $7.5 million in homes sold this past year as compared to $8.7 million in 2013. Nevertheless, because of the fundamental need for high quality affordable housing, we have continued to strengthen our sales operations and now operate four sales centers.

Although these sales centers have not yet generated meaningful sales, they have helped drive rental demand to our communities. The shift from home ownership to renters has been taking place not just in our sector but throughout the overall housing market. As a result of tight credit standards, low job security, limited wage growth, and the recent housing correction, the home ownership rate in the United States has dropped to a 20-year low of 64%.

We continue to be optimistic about future sales and rental prospects given the basic need for quality affordable housing. We believe our vacant existing lots and our vacant land are valuable assets that will earn significant income as housing demand increases. And now, Anna will provide you with greater detail on our results for the quarter and for the year.

Thank you, Sam. Core funds from operations, or core FFO, was $3.8 million or $0.16 per diluted share for the fourth quarter of 2014 compared to $1.1 million or $0.05 per diluted share for the fourth quarter of 2013, representing an increase of 220%. Core FFO, excluding securities gains, was $3.5 million or $0.15 per diluted share for the fourth quarter of 2014 as compared to $825,000 or $0.04 per diluted share in the prior-year period.

For the full-year 2014, core FFO was $12.3 million or $0.55 per diluted share compared to $11.4 million or $0.61 per diluted share in 2013. For the full-year 2014, core FFO excluding securities gains was $10.8 million or $0.48 per diluted share compared to $7.3 million or $0.39 per diluted share in the prior year, representing an increase of 23%. Rental and related income for the quarter was $16.9 million compared to $14.1 million a year ago, representing an increase of 20%. For the full year, rental and related income was $63.9 million as compared to $53.5 million for 2013, resulting in an increase of 19%.

These increases were primarily due to the acquisition of 14 communities, the addition of rental units, and the growth in occupancy. Our community operating expenses for the quarter were $8.4 million compared to $8.7 million a year ago, representing a decrease of 3%. For the full-year 2014, community operating expenses were $33.6 million compared to $29.1 million for 2013 for an increase of 15%. This increase was primarily due to our acquisitions.

Community operating expenses for 2014 were 52.6% of rental and related income, representing a 190-basis point reduction from the 54.5% for 2013. As we noted in the past, our expense ratio will continue to improve as we upgrade and integrate our acquisitions and increase our occupancy rate and rental income. Income from community operations amounted to $8.6 million for the quarter compared to $5.4 million a year ago, representing a 59% increase.

For the full year, income from community operations amounted to $30.3 million compared to $24.3 million for 2013, representing a 24% increase. Our loss from the sales operations, including interest expense, increased from $640,000 for 2013 to $1.9 million for 2014. This loss does include costs associated with our sales centers. We believe that over the long term, these sales centers will have the potential to generate meaningful positive results.

As of year end, our capital structure consisted of approximately $260 million in debt, of which $183 million was community level mortgage debt and $77 million were loans payable. 95.7% of our mortgage debt is fixed rate. The weighted average interest rate on our mortgage debt is 4.8%, and the weighted average maturity is 5.3 years. We also had a total of $92 million in perpetual preferred equity at year end.

Our preferred stock, combined with an equity market capitalization of $233 million and our $260 million in debt results in a total market capitalization of approximately $585 million at year end. From a credit standpoint, our net debt to total market capitalization was 43%. Our fixed charge coverage was 1.7 times, and our net debt to total EBITDA was 8.3 times. From a liquidity standpoint, we ended the quarter with $8.1 million in cash and cash equivalents, and $15 million potentially available on our credit facility pursuant to an accordion feature.

We also had $10.2 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory. In addition, we held $63.6 million in marketable REIT securities encumbered by $19.4 million in margin loans at 2% interest. Generally, 50% of the market value of our REIT securities may be borrowed on margin. We intend to limit the securities portfolio to be no more than approximately 15% of our gross assets. At the end of the year, we had $5.1 million in net unrealized gains on our securities investments in addition to the $1.5 million in total gains realized in 2014.

To further enhance our liquidity, UMH has previously announced that we would take advantage of the unprecedented low interest rate environment by refinancing our portfolio of our manufactured home communities on a long-term basis. Preliminarily, we expect to raise approximately $55 million to $60 million from the financing and refinancing of 10 communities and provide $40 million to $45 million in free cash. Subsequent to year end, we closed on two Freddie Mac mortgages through Wells Fargo for total proceeds of $10.3 million.

These loans have a 10-year maturity with principal repayments based on a 30-year amortization schedule and have a weighted average interest rate of 3.9%. We used the proceeds to retire a variable rate mortgage of $6.8 million. We expect to close on the remaining loans during the first quarter. We anticipate that these refinancings will have a favorable impact on FFO. And now, let me turn it over to Gene before we open up the call for questions.

Thank you, Anna. As Founder and Chairman of the Board of Directors, I am pleased to announce that UMH is making substantial progress on its operational business plan. Our communities are strategically very well located. We are taking advantage of the economic and population growth that has resulted from the oil and gas deposits in Pennsylvania and Ohio.

These vast resources are substantial catalysts for major growth in the regions in which we operate. As I have stressed in the past, these are long-term catalysts and will require a long-term approach. UMH is experiencing favorable development. The manufactured housing industry has experienced very strong demand for rental units, and we are capitalizing on that demand. UMH is also experiencing an improved credit market. We currently have $260 million in mortgage or other debt.

Several of our communities can be refinanced over the next 3 years. This will add $100 million to our investable capital base, which will help allow us to maintain and eventually even increase our present cash distribution of $0.72 a share. As Anna mentioned, we have already begun that process. In real estate, realizing growth in individual property values can be achieved through refinancing. This is a tax advantage method of realizing increased value.

The UMH story is predicated on a strong housing market and an even stronger market for affordable housing. UMH believes manufactured housing offers special cost advantages. UMH has also invested heavily in areas that will experience above average growth. This includes the rich oil and gas deposits in the Marcellus and Utica shale areas.

With the growth of our per share earnings and the favorable developments previously discussed, Management will recommend to the Board of Directors the continuation of our current $0.18 a quarter with $0.72 annual per share cash distribution. We will now be happy to take questions.

We will now begin the question-and-answer session.

(Operator Instructions)

Our first question will come from Craig Kucera of Wunderlich Securities.

Good morning, guys.

Good morning.

Nice quarter. I wanted to follow up on your expenses, which this year, you've actually done a really good job as far as keeping those kind of in line, and I know in the past, there has been some non-recurring expenses to bring communities up to market, more or less. Where are we in that process and how much of this quarter's expense was sort of in that bucket for lack of a better term?

As we continue to say, ultimately, communities will operate on a 50% expense ratio if we are paying the water and sewer. And if it's separately metered and the residents are paying the water and sewer, the expense ratio will go to 30%. That's the goal. To the extent any community is not meeting that goal, the reason is we purchased it with substantial deferred maintenance and it takes one to two years to clean that up, so you just look at the number of acquisitions we did each year, and those are the ones that bring the expense ratio over 50%, but we're working every day, and there are two different ways to get the expense ratio down.

One is add revenue through rental units, which just the increased revenue brings down the expense ratio. And the second way is as you finish your repairs and maintenance that are related to it being an acquisition, the expenses fall. So it takes a year but the second year, it should be finished, and if it takes three years, it took longer than we thought, but you know, that depends on the communities. There's two really good communities we acquired that we expected three years, but generally we expect to be done in two years.

And where would you say that you guys are in that process?

We're getting closer every day because the expense ratio is down to 52%. And we believe it's going to continue to drop.

But don't forget, we continue to purchase communities so there will be some expenses on those new communities, so it's almost like a never-ending cycle. But we do, as you see, have, for our previous communities, we have dropped those expense ratios.

Right. When you look at your capital spending plan for this year as far as acquiring more rental units and putting them in their place, kind of what is the current plan? Is it still putting 500-plus units in your existing communities?

Yes, it's going to be 500 units which is approximately $40,000 per unit, $20 million. The demand is there. Rental units are doing fantastic. We point out that manufactured homes may be the best form of rental housing ever created. We provide a 1,000 square foot house that costs us $40,000, and we are providing it to the resident for $800 per month. When someone is building an apartment, you know, it's costing them $200,000, $200 per square foot, so we're incredibly cost competitive.

And on top of that, when you see demand for rental housing, the apartment developer is going to have a one year period to get their approvals plus another year of construction. We've purchased existing vacant sites fully permitted, built in place, and it's just an eight week process to add the house as we believe demand dictates. So we think the rental program is fantastic.

And that doesn't mean we will stick with the 500. If demand is faster, we will go faster. For instance, this year, we added 900 rental units. That includes about 100 that we purchased with community acquisitions. But we did an additional 800, if you think about it this year.

Our goal is to have approximately $72 million in rental revenue in 2015, and in 2014, our rental revenue was approximately $64 million. So we're projecting about an $8 million increase in rental revenue for UMH.

And is that predicated on 500 units?

That is predicated on 500 units, correct.

So if you accelerated that, and the demand were there and the market could bear it, then you could certainly outperform that, okay. I'll go back in the queue. Thank you.

The next question will come from Brian Hollenden of Sidoti.

Good morning, guys. Thanks for taking my call.

Hi, Brian. How are you doing?

Good. Can you talk a little bit about the drop in oil and why that is not affecting rental demands?

Sure. In fact, I just was driving through Harrisburg the other day and I saw pipe piled up the way they pile up storage containers over at the shipping yards on the New Jersey Turnpike. The piping projects have already been contracted for and are proceeding full speed ahead. And we're getting a lot of housing demand from the pipe layers. There is also the projects pertaining to cracker plants.

There is the existing wells that have already been drilled. And so even if they have cut back the number of new wells they are going to drill, they are not stopping the pipeline projects. Those are very much going on at this moment, and we're getting plenty of occupancy from them. So you know, I have been to the Marcellus Shale conference.

I believe -- it's my own personal belief that the decline in oil prices is relatively short term and eventually you'll be drilling more wells because as the pipeline is put into place, more and more people will switch their energy to natural gas, which will come from Pennsylvania and Ohio. But even as we wait for that, nothing is slowing down the pipeline projects.

Okay. Thank you. And one other question, I'll jump back in the queue. Any region where occupancy is high enough where you're raising rents and kind of what is the overall expectation for rental increases?

So I have a long story theory about that. There are places where we are getting to 100% occupancy. But at the same time, it's hard to raise rents more than 4%. I don't think it's good for the product or good for the communities to rapidly raise rents, but you can get your 4% rent increase. Which gets you to why rentals are even better than selling houses.

On rentals, you can raise the rents as the resident turns over, and you can raise the rent more than 4% and you can raise the rents as the market bears. I wonder what Sam Zell would say if you ask him, would he have been better off in California owning all these communities as rental units rather than resident-owned homes because the rent control has been a nightmare in California, and had you owned the houses, had they been rental houses, they probably would not have been rent controlled and you probably would have made an awful lot more money.

Rental units allow you to raise the rents as the market bears whereas in an existing community where the resident made a substantial investment in their house, you probably don't want to go up more than 4% or CPI, whichever is higher.

Our budgets for 2015 include a 4% rent increase on the sites where there is a homeowner on that site.

Thank you.

The next question comes from Dean Shahinian. Please go ahead.

Good. Thank you very much. I had a question about the term relatively short term and long term that has been used. The Chairman, I believe, said that he predicts the decline in energy prices is relatively short term. Earlier in the call, there was a statement of confidence that the financings and acquisitions will determine long-term value to shareholders.

In last year's annual report, the Chairman's letter said it is taking longer than expected for demand for manufactured housing to rebound. And again, on the call, taking the long-term approach, and I just observed that about 20 years ago, the stock price was about where it is now. Could you comment what is in your mind when you are saying the short-term energy prices are down, but long term there's going to be value delivered?

(multiple speakers) I'm not sure I understand the question. We don't subscribe to the assumption that the recent decline in energy prices is at all detrimental to UMH. In fact, it's very -- it really helps our communities when the price of the gasoline goes down, the price of heating goes down, our tenants gain, and if they save $1,000 a year, that's very important.

So we think that the decline in energy prices has been very good for the country and very good for UMH. What Sam was pointing out to you on the oil and gas industry and how we have tied UMH's growth to that by investing with there's going to be terrific growth in that, these pipeline projects are in the billions. I think it's $6 billion.

So when you talk about the magnitude of what's happening in Pennsylvania, Pennsylvania, we expect 2%, 3% increase in employment, and we expect wages to go up, and we expect the state to prosper greatly. And the decline in the oil prices, we don't think is going to have a significant factor because the Marcellus and Utica shale were originally financed and created and developed based on the price of natural gas, and the natural gas market is very good.

I am sure they would like to get an extra $4 per million BTUs, but the price is sufficient to heat the northeast and to heat Philadelphia and to create vast new markets for moving trucks and ships by natural gas instead of by oil. So we think we're only in the first inning of a wonderful age that is caused by the fact that they can do horizontal drilling and they can get these resources that at one time we thought were undevelopable.

And now, they are developable, and they add billions and billions to the economy. And that may be long term. As far as UMH's prospects, you have to realize our basic problem or opportunity is that we have 15,200 sites, and we have 12,200 sites occupied. We have 3,000 vacancies. And when we fill those vacancies, we are going to increase our top line by about $15 million.

So whether you call short term, middle term, long term, that's the objective of the Company, and we are reducing the time it takes to do that by investing say $40 million to put in rental units. But we see as the government statistics show, that we are adding, what is it, almost 300,000 jobs a month into the country, and in Pennsylvania, the job growth is at or better than the national average.

So we are very optimistic that we're going to fill our parks over the next two, three years. That is not a long-term prospect at all. We're going to have growth in our top line, and we believe we'll get commensurate growth in our bottom line in 2015, 2016, 2017. I don't think that's long term at all. Now, going further, we think we're going to gross $72 million in 2015. Over the next 18 years, we're going to double that and gross $140 million.

So if you want to take a long-term view of the Company, the prospects are excellent. But shareholders are not going to have to wait that long. We're very optimistic that over the next one, two, and three years, we're going to solve our basic problem and run our rental projects, UMH's mobile home communities, at full occupancy.

And just add to that, as we pointed out in the last phone call and we point out constantly, we have approximately $600 million in assets with 23 million shares outstanding. Just 4% appreciation comes to about $1 per share. And the market doesn't recognize that and won't recognize it until we either prove it through the refinancing that will bring the cash in that people will have to see and can't deny, or we increase the earnings, which is going to happen over time, and then it can't be denied.

But you know, our belief is that you're correct, in the immediate term, the stock price is not reflecting these steps we've taken to grow the Company. In 2006, we sold $16 million worth of houses and made close to $2 million. The stock price was $16. The manufactured housing industry has been devastated as has pretty much all housing stocks. Many of them have come back faster than we have but we are certainly on the road for quite a recovery.

Great. Thank you very much.

The next question will come from Michael Boulegeris of Boulegeris Investments.

Thank you for taking my questions, and good morning. Sam, could you comment on the goals for FY2015 in terms of your same site occupancy and the rental occupancy? You discussed in general, but could you be a little more specific in terms of what your goals are there?

Sure. In Pennsylvania, we'll continue to add houses as quickly as they rent, which is very quickly. When I look at the list of communities with 100% rental occupancy, it's pretty substantial. And so if they have vacant lots and 100% rental occupancy, you just keep adding rental units. Ohio, that's equally true. Western New York is very slow. Eastern New York is very strong. New Jersey, we generally don't do rental units because it's a very good sales market and we can make money on sales. Nashville has been absolutely fantastic for us, and those communities are filling up.

The Weatherly Estates, the whole community is virtually 100% full. And the other communities that we acquired, we're gaining occupancy every day and eventually, they'll be 100% full. We own Countryside, which is south of Nashville, which was built with something like 320 sites and we bought it with only 160 occupied. So that, you know, it'll take time to fill up, but it's a fantastic community with a swimming pool, clubhouse, gorgeous lots. It's more built for sales than rentals, but sales remain ridiculously difficult due to the regulatory environment.

Last year, there were 46 deals where the buyers completely qualified. They could have been sales. It would have been about $3 million in sales and about $400,000 or more in sales profits but we couldn't close the deals just because people got fed up with the paperwork and just wouldn't keep coming back and bringing whatever the lenders needed.

So because the sales atmosphere is so difficult, that's why we took homes that were in inventory for sale, and rented them, and we also rented the 500 homes we planned to purchase, which is why rental occupancy went up so much. But sales, all it really needs is a change in the regulatory environment. On top of that, if conventional home sales would increase, we currently don't get that 55 and older buyer who is selling their house for $300,000 and coming to us and buying a house for $100,000.

That used to be a substantial part of our business in 2006, and it's a very small part today. So we're incredibly optimistic about the rentals. It's just --.

Do you think that -- let's say the same site occupancy, do you think that could -- you could drive that to 85%, 86% this fiscal year?

Yes, and just thinking about the numbers to be more exact with you, there is 2,300 vacant sites so 10% reduction of vacancies, 230 lots, we'll easily do that. 500 lots, we'll do that. And the question is, will we do more than that? And you know, just play it quarter by quarter. But revenue is growing $40,000 per month or more every month right now.

In your press release, you mentioned that you are experiencing growth in several markets. And I think both you and Gene mentioned the Marcellus and Utica and Western PA. Can you talk about the growth in, let's say, eastern Pennsylvania, southern New Jersey, and Tennessee? What's driving the growth in those areas where you have a presence?

I'll let my father answer more, but wherever there is employment and population growth, the acceptance of our product is fantastic. You set up the house, and four weeks later, it's rented. So there's people coming to the properties. They like the product. They take the product. But I will let you.

Well, we're very competitive. We follow what happens in the REIT industry. The apartment REITs are building 200,000 new apartments a year for $220,000 an apartment. You're talking much more than $1,400 a month for a three bedroom, two bath apartment. We are very competitive with our product, so that we think we're going to do very well as housing demand increases nationwide.

Homes cost $300,000, $400,000. If you don't make a lot of money, you can't afford a new home. Our product, we rent, we put $40,000 units in as rental units. Sam always likes to point in, that's our cost. The value may be $60,000 a unit, and the lots are valued at about $40,000. So where we're able to provide housing at about $100,000 a unit, and that is very, very competitive, and it is -- housing units are badly needed throughout the United States.

The basic housing market will be strong, so that we are confident even in areas that aren't benefiting from the Marcellus, Utica Shale, will do very well. We are a rather large company now. They have approved the casino in Thompson, New York. It's a billion dollar casino. They are going to need 3,000 people to come in and build it.

They are going to need an extra few thousand people in help. And if you -- in our Monticello community, we have what, 30 vacancies. So we are very confident that that community over the next year will be 100% occupied. And we do this community by community. So overall, we're very optimistic about the prospects of UMH Properties.

Thank you for that color, and I appreciate also your comments on the security of the dividend. And I also want to just ask in terms of your capital outlays that you're projecting for this fiscal year, I believe UMH has somewhere in the range of 800 acres of land for development. Is that accurate? And could you give us some color as to if you have any more detailed plans in developing this acreage?

Sure. The New Jersey Supreme Court just came out. They've taken back affordable housing from the COAH program and brought it back to the courts, which may help us because in New Jersey, we have 110 acres at Fairview Manor and we have 50 acres at Cedarcrest, both in Vineland. Fantastic properties where if we could develop those sites, you'd earn more than a $30,000 per unit sales profit.

And we've been working on this for a number of years, but Fairview Manor could potentially be 400 lots, and Cedarcrest and Vineland, the city was going to allow us to build 40 units but that's not enough for 50 acres so we're continuing to fight on that. We have Coxsackie, which is 18 miles south of Albany, New York, where we own 220 acres. 110 acres of that was originally zoned to allow a 330-space community. And we continue to work on that. And we're hoping maybe this year we'll get that approved.

Memphis Mobile City was a community that had 150 lots that was wiped out in a flood three years ago. And we expect to have the approvals to rebuild that this year and hope to rebuild Memphis Mobile City this year. And there's other land that we have to expand. It's a total of almost 1,000 acres, and it's very valuable land. And there's nothing more difficult than getting approvals to build a manufactured home community, which is what told us that there is substantial value in buying communities with vacancies.

When we try to build a community, we never know how long it will take to get the approvals. We never know exactly how many units we'll get. And we don't even really know exactly what it will cost to build it. Whereas when you buy an existing community and you buy the vacancies, you know, we know exactly what each lot costs, they are fully permitted in place and ready to use.

So our expansion program in the right housing market should generate substantial sales profits. In fact, that was how we always thought we would make money, building expansion, selling homes, you'd sell the homes and make enough money to pay for the lot through the sale and collect the lot rent thereafter. That's what we're working on.

Lastly, I know it's been a tough winter in the northeast, and you've acquired several properties -- many properties the last couple of years. Should we model in any additional maintenance costs for winter-related repairs of communities in and above what you're currently doing?

I believe so. I mean this year, we have had a lot of snow. Not just in the northeast, but we've also had it in Tennessee, where we've had a lot of over time and a lot of snow removal even there. But I think in the long run, if you compare it to last year, we're probably still on par with last year's.

Thank you for that. And congratulations on the progress of the Company.

Thank you. Over time, there'll be even more improvements because what's happening, we have to separately meter the water and sewer of the communities we acquired. Until we do that, winter water line breaks cost us more than they are going to cost us when we're finished. So we're working on improving our expense ratios and reducing expenses. But winter and bad winters definitely have their effect.

Understand. Thank you again.

Next, we have a follow-up question from Craig Kucera.

Thanks. Appreciate you taking the call. I just wanted to follow up on expenses again. In your more recent acquisitions, what is a typical cumulative amount of deferred maintenance per -- however you think of it, per dollar of investment, per million dollar of investment when you underwrite?

Again, it depends on the community, but taking a worst case picture of it, which would be a community we bought, Holiday Manor just outside of Nashville, and Colonial Heights, which was just outside of Pittsburgh, you probably, Anna, you'd know the number better, but I wouldn't be surprised if you spent $100,000 in a year on those communities doing maintenance that you otherwise would not have done.

That includes also like we put security gates in. We had security people. We had to throw -- I won't say throw out, we had to evict a number of residents, evict a number of homes because the homes did not meet the criteria that we expect it to be.

So there were a lot of additional expenses. Again, it ranges from community to community. So it is very difficult to say. Even part -- we even had to increase, let's say, our employees there, you know, to increase the community itself.

Okay. So generally speaking, though, do you have a feel for just a typical -- you know, we buy communities, $5 million, we typically think we're going to have to spend any amount, or is it just all over the place?

It depends on the community. But the big thing, the real important thing to understand here, we doubled the size of the portfolio in five years. So absent a really large acquisition, each new acquisition is such a smaller piece of the pie that even though the acquisition expenses will outweigh any of our existing community expenses, it's going to have such a less effect on the whole today than it did yesterday, that it's almost going to be unnoticeable.

Okay. Thank you.

(Operator Instructions)

I'm showing no additional questions. I would like to turn the conference back over to Sam Landy for closing remarks.

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our Company. As always, Gene, Anna, and I are available for any follow-up questions. We look forward to reporting back to you after our first quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You are able to access the replay for this conference -- my apologies. The replay will be available approximately one hour after the end of the call by dialing 877-344-7529. Or 412-317-0088 and entering conference number 10058069. Thank you very much, and have a nice day.