Loans and Mortgages Payable

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Loans and Mortgages Payable

NOTE 5 – LOANS AND MORTGAGES PAYABLE

Loans Payable

The Company may purchase securities on margin. The interest rates charged on the margin loans at December 31, 2018 and 2017 was 2.75% and 2.0%, respectively. These margin loans are due on demand. At December 31, 2018 and 2017, the margin loans amounted to $31,975,086 and $37,157,467, respectively, and are collateralized by the Company’s securities portfolio. The Company must maintain a coverage ratio of approximately 2 times.

The Company has revolving credit agreements totaling $28,500,000 with 21^st Mortgage Corporation (“21^st Mortgage”), Customers Bank and Northpoint Commercial Finance to finance inventory purchases. Interest rates on these agreements range from prime with a minimum of 6% to LIBOR plus 7.75% after 2 years. As of December 31, 2018 and 2017, the total amount outstanding on these lines was $15,928,350 and $2,239,315, respectively, with a weighted average interest rate of 7.04% and 6.74%, respectively.

In June 2017, the Company entered into an amended and restated revolving line of credit with OceanFirst Bank (“OceanFirst Line”), secured by the Company’s eligible notes receivable. The maximum availability on the OceanFirst Line is $10 million. Interest was reduced from prime plus 50 basis points to prime plus 25 basis points. The new maturity date is June 1, 2020. As of December 31, 2018 and 2017, the amount outstanding on this revolving line of credit was $4 million, and the interest rate was 5.50% and 4.75%, respectively.

The Company has an agreement with 21^st Mortgage to finance the Company’s purchase of rental units. These loans are at an interest rate of 6.99%, with an origination fee of 2% on new units and 3% on existing units. These loans will have a 10 year term from the date of the borrowing. The amount outstanding on this loan was $373,499 and $421,930, as of December 31, 2018 and 2017, respectively.

The Company has a $4,000,000 loan from Two River Community Bank, secured by 1,000,000 shares of Monmouth Real Estate Investment Corporation common stock. This loan is at an interest rate of 4.625%, with interest only payments through October 2017, and matures on October 30, 2019. The amount outstanding on this loan was $3,779,477 and $3,969,329 as of December 31, 2018 and 2017, respectively. The Company also has $2,361,066 in automotive loans with a weighted average interest rate of 4.43%.

Unsecured Line of Credit

On November 29, 2018, UMH Properties, Inc. (“UMH” or the “Company”) entered into a First Amendment to Amended and Restated Credit Agreement (the “Amendment”) to expand and extend its existing unsecured revolving credit facility (the “Facility”). The Facility is syndicated with two banks led by BMO Capital Markets Corp. (“BMO”), as sole lead arranger and sole book runner, with Bank of Montreal as administrative agent, and includes JPMorgan Chase Bank, N.A. (“J.P. Morgan”) as the sole syndication agent. The Amendment provides for an increase from $50 million in available borrowings to $75 million in available borrowings with a $50 million accordion feature, bringing the total potential availability up to $125 million, subject to certain conditions including obtaining commitments from additional lenders. The Amendment also extends the maturity date of the Facility from March 27, 2020 to November 29, 2022, with a one-year extension available at the Company’s option, subject to certain conditions including payment of an extension fee. Availability under the 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 Amendment increased the value of the Borrowing Base communities by reducing the capitalization rate applied to the Net Operating Income (“NOI”) generated by the communities in the Borrowing Base from 7.5% to 7.0%.

Interest rates on borrowings are based on the Company’s overall leverage ratio and decreased from LIBOR plus 1.75% to 2.50% or BMO’s prime lending rate plus 0.75% to 1.50%, at the Company’s option, to LIBOR plus 1.50% to 2.20%, or BMO’s prime lending rate plus 0.50% to 1.20%. Based on the Company’s current leverage ratio, borrowings under the Facility will bear interest at LIBOR plus 1.60% or at BMO’s prime lending rate plus 0.60%.

As of December 31, 2018 and 2017, the amount outstanding under this Facility was $50 million and $35 million, respectively.

The aggregate principal payments of all loans payable, including the Credit Facility, are scheduled as follows:

Year Ended December 31,
2019	$	19,767,278
2020		4,215,285
2021		378,318
2022		51,130,884
2023		568,692
Thereafter		32,357,022
Total Loans Payable		108,417,479
Unamortized Debt Issuance Costs		(432,126	)
Total Loans Payable, net of Unamortized Debt Issuance Costs	$	107,985,353

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 3.71% to 6.5%. The weighted average interest rate was 4.3% as of December 31, 2018 and December 31, 2017, respectively, including the effect of unamortized debt issuance costs. The weighted average interest rate as of December 31, 2018 was 4.3%, compared to 4.2% as of December 31, 2017, not including the effect of unamortized debt issuance costs. The weighted average loan maturity of the Mortgage Notes Payable was 6.3 years at December 31, 2018 and 6.9 years at December 31, 2017.

The following is a summary of mortgages payable at December 31, 2018 and 2017:

	At December 31, 2018				Balance at December 31,
Property	Due Date	Interest Rate			2018			2017
Allentown	10/01/25		4.06	%	$	13,133,031		$	13,390,559
Brookview Village	04/01/25		3.92	%		2,722,314			2,778,698
Candlewick Court	09/01/25		4.10	%		4,383,031			4,468,826
Catalina	08/19/25		4.20	%		5,318,941			5,533,771
Cedarcrest Village	04/01/25		3.71	%		11,772,098			12,024,840
Clinton Mobile Home Resort	10/01/25		4.06	%		3,446,832			3,514,421
Cranberry Village	04/01/25		3.92	%		7,466,333			7,620,974
D & R Village	03/01/25		3.85	%		7,526,804			7,685,346
Fairview Manor	11/01/26		3.85	%		15,710,739			16,010,749
Forest Park Village	09/01/25		4.10	%		8,172,870			8,332,848
Hayden Heights	04/01/25		3.92	%		2,051,518			2,094,009
Heather Highlands	08/28/18		Prime + 1.0	%		-0-			16,606
Highland Estates	06/01/27		4.12	%		16,353,252			16,640,165
Holiday Village	09/01/25		4.10	%		7,777,408			7,929,646
Holiday Village- IN	11/01/25		3.96	%		8,349,008			8,514,837
Holly Acres Estates	10/05/21		6.50	%		2,157,664			2,194,312
Kinnebrook Village	04/01/25		3.92	%		3,966,082			4,048,226
Lake Sherman Village	09/01/25		4.10	%		5,404,640			5,510,432
Meadows of Perrysburg	10/06/23		5.413	%		3,002,368			-0-
Olmsted Falls	04/01/25		3.98	%		2,051,221			2,093,269
Oxford Village	01/01/20		5.94	%		6,526,306			6,751,511
Perrysburg Estates	09/06/25		4.98	%		1,615,470			-0-
Pikewood Manor	11/29/28		5.00	%		14,722,561			-0-
Shady Hills	04/01/25		3.92	%		4,891,221			4,992,527
Somerset Estates and Whispering Pines	02/26/19		4.89	%		31,555			217,770
Springfield Meadows	10/06/25		4.83	%		3,088,505			3,141,199
Suburban Estates	10/01/25		4.06	%		5,475,710			5,583,084
Sunny Acres	10/01/25		4.06	%		6,095,121			6,214,642
Southwind Village	01/01/20		5.94	%		5,213,023			5,392,911
Trailmont	04/01/25		3.92	%		3,260,814			3,328,351
Twin Oaks	12/01/19		5.75	%		2,333,022			2,415,894
Valley Hills	06/01/26		4.32	%		3,348,290			3,408,438
Waterfalls	06/01/26		4.38	%		4,558,525			4,639,515
Weatherly Estates	04/01/25		3.92	%		7,956,386			8,121,177
Wellington Estates	01/01/23		6.35	%		2,367,059			2,414,621
Woods Edge	01/07/26		4.30	%		6,476,902			6,728,792
Worthington Arms	09/01/25		4.10	%		9,163,406			9,342,775
Various (2 properties)	02/01/27		4.56	%		13,821,208			14,049,088
Various (2 properties)	08/01/28		4.27	%		13,353,881			-0-
Various (4 properties)	07/01/23		4.975	%		7,926,365			8,079,960
Various (5 properties)	01/01/22		4.25	%		13,412,679			13,749,838
Various (5 properties)	12/06/22		4.75	%		7,007,404			7,154,380
Various (6 properties)	08/01/27		4.18	%		13,068,415			13,296,207
Various (13 properties)	03/01/23		4.065	%		47,931,443			49,035,572
Total Mortgages Payable						334,411,425			308,460,786
Unamortized Debt Issuance Costs						(3,318,362	)		(3,565,669	)
Total Mortgages Payable, net of Unamortized Debt Issuance Costs					$	331,093,063		$	304,895,117

At December 31, 2018 and 2017, mortgages were collateralized by real property with a carrying value of $614,306,362 and $538,249,737, respectively, before accumulated depreciation and amortization. Interest costs amounting to $1,036,307, $500,859 and $359,906 were capitalized during 2018, 2017 and 2016, respectively, in connection with the Company’s expansion program.

Recent Transactions

During the year ended December 31, 2018

On July 13, 2018, the Company obtained a $13,442,000 Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage through Wells Fargo Bank, N.A. (“Wells Fargo”) on Camelot Village and Redbud Estates. This mortgage is at a fixed rate of 4.27% and matures on August 1, 2028. Principal repayments are based on a 30-year amortization schedule.

On November 30, 2018, the Company obtained a $14,750,000 mortgage on Pikewood Manor from OceanFirst Bank. This mortgage is at a fixed rate of 5.0% and matures on November 29, 2028. The interest rate will be reset after five years to the weekly average yield on U.S. Treasury Securities plus 2.25%. Principal repayments are based on a 25-year amortization schedule.

On December 18, 2018, the Company assumed a mortgage loan with a balance of approximately $3,000,000, in conjunction with its acquisition of Meadows of Perrysburg. The interest rate on this mortgage is fixed at 5.4125%. This mortgage matures on October 6, 2023.

On December 18, 2018, the Company assumed a mortgage loan with a balance of approximately $1,600,000, in conjunction with its acquisition of Perrysburg Estates. The interest rate on this mortgage is fixed at 4.98%. This mortgage matures on September 6, 2025.

During the year ended December 31, 2017

On January 20, 2017, the Company obtained a $14,250,000 Freddie Mac mortgage through Wells Fargo on Boardwalk and Parke Place in connection with the Company’s acquisition of these communities. This mortgage is at a fixed rate of 4.56% and matures on February 1, 2027. Principal repayments are based on a 30-year amortization schedule.

On May 31, 2017, the Company obtained a $16,800,000 Freddie Mac mortgage through Wells Fargo on Highland Estates. This mortgage is at a fixed rate of 4.12% and matures on June 1, 2027. Principal repayments are based on a 30-year amortization schedule. Proceeds from this mortgage was used to repay the existing $9,000,000 mortgage with an interest rate of 6.175%.

On August 28, 2017, the Company obtained a $13,370,000 mortgage loan on six communities from Sun National Bank. This mortgage is at a fixed rate of 4.18% and matures on August 1, 2027. Principal repayments are based on a 30-year amortization schedule. Proceeds from this mortgage was used to repay the existing $10,000,000 mortgage, secured by eleven communities with an interest rate of LIBOR plus 3%, which was fixed at 3.89% with an interest rate swap.

On December 22, 2017, the Company assumed a mortgage loan with a balance of approximately $2,418,000, in conjunction with its acquisition of Wellington Estates. The interest rate on this mortgage is fixed at 6.35%. This mortgage matures on January 1, 2023.

The aggregate principal payments of all mortgages payable are scheduled as follows:

Year Ended December 31,
2019	$	21,140,538
2020		7,307,273
2021		22,006,149
2022		13,894,653
2023		61,174,801
Thereafter		208,888,011
Total	$	334,411,425