UMH Properties Inc (UMH) 2018 Q1 法說會逐字稿

Good morning, and welcome to the UMH Properties First Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

It is now my pleasure to introduce your host, Ms. Nelli Madden, Director of Investor Relations. Thank you. Ms. Madden, you may begin.

Thank you very much, operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited first quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at umh.reit.

I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes that 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 first quarter 2018 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. In addition, during today's call, we will be discussing non-GAAP financial metrics. Reconciliations of these non-GAAP financial metrics to the comparable GAAP financial metrics as well as explanatory and cautioning language are included in our earnings release, our supplemental information and our historical SEC filings.

Having said that, I would like to introduce management with us today: Eugene Landy, Chairman; Samuel Landy, President and Chief Executive Officer; Anna Chew, Vice President and Chief Financial Officer; and Brett Taft, Vice President.

It is now my pleasure to turn the call over to UMH's President and Chief Executive Officer, Samuel Landy.

Thank you very much, Nelli. Good morning, everyone, and thank you for joining us. We are pleased to report our results for the first quarter ended March 31, 2018.

UMH's first quarter earnings for 2018 continue to demonstrate the success of our business plan. Both core FFO and normalized FFO for the first quarter of 2018 were $0.18 per diluted share, representing an increase of approximately 6% year-over-year. Our normalized FFO for the quarter fully covered our $0.18 dividend.

During the quarter, we continued to increase our liquidity and strengthen our financial flexibility and balance sheet by issuing 2 million shares of a new 6.375% Series D Cumulative Redeemable Preferred Stock for net proceeds after deducting the underwriting discount and other estimated offering expenses of approximately $48 million. This additional capital will be used for general corporate purposes, including acquisitions, expansions of communities and for the purchase of additional rental homes. We anticipate continued per share earnings accretion once this capital is fully deployed.

Community NOI rose from $13 million for the first quarter of 2017 to $14.5 million for the first quarter of 2018, an increase of 11%. Our same property results have continued to improve. Same property occupancy increased by 249 sites, representing a 170 basis point improvement over the prior year period. Same property revenue increased 6.5%, driven by this occupancy gain as well as rent increases to our residents.

Year-over-year, our weighted average monthly site rent increased 3.3% to $441 per site per month. For the quarter, same property expenses increased 7.9%, primarily due to the harsher-than-normal winter, resulting in increased snow removal, salary, heating and water expenses. We expect expenses to normalize over the remainder of the year.

Our same property NOI increased 5.4% for the quarter. These strong results continue to validate our business plan. It is important to note that our same property pool is adjusted each year to include the previous year's acquisitions. Most of our acquisitions are value-add communities with low occupancy rates, which negatively impacts our overall occupancy and our same property occupancy levels. Included in our same property pool for 2018 are our acquisitions from 2016, which were at a weighted average occupancy rate of 74%. Our acquisitions generally take 2 to 3 years to turn around, but when they do, occupancy levels rise quickly, expense ratios decrease and the community substantially increase in value.

Our rental home program remains the most efficient way to drive occupancy and earnings growth. Manufactured homes as rental units expose new customers to our product. Many residents who previously resided in apartments, townhouses or condos are very complimentary of the quality and lifestyle provided by manufactured homes and land lease communities.

During the quarter, we added 165 rental homes to our communities. Our rental home portfolio now contains 5,772 homes with an occupancy rate of 94.7%. This represents a 100 basis point increase over the prior year period. 34% of our occupied homesites are now occupied by rental homes. Our average home rental rate is $732, which is an increase of 2.8% over the prior year period.

After a 27% increase in sales in 2017, sales for the first quarter of 2018 were approximately $2.5 million, representing an increase of 32% year-over-year. Although manufactured home sales have not returned to prerecession levels, we are encouraged by the consistent increase in sales volume.

The positive demographic trends and robust labor market continue to favor our industry. Conventional home prices continue to rise, supported by low inventories and increasing sales. As household formation strengthens and for-sale inventory remains limited, a large share of housing demand will be looking at alternative forms of housing. We expect demand for manufactured home sales to increase further.

We are very pleased with our ability to acquire communities in a competitive acquisition market. The manufactured housing sector is one of the hottest real estate sectors. Our property type has finally been recognized as the relatively recession-resistant and stable income generator that it has been for UMH for the past 50 years.

Increased demand for manufactured home communities has resulted in compressed cap rates and increased property value. Since 2010, UMH has acquired 84 communities containing 13,200 homesites, which have all significantly increased in value from improved operating metrics as well as the heightened demand for our product type. In 2017, we acquired 11 communities containing approximately 2,000 sites for a total purchase price of $63.3 million. These communities are performing very well and should positively impact our same property results next year when added to the pool.

Our current acquisition pipeline consists of 6 communities with approximately 2,200 sites for a total purchase price of $75.5 million. We expect 2 of these communities with a purchase price of $20.5 million to close within the next few weeks. We are currently reviewing several other potential acquisitions.

Our expansion program is progressing as expected. We anticipate building an additional 365 sites at 7 separate locations in 2018. This includes approximately 50 sites at Memphis Blues, our all rental community. Phase I of this development, which consisted of 39 sites, became fully occupied in less than 1 year. This demonstrates the robust demand for our property type.

UMH has a 50-year history of providing quality, affordable housing for our nation's workforce. This year, we were named Manufactured Housing Institute's Community Operator of the Year. This award recognizes UMH's long-term commitment to innovation and advancement of the manufactured housing industry. UMH was also awarded Manufactured Housing Institute's Land-Lease Community of the Year for the Midwest region for our Woods Edge community located in West Lafayette, Indiana. We are proud to receive both of these awards. They showcase our dedication to providing quality, affordable housing at all of our locations. Our innovative approach of acquiring value-add communities, embracing rental homes and upgrading communities has resulted in improved community operating results and also significantly increased the value of our communities.

And now Anna will provide you with greater detail on our results for the quarter.

Thank you, Sam. Core funds from operations, or core FFO, was $6.4 million or $0.18 per diluted share for the first quarter of 2018 compared to $5.1 million or $0.17 per diluted share for the prior year period. In 2018, the changes in the fair value of marketable securities were recorded in current period earnings. Core FFO excludes this change in fair value.

Normalized FFO, which excludes realized gains on the sale securities and other nonrecurring items, was $6.3 million or $0.18 per diluted share for the first quarter of 2018 compared to $5 million or $0.17 per diluted share for the prior year period, representing an increase of 6.3% on a per share basis.

Rental and related income for the quarter was $27.3 million compared to $24.5 million a year ago, representing an increase of 11%, primarily due to community acquisitions, the addition of rental homes and the growth in occupancy.

Community NOI increased by 11% for the quarter from $13 million in 2017 to $14.5 million in 2018. Community operating expenses were 46.8% of total rental and related income for both the first quarter of 2017 and 2018.

As with our same-store expenses, a harsher-than-normal winter resulted in increased snow removal, salary, heating and water expenses. As we noted in the past, most of the community expenses consist of fixed costs, and therefore, as occupancy rates continue to rise and as we upgrade and integrate our acquisitions, these expense ratios will continue to improve.

Due to the adoption of the new accounting pronouncement, effective January 1, 2018, our current earnings include the change in fair value of our marketable securities. Previously, these unrealized gains and losses were recognized in accumulated other comprehensive income on our balance sheet. As a result of this required accounting change, the company recorded an increase to beginning retained earnings of $11.5 million to recognize the unrealized gains previously recorded on our balance sheet.

At quarter end, the company had net unrealized losses of $14.4 million in the securities portfolio, resulting in a $25.9 million total decrease in the fair value for the quarter. We include this decrease in our FFO but exclude it from core FFO since it is unrealized.

As we turn to our capital structure, at quarter end, we had approximately $354 million in debt, of which $303 million was community-level, fixed-rate mortgage debt at a weighted average interest rate of 4.2%, and $51 million were loans payable at a weighted average interest rate of 3.3%.

88% of our total debt is fixed rate. The weighted average interest rate on our total debt is 4.1% at both March 31, 2018, and 2017. The weighted average maturity on our mortgage debt was 6.7 years at quarter end compared to 6.6 years a year ago.

At quarter end, UMH had a total of $289 million in perpetual preferred equity, including the 2 million shares of our 6.375% Series D Cumulative Redeemable Preferred Stock issued recently. Our preferred stock, combined with an equity market capitalization of $487 million and our $354 million in debt, results in a total market capitalization of approximately $1.1 billion at quarter end, representing a 9% increase year-over-year.

From a credit standpoint, our net debt to total market capitalization was 29%. Our net debt less securities to total market capitalization was 19%. Our fixed charge coverage was 1.7x. Our net debt to adjusted EBITDA was 5.5x, and our net debt less securities to adjusted EBITDA was 3.6x.

From a liquidity standpoint, we ended the quarter with $26 million in cash and cash equivalents and $113 million in our securities portfolio, encumbered by $22 million in margin loans and $35 million available on our credit facility. We also had $31 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory.

And now let me turn it over to Gene before we open it up for questions.

Thank you, Anna. UMH's first quarter results were an excellent start to 2018. We have delivered solid performance metrics with double-digit growth in rental revenue, home sales and total NOI. The housing market is strong and getting stronger. Conventional home prices were up 8% year-over-year in many markets. The value of manufactured home communities appears to be rising. Our focus is on creating value by building a large-scale portfolio of communities that are fully occupied.

The REIT market has been under pressure thus far in 2018, losing approximately 10% in value. The sellout has been driven by negative fund flows as a result of rising interest rate fears. However, when increases in interest rates are driven by economic growth, REITs historically have still done well. Operating fundamentals for REITs remain very strong. Additionally, our portfolio generates substantial dividend income. In keeping with our conservative principles, we seek to limit our REIT securities investments to less than 20% of our underappreciated assets.

Our REIT securities portfolio provides us with additional liquidity to pursue opportunistic acquisitions in our core business. It also reduces our reliance on the capital markets for growth capital. We will continue to look for investment opportunities in REIT securities. In many cases, REIT stocks are currently trading at substantial discounts to net asset value.

Private real estate valuations remain high, and cap rates have continued to compress. Real estate, therefore, can at times be cheaper on Wall Street than on Main Street. These opportunities allow us to diversify into liquid REIT securities while enhancing value by buying real estate in securitized form at discounts from net asset value.

Starting in 2018, unrealized gains or losses in value on securities holdings are included in our operating numbers. Management views REIT securities as a form of real estate ownership, and in almost every case is pleased with the performance of the holdings. Our REIT securities portfolio has performed well for decades but has not performed as well over the past quarter. We view this as temporary and expect the value of the companies to better reflect their earnings and underlying property values.

UMH is well on its way to an excellent year. The appearance of Dr. Ben Carson, the U.S. Secretary of HUD, as the featured speaker at this year's Annual MHI Congress and Expo, indicates government recognition of manufactured housing as quality, affordable housing. Our excellent results can be further improved if retail financing becomes more available for our residents. Sales have improved substantially, but if a secondary market develops for manufactured home loans, our sales volume increase could be even more dramatic.

We've increased revenue and income year after year by adding rental units. We project to continue to achieve our 4% rent increases throughout the year and to install another 800 rental units this year. The 2 combined should add $10 million in new revenue in 2018.

We will now be happy to take questions.

(Operator Instructions) The first question is from Rob Stevenson of Janney.

Sam, in terms of the occupancy gains during the quarter, any particular assets where you had a big jump? Or was it just widespread?

No, some places are doing better than others. In fact, from January 1, 2018, Ohio is up 36 units; Houston, Pennsylvania, down 4 units; Western New York, plus 3; Tennessee, plus 22; Indiana, plus 49 units; Eastern Pennsylvania, plus 5 units; Maryland, unchanged; Western Pennsylvania, down 3 units; New Jersey, down 1 unit; and Michigan, plus 10 units, for a total of up 117 units since January 1.

Okay. And was it 1 or 2 or 3 particular communities where you put up a bunch of rental units in this quarter or whatever that helped drive that or last -- put them in last quarter, et cetera, that was driving the vast majority of that in any one state?

Well, each of those states. So Ohio is up 36; Tennessee is up 22; Indiana is up 49; Michigan, up 10. There are certain communities in those states that are doing extremely well. But those states are doing well. So we're not losing occupancy. We're gaining occupancy in each of those states, in each of the communities in those states.

Okay. And then the rental homes in terms of -- are you guys seeing any cost pressures on that? Are they still being sold to you at roughly the same rate? Or given what's been going on with materials and labor, are you seeing 5% or 10% inflation in the price of the homes that you're buying these days?

So as a general matter, the cost per unit had gone up $600 per unit. But in Eastern Pennsylvania, in that area, the price increases are much stronger, in fact, as much as 20%. And so in the Eastern Pennsylvania, New Jersey area, where home prices are always the highest, we're going to have to charge increased rents on rentals and increased prices on home sales in Eastern Pennsylvania and New Jersey. The remainder of the factory orders are up $600. That's about, I think -- whatever the percentage, up about $600 per unit, and we're able to pass that along to the resident.

Okay. And then, Anna, in terms of the accounting adjustment for the securities portfolio, and so gains and losses are going to flow through here. So if the portfolio is worth $5 million more than -- on June 30 than it was on March 31, there's going to be $5 million flowing through NAREIT FFO on that quarter? Or is it a lower cost or market? Can you sort of expand on that a little bit? As to how gains and losses are going to flow?

Sure. You have it right. Let's say the market goes up, which we believe that it will go up, but let's say it does go up, and for your example, you said $5 million, we would be recording a $5 million gain for the quarter. And it is not lower of cost or market. What had happened was we had an $11 million gain at the end of the year. Then at the end of the quarter, we had a $14 million unrealized loss. The 2 combined is the $25 million. We didn't lose $25 million in -- we didn't have unrealized losses of $25 million in our securities portfolio. We had a $14 million unrealized losses in securities portfolio. But because we are comparing it to a gain at the end of the year, it added up to $25 million. Going forward, we will be able to record the gain.

Okay. And then sitting here 40, almost 45 days into the following quarter, where is that securities portfolio today versus the March 31? Have you guys bought anything of size in that -- to add to that portfolio since the end -- since March 31?

We have not bought anything of size. However, the securities portfolio had gained in value. As of today, and I'm just -- it's an estimate, the unrealized loss of $14 million is now an unrealized loss of approximately, I'll say, around $7 million. And of course, that may not hold true to the end of the quarter, but if the quarter ended today, we would have a gain in our income statement of $7 million.

Okay. And the composition of that portfolio is fairly consistent with what it was when you reported it in the K at year-end?

Yes, it is.

Okay. And then lastly, depending on how long, over what time period that $75 million of acquisitions comes through? You guys are doing, call it, $10 million, $15 million maybe a quarter on the dividend reinvestment stuff. Do you plan on using the securities portfolio to help close that? Is that primarily that $75 million, the equity portion primarily going to be funded from the dividend reinvestment program and cash on hand? How are you guys thinking about the equity component of that $75 million if you guys close all of that?

We've cut back on the amount of shares we're selling, and we're doing approximately 1.5 million a month, which is 6 million a quarter, plus the dividend reinvestment is another 2 million, so there'll be 8 million -- 6 million. So we'll do about 20 million a year at the current rate of issuing stock in the dividend reinvestment plan and the DRIP and SIP. The rest of the money we have, as Anna and Sam did in the report, were very liquid. I think we had $25 million in cash at the end of the quarter. And we had unused bank lines. And so if we buy $75 million in parks, we hope to finance half or 60% of the purchase price. And we will need $20 million, $30 million for acquisitions, and we need $32 million a year to buy rental homes. But we have ample credit to do that.

As of the end of the year, our Series D Preferred Stock issuance, of about $50 million, was not fully utilized. As a matter of fact, most of it was not utilized. We're awaiting the acquisitions. The acquisitions are taking a little longer than we expected as usual.

Okay. And then the -- what is the -- beyond the $20 million that you guys expect to close in the next couple of weeks, the other 75 -- the remaining $55 million, how far out does that conceivably go? Is that sort of second and third quarter? Or does that go through likely year-end to close the rest of the $55 million if it closes?

It goes through likely year-end. We expect a portion of that to close in the third and fourth quarters and, hopefully, all of it this year. But there's a chance that some of it slips off until the first quarter of next year.

The next question is from Craig Kucera of B. Riley FBR.

As you guys are rolling out your increases in rents this year by 4%, can you talk about communities that you did that in the first quarter? And just how receptive the tenants are? Are you seeing any pushback or maybe increased turnover as a result of that?

Yes. So first, last year, we only raised the rent 4% on the lots. And on the rental homes, we only rent -- we only raised the rent on the lot rent portion, the 4%, but not on the home rent so that the increase in the home rental income from a year ago is only up 2.8%. Again, that's because it's only raised on the lot rent. This year, we're raising both the home rent and the lot rent the full 4%. It's not resulting in any vacancies. We're maintaining our 94.7% rental occupancy. Again, at communities that are less than about 80% occupancy, we may be more careful. But in general, we're raising rents 4% on both the lots and the homes, and it's passing through. I'd also point out that we had the $0.18 FFO for the quarter, but this was an incredibly hard winter. And -- but for the hard winter, I think we would have done even better.

But to answer the question on whether the tenants can pay the rent, the computer today tells us that a 3-bedroom apartment, are $1,100, $1,200 a month, and I think we reported our rents at $725 a month. So we're $400 under the competition, and we think our product is equivalent or even better.

Got it. Circling to your same-store numbers, they were good again, but your expenses had been up. And I appreciate the color on it being a challenging winter. But I think they've been in the 6% to 8% for the last 3 quarters on a year-over-year basis. And I guess I'd like to know when you say they're going to normalize, kind of where that goes. Is that closer to the 2%, 3%? Or kind of what you're thinking?

So what I'm thinking about is our operating expense ratio is 47%, and it’s maintained at 47% despite the tough winter. But my belief is that it will continue to drop due to the new rental units, more communities that we've completed the deferred maintenance on and things of that nature. So I would expect that the expense ratio would fall from the 47%, but the hard winter causes increased labor costs and snow removal, other snow removal costs, results in broken waterlines, additional water and sewer expenses. So all those things have quite a detrimental effect to the quarter so that I'm very happy we were able to report the $0.18 for the quarter.

Also, I wanted to remind everybody that last year is -- we had added the 2016 acquisitions, which was a fairly large number of acquisitions. There was almost 2,800 sites, and that was at a 64% occupancy rate. And so therefore, it takes a little longer. We usually say it takes about 3 years. So therefore, in 2017, of course, the numbers have not come in strong yet, but we expect that they will continue to increase as we fill those occupancies.

Okay. One more for me, and I'll jump back in the queue. You mentioned you were expanding, I think, 365 sites. Can you talk about what's your budgeting to get that done and kind of what that looks on the back end?

So they say it cost $70,000 a site when -- to build the community, get the approvals, things of that nature. We've already completed the approval process or are very close to fully approved on these 365 lots. So you're certainly talking $50,000 per lot and possibly more for the construction.

The $20 million, yes, $20 million.

(Operator Instructions) Our next question is from Tayo Okusanya of Jefferies.

Earlier on in your prepared remarks, you did mention if an alternative financing market did come up, that it could really help to boost home sales. I mean, in this current government, do you kind of see any probability of that happening?

So I had the personal opportunity to be 1 of 16 people to meet with Dr. Ben Carson. And Dr. Ben Carson knows how bad the financing situation was for manufactured housing, and Dr. Carson very much wants to help our industry and realizes that manufactured homes in land-lease communities are the solution to the affordable housing crisis. On top of that, we met with Freddie Mac and Fannie Mae who are working on their pilot program, but they are talking about developing a very large secondary market for manufactured home loans. Both of those combined or either one in and of itself would dramatically improve home sales for us, for new home sales, for our residents reselling their houses. And also, I always point out we want to keep the rental units forever because they're going to last 40 years, and $8,000 a year for 40 years on a $40,000 investment is a pretty good return. But if they create this secondary market, the finance value of those rental units could be substantial so that you might be better off selling them and earning the sales profit. So we'll see what happens, but the government recognizes the problems and is trying to solve them.

And you think there’ll be bipartisan support for such a solution?

Yes. We've been working on this for years. And we've met with the top Democrats, the top Republicans, and both parties have fully supported it, supported the change the whole time. They just haven't been able to find a way to do it.

The next question is from Michael Boulegeris of Boulegeris Investments.

I wanted to ask, Sam, in your investor presentation, there's 220 acres for development in East Central New York. I think you've mentioned that before. Can you give us an update if there's any additional progress there?

Well, that's the Coxsackie project, which is 18 miles south of Albany, 1/4 mile from the Hudson River, and you could see Hunter Mountain from the property. We bought its zoned to allow a 330-space manufactured home community with city water and city sewer. Since then, we've learned everything they can do to stop you from building a manufactured home community. That is what helped us understand the value of vacant lots when we're buying communities with vacancies. The impossibility of building communities makes it just a fantastic opportunity to buy existing communities at 6, 7 caps with 20% or more vacancies. To get those vacancies is -- it's a great benefit to the company as demand increases because when you try to build the community, it's an impossibility. So on the Coxsackie project at this moment, we've met with the top federal housing lawyers. And we are, I believe, going to file a Federal Fair Housing Act case against the village of Coxsackie, and hopefully, we'll get back to where we were in the beginning, which was that we're entitled to build a 330-space community on 180 acres with city water and sewer. But all of this has already taken 11 years and will still take another 2 to 3 years.

I appreciate that color. Can you share with us your expansion program in Tennessee? Maybe I missed it in your opening remarks. But specifically, in the national area, you seemed to have really had some great acquisitions there and turn those properties around it, it appears, under the 3-year window.

So Tennessee is doing fantastic in all locations. But Countryside, which is right near where the Spring Hill Saturn plant was that now became a GM plant, I believe the GM plant, they've -- we bought the community at something like 70% occupied. It's now in the high 90s, and we're working on 100-lot expansion that's almost fully approved. And we'll be building those 100 lots, hopefully, this year. Memphis Blues, we built the first phase, 38 lots and filled that within 20 -- filled that within 12 months. And now we're going to build the infrastructure for the next 100 lots, with the 51 lots being fully complete in 2018. Trailmont, which is north of Nashville, 35 lots...

Holiday Village.

Holiday. Yes. Holiday Village, 75 lots, just north of Nashville. The north of Nashville market is incredible. We bought these communities when there were vacancies, when other people weren't taking care of their properties. And today, if you Google Nashville tall skinnies, you'll see that they're taking the vacant land that's within 2 miles of our community, and the land is so valuable. They're building these tall skinny units. And so we're already doing fantastic in Memphis and Nashville, but these expansion lots should be very beneficial. We're going to build a total of 365 lots this year. And just looking at it...

A little over 200 is going to be -- or 200 and something is going to be in Nashville area, yes.

And maybe, Anna, could you -- or Sam, share with us your perhaps conservative projection for home sales? It appears that they're trending in the right direction. And also, have the price increases, let's say, post last year's hurricane season abated?

Well -- so there's definitely 4% increases on the cost of houses from all the factories, and as mentioned, it's even more substantial in Eastern Pennsylvania, as much as 20%. But that's our cost from the manufacturers. In terms of our home sales, they're growing impressively. But at the same time that I say that, with the exception of Tennessee, where home sales are very good, most markets are not comparable to what it was like to sell homes in 2005, 2006. We're not selling 4 homes per month at any location right now. And when you build an expansion, 4 homes per month is what you consider successful. Incomes are rising. People have more money. There's more cash buyers. We have more traffic than ever. Acceptance of our product is great. But even with our double-digit percentage increase in sales, I believe we still have the opportunities to substantially increase it and at some point, possibly even double it from where we are today.

And lastly, maybe, Gene, as Shell’s petrochemical complex, that construction continues and energy prices firm. What is your long-term outlook for UMH in maybe what's your core Western Pennsylvania?

It's very bullish. I just finished an article. Pittsburgh, the city of Pittsburgh, the first 3 months of this year, applications for permits are up 50%. And the -- as you know, the oil and gas prices are strengthening, and we are only in the first inning of production. Pennsylvania produces more than the equivalent of 3 million barrels a day. And most people don't realize that. And the production will -- has to be hooked to the pipelines and delivered. And the upstream and downstream businesses that come from this production, they're just beginning also. The -- I think it's been maybe 10 years we've been talking about the Shell oil plant in Monaca. It's going to have 10,000 employees for 4 years to build a multibillion-dollar cracker plant. And there's supposed to be 2 or 3 cracker plants from other companies built in the Ohio, West Virginia and Pennsylvania area. The oil and gas industry is a huge industry, produces a huge dollar amount. It's labor intensive. And we have a company that has maybe 2,500 vacancies in 5, 6 states. The economy is doing very well overall. We were fortunate enough to pick Indiana and Nashville and Western Pennsylvania and Eastern Ohio, which are doing even better than the overall economy, which is -- the overall economy is good, but the regions we're in are doing even better than the average. So we're very, very bullish on the future. There is a housing shortage. The housing shortage is reflected in the 8% increase in home values almost everywhere in the United States. And the fact that homes now in 25% of the cases are selling for more than the asking price, that's strong evidence that the market is very strong and getting stronger. So UMH Properties, Inc. is very optimistic about its existing holdings and its ability to acquire communities and turn them around and build a sound platform that we’ll have fully rented.

This concludes our question-and-answer session. I would like to turn the conference back over to Samuel 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 hope to see you at NAREIT's REIT Week event in June, and we look forward to reporting back to you after our second quarter. Thank you.

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