UMH PROPERTIES, INC. (UMH)

Overview

The
following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with
the consolidated financial statements and footnotes thereto included elsewhere herein and in the Company’s annual report on Form
10-K for the year ended December 31, 2025.

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 generally on an annual or month-to-month basis to residents. The Company also leases manufactured homes to residents and,
through its wholly-owned taxable REIT subsidiary, S&F, sells manufactured homes to residents and prospective residents of our communities
and for placement on customers’ privately-owned land. The Company also provides financing to home purchasers through its COP program
with Triad Financial. During 2022, the Company also formed a qualified 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% interest in the qualified opportunity zone fund.

As
of June 30, 2026, the Company operated a portfolio of 145 manufactured home communities, of which 142 are majority owned and are included
in our consolidated operations with the remaining three owned through our joint ventures with Nuveen Real Estate in which the Company
has a 40% interest. One of these joint ventures owns two communities in Florida (Sebring Square and Rum Runner) and one joint venture
owns one community in Pennsylvania (Honey Ridge). Of the 142 majority owned communities, 140 are owned 100% by the Company with the remaining
two owned by the Company’s Opportunity Zone Fund, in which the Company has a 77% interest. The Company’s portfolio of 145
communities contains approximately 27,100 developed homesites, of which 11,200 contain rental homes that are leased to residents. These
145 communities are located in twelve states consisting of New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan,
Alabama, South Carolina, Florida and Georgia. In addition, the Company has over 1,000 self-storage units that are available for leasing
by residents. 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.

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The
Company earns income from the operation of its manufactured home communities which includes leasing of manufactured homesites, the rental
of manufactured homes, the sale and finance of manufactured homes, the brokering of third party 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.

The
primary focus of our business is the operation of our manufactured home communities, leasing of manufactured homesites and manufactured
homes in our communities to residents. The sales of homes are integrated with the leasing of these manufactured homes and homesites.
The Company reports segment information in accordance with ASC Topic 280, Segment Information (“ASC 280”). ASC 280 requires
companies to report financial and descriptive information for each identified operating segment based on management’s internal
organizational decision-making structure. Management has determined that the Company has one single reportable segment based on its method
of internal reporting in addition to its allocation of capital and resources. The primary focus of our business is the ownership and
operation of our manufactured home communities, leasing of manufactured homesites and manufactured homes in our communities to residents.
The sales of homes are integrated with the leasing of these manufactured homes and homesites. Sales of homes are necessary to maintain
and increase occupancy at our communities. These leasing activities generate rental revenues and incur operating expenses. As each of
the Company’s assets has similar economic characteristics, the assets have been aggregated into one reportable segment. The accounting
policies for the reportable segment are the same as those described in Note 2 – Summary of Significant Accounting Policies included
in our annual report on Form 10-K for the year ended December 31, 2025. Our Chief Executive Officer, with the assistance of our Chief
Operating Officer, is the Company’s Chief Operating Decision Maker (“CODM”). The CODM is provided with consolidated
financial statements to assess segment performance and decide how to allocate resources based on consolidated net income, which is reported
on the Consolidated Statements of Income (Loss). The measure of segment assets is reported on the Consolidated Balance Sheets as Total
Assets. Total expenditures for additions to segment long-lived assets are consistent with the amounts presented in the accompanying Consolidated
Statements of Cash Flows. The CODM reviews net income on an individual asset level and on a consolidated level and uses this information
to monitor actual results, evaluate returns on assets and determine how to reinvest profits. The revenue, costs and expenses, and net
income for the reportable segment are the same as those presented on the Consolidated Statements of Income (Loss). We report our results
of operations consistent with the manner in which the CODM reviews the business to assess performance and allocate resources.

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 stock, preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

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The
Company intends to continue to increase its real estate investments and investments in expansions. 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. This has resulted in increased occupancy rates and improved operating results. For the
three and six months ended June 30, 2026, rental and related income increased 9% from the prior year period and Community Net Operating
Income (“NOI”), as defined below, increased 8%. Same property NOI, which includes communities owned and operated as of January
1, 2025 (excluding River Bluff Estates), increased 9% and 8% for the three and six months ended June 30, 2026, respectively, over the
prior year period driven by a 110 basis point increase in occupancy, to 89.4%, and rental rate increases of 5.3%. We have been positioning
ourselves for future growth and will continue to seek opportunistic investments. In addition, on behalf of our joint venture arrangements
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. We will also seek additional opportunities, through our opportunity zone fund,
to acquire communities that require substantial capital investment and are located in qualified opportunity zones.

The
macro-economic environment and current housing fundamentals continue to favor home rentals. Although 30-year fixed rate mortgage rates
have shown signs of stabilizing, they are still approximately 6.6%. Housing inventory has improved but affordability remains a challenge
for many prospective buyers, especially lower and middle-income households. We believe 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 the six months ended June 30, 2026, our
portfolio of rental homes, including the joint venture entities, increased by 192 homes, net of rental home sales. Occupied rental homes represent approximately 44.8% of total
occupied sites. Occupancy in rental homes continues to be strong and registered at 95.3% as of June 30, 2026. Our manufactured home communities
compare favorably with other types of rental housing, including apartments, and we will continue to allocate capital to rental home purchases,
as demand dictates.

See
PART I, Item 1 – Business in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a more complete
discussion of the economic and industry-wide factors relevant to the Company and the opportunities and challenges, and risks on which
the Company is focused.

Significant
Accounting Policies and Estimates

The
discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”). The preparation of these consolidated financial statements requires management to make estimates and judgments
that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities
at the date of the Company’s consolidated financial statements. Actual results may differ from these estimates under different
assumptions or conditions.

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On
a regular basis, management evaluates our assumptions, judgments and estimates. Management believes there have been no material changes
to the items that we disclosed as our significant accounting policies and estimates under Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31,
2025.

Supplemental
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 flows 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 indic

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Item
7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

2025
Accomplishments

During
2025, UMH made substantial progress on multiple fronts – generating solid operating results, achieving strong growth and improving
our financial position. We have:

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 incorporated in Maryland and operates as a self-administered, self-managed REIT with its 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 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 holds a 77% interest in its OZ Fund.

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As of December
31, 2025, the Company operated a portfolio of 145 manufactured home communities, of which 142 are majority owned and are included in
our consolidated operations with the remaining three owned through our joint ventures with Nuveen Real Estate in which the Company
has a 40% interest. One of these joint ventures owns two communities in Florida (Sebring Square and Rum Runner) and one joint
venture owns one community in Pennsylvania (Honey Ridge). Of the 142 majority owned communities, 140 are owned 100% by the Company
with the remaining two owned by the Company’s Opportunity Zone Fund, in which the Company has a 77% interest. The
Company’s portfolio of 145 communities contain a total of approximately 27,100 developed homesites, of which 11,000 contain
rental homes that are leased to residents. These 145 communities are located in twelve states consisting of New Jersey, New York,
Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, South Carolina, Florida and Georgia. In addition, the Company
has over 1,000 self-storage units that are available for leasing by residents. 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.

The
Company earns income from the operation of its manufactured home communities which includes leasing of manufactured homesites, the rental
of manufactured homes, the sale and finance of manufactured homes, the brokering of third party 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 2025, total income increased 9%
from the prior year due to our rental program, rent increases and the growth of our sales business. Community NOI (as defined below
under Non-U.S. GAAP Measures) increased 9% from the prior year. Overall occupancy increased 80 basis points from 87.3% as of December 31, 2024 to 88.1% as of
December 31, 2025. Same property occupancy, which includes communities owned and operated as of January 1, 2024, increased 80 basis
points from 87.5% as of December 31, 2024 to 88.3% as of December 31, 2025. (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, 2025, does
not include the properties owned by the Company’s joint ventures 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. Although 30-year fixed rate mortgage rates
have shown signs of stabilizing, they are still approximately 6%. Housing inventory has improved but affordability remains a challenge
for many prospective buyers, especially lower and middle-income households. We believe 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 2025, our portfolio of rental homes increased
by 571 homes, net of rental home sales. Occupied rental homes represent approximately 43.6% of total occupied sites. Occupancy in rental
homes continues to be strong and registered at 93.8% as of December 31, 2025. Our manufactured home communities 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 $23.8 million as of December 31, 2025,
representing 1.1% 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, 2025, 97% of the Company’s
portfolio consisted of REIT common stocks and 3% consisted of REIT preferred stocks. Other than purchasing marketable equity securities through automatic dividend
reinvestments, the Company has not made any purchases of REIT securities during 2023, 2024 and 2025 and the Company
does not intend to increase its investment in the REIT securities portfolio.

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The Company’s
weighted average yield on the securities portfolio was approximately 5.2% at December 31, 2025. At December 31, 2025, the Company had
net unrealized losses of $40.8 million in its REIT securities portfolio. During 2025, the Company sold positions in securities, generating
a net realized loss of $221,000.

The
Company continues to strengthen its balance sheet. During the year ended December 31, 2025, through an at-the-market sale program for
our Common Stock that was established in September 2024 (the “September 2024 Common ATM Program”), the Company issued and
sold a total of 2.6 million shares of our Common Stock, generating gross proceeds of $45.1 million and net proceeds of $44.1 million,
after offering expenses. Additionally, during 2025 the Company raised approximately $9.3 million in new capital through the Dividend
Reinvestment and Stock Purchase Plan (“DRIP”).

During
the year ended December 31, 2025, through an at-the-market sale program for our Preferred Stock that was established in January 2023
(the “2023 Preferred ATM Program”), and an at-the-market sale program for our Preferred Stock that was established in March
2025 (the “2025 Preferred ATM Program”), the Company issued and sold a total of approximately 93,000 shares of our Series
D Preferred Stock, generating gross proceeds of $2.1 million and net proceeds of $2.0 million, after offering expenses.

On
July 22, 2025, the Company issued approximately $80.2 million aggregate principal amount of its 5.85% Series B Bonds Due 2030 (the “Series
B Bonds”) in an offering to investors in Israel. The net proceeds, after deducting offering discounts, fees and other transaction
costs, were approximately $75.1 million.

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 Stock, Preferred Stock and debt, will enhance shareholder returns as the properties appreciate over time.

On
December 31, 2025, the Company had approximately $72 million in cash and cash equivalents and $260 million available on our credit
facility, with a potential total availability of up to $500 million pursuant to an accordion feature. We

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