UMH PROPERTIES, INC. (UMH)

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

2024
Accomplishments

During
2024, 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, 2024, we operated 139 manufactured home communities, 137 of which are communities in which we own either a 100% or
majority interest, containing a total of approximately 26,300 developed homesites, on which approximately 10,300 Company-owned
rental homes are situated.  The 139 communities include (i) two communities in central Florida owned through a joint venture
with Nuveen Real Estate in which the Company has a 40% interest (Sebring Square and Rum Runner), (ii) two communities in Tennessee,
the Countryside Village expansion (Duck River Estates) and the Allentown expansion (River Bluff Estates), that were previously part
of other Company-owned communities but are now considered separate communities, and (iii) two communities acquired through the
Company’s OZ Fund. These 139 communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana,
Maryland, Michigan, Alabama, South Carolina, Florida and Georgia. UMH has continued to execute our growth strategy of purchasing
well-located communities in our target markets, including the energy-rich Marcellus and Utica Shale regions. On November 30, 2023,
the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new joint venture entity focused on the
development of a new manufactured housing community located in Honey Brook, Pennsylvania. As with the original 2021 joint venture
entity, UMH has a 40% stake in the new joint venture entity and serves as the managing member, developer and operating member. The
Honey Brook community, once complete, is expected to contain 113 manufactured home sites situated on approximately 61 acres. This
community is expected to open at the end of the second quarter of 2025 with our first two homes on order currently.

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 2024, 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) increased 10% from the prior year. Overall occupancy increased 60 basis points from 86.7% as of December 31, 2023 to 87.3% as
of December 31, 2024. Same property occupancy, which includes communities owned and operated as of January 1, 2023, increased 70 basis
points from 87.1% as of December 31, 2023 to 87.8% as of December 31, 2024. (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, 2024, does not include
the properties owned by the Company’s joint venture with Nuveen.)

Demand
for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that
should result in continued high demand.

The
macro-economic environment and current housing fundamentals continue to favor home rentals. Due to high mortgage rates and lack of inventory,
the higher cost of buying a home versus renting one is at its most extreme since 1996. According to the National Association of Realtors, reported sales of existing homes fell to 4.06 million in 2024,
the lowest level in nearly 30 years. 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 2024, our portfolio of rental homes increased by 364 homes, net of rental home sales. Occupied
rental homes represent approximately 43.0% of total occupied sites. Occupancy in rental homes continues to be strong and registered at
94.0% as of December 31, 2024. 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 $31.9 million as of December 31, 2024,
representing 1.6% 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, 2024, 99% consisted of REIT common stocks and 1%
of the Company’s portfolio consisted of REIT preferred stocks. The Company does not intend to increase its investment in the REIT
securities portfolio.

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The
Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The
Company’s weighted average yield on the securities portfolio was approximately 4.5% at December 31, 2024. At December 31, 2024,
the Company had unrealized losses of $38.5 million in its REIT securities portfolio. During 2024, the Company sold positions in securities,
generating a net realized loss of $3.8 million.

The
Company continues to strengthen its balance sheet. During the year ended December 31, 2024, through an at-the-market sale program
for our Common Stock that was established in March 2024 (the “March 2024 Common ATM Program”), an at-the-market sale
program for our Common Stock that was established in September 2024 (the “September 2024 Common ATM Program”) and a
prior at-the-market sale program for our Common Stock established in 2023 (collectively, the “Common ATM Programs”), the
Company issued and sold a total of 12.5 million shares of our Common Stock, generating gross proceeds of $224.5 million and net
proceeds of $220.6 million, after offering expenses. Additionally, during 2024 the Company raised approximately $10.2 million in new
capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”).

During
the year ended December 31, 2024, through an at-the-market sale program for our Preferred Stock that was established
in January 2023 (the “2023 Preferred ATM Program,” and together with the Common ATM Programs, the “At-the-Market Sale
Programs”), the Company issued and sold a total of approximately 1.2 million shares of our Series D Preferred Stock, generating
gross proceeds of $28.5 million and net proceeds of $28.0 million, after offering expenses.

The
Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained
through the issuance of common stock, preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

On
December 31, 2024, the Company had approximately $99.7 million in cash and cash equivalents and $260 million available on our credit
facility. We also had $138 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory
and $55 million available on our lines of credit secured by rental homes and rental home leases.

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto
otherwise vacant sites. As part of this plan, we intend to seek opportunities, through our OZ Fund, to acquire communities that require substantial capital investment
and are located in qualified opportunity zones. In addition, on behalf of our joint venture arrangement with Nuveen Real Estate, we will
seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment
guidelines.  There is no guarantee that any of these additional opportunities will continue to materialize or that the Company will
be able to take advantage of such opportunities. The growth of our real estate portfolio and success of the joint venture depends on the
availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market
areas in which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions
will be made.

See
PART I, Item 1- Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant
to the Company, the Company’s lines of business and principal products and services, and the opportunities, challenges and risks
on which the Company is focused.

Acquisitions
in 2024 and 2023

There
were no acquisitions made during 2024. On January 19, 2023, through our qualified opportunity zone fund, we acquired Mighty Oak, a
newly developed manufactured home community located in Albany, GA for approximately $3.65 million, This community contains a total
of 118 newly developed homesites that are situated on approximately 26 total acres and was unoccupied at the date of the
acquisition.

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In
addition, in November 2023, 61 acres of land located in Honey Brook, Pennsylvania, previously owned by
the Company, with a carrying value cost basis of $3.8 million, was contributed to an entity formed under our joint venture with Nuveen
for the purpose of developing a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company
was reimbursed by Nuveen for 60% of the carrying value of this land. This community is expected to open at the end of the second quarter of 2025 with our first two homes currently on order.

Results
of Operations

2024
vs. 2023

Rental
and related income increased from $189.7 million for the year ended December 31, 2023 to $207.0 million for the year ended December 31,
2024, or 9%. This increase was due to increases in rental rates, same property occupancy and additional rental homes. During 2024, the Company raised
rental rates by 5% to 6% at most communities. Rent increases vary depending on overall market conditions and demand. Occupancy, as well
as the ability to increase rental rates, directly affects revenues. The Company has been acquiring communities with vacant sites that
can potentially be occupied and earn income in the future. Overall occupancy was 87.3% and 86.7% at December 31, 2024 and 2023, respectively.
Demand for rental homes continues to be strong. As of December 31, 2024, we had approximately 10,300 rental homes with an occupancy rate
of 94.0%. We continue to evaluate the demand for rental homes and will invest in additional homes as demand dictates.

Community
operating expenses increased from $81.3 million for the year ended December 31, 2023 to $87.4 million for the year ended December 31,
2024, or 7%. This increase was due to increases in payroll and payroll costs, real estate taxes, insurance, professional fees, waste
removal, water expenses and sewer expenses.

Community
NOI increased from $108.4 million for the year ended December 31, 2023 to $119.7 million for the year ended December 31, 2024, or 10%.
This increase was primarily due to the increases in rental rates, occupancy and rental homes. The operating expense ratio (defined as
community operating expenses divided by rental and related income) improved 70 basis points from 42.9% in 2023 to 42.2% for 2024. Many
recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership.
Since most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue
to improve. Due to the Company’s ability to increase its rental rates annually (subject to limitations on rent increases in certain
jurisdictions), increasing costs due to inflation and changing prices have generally not had a material effect on revenue and income
from continuing operations.

Sales
of manufactured homes increased from $31.2 million for the year ended December 31, 2023 to $33.5 million for the year ended December
31, 2024, or 8%. The total number of homes sold increased 16% from 341 homes in 2023 to 394 homes in 2024. Cost of sales of
manufactured homes increased from $21.1 million for the year ended December 31, 2023 to $21.9 million for the year ended December
31, 2024, or 4%. The gross profit percentage was 35% and 32% for the years ended December 31, 2024 and 2023, respectively. Selling
expenses remained relatively stable for the years ended December 31, 2023 and 2024. Gain from the sales operations, excluding
interest on the financing of inventory, increased 53% and amounted to a gain of $4.8 million and $3.1 million for the years ended
December 31, 2024 and 2023, respectively. Many of the costs associated with sales, such as salaries, and to an extent, advertising
and promotion, are fixed. Despite high mortgage rates, home prices have continued to rise as fewer sellers are listing homes and
inventories decline resulting in the inherent relative affordability of our property type becoming more and more apparent, which
should result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the
fundamental need for affordable housing. The Company believes that sales of new homes produce new rental revenue and represent an
investment in the upgrading of our communities.

General
and administrative expenses increased from $19.7 million for the year ended December 31, 2023 to $21.8 million for the year ended December
31, 2024, or 11%. This increase was primarily due to an increase in payroll and related personnel cost and an increase in
meeting costs as a result of our biennial in-person employee training meeting (which was not held during 2023). General and administrative
expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividends and other income)
was approximately 8.7% and 8.1% for the years ended December 31, 2024 and 2023, respectively.

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Depreciation
expense increased from $55.7 million for the year ended December 31, 2023 to $60.2 million for the year ended December 31, 2024, or 8%.
This increase was primarily due to the increases in rental homes during 2024 and 2023.

Interest
income increased from $5.0 million for the year ended December 31, 2023 to $7.1 million for the year ended December 31, 2024, or 43%.
This increase was primarily due to an increase in the average balance of notes receivable from $71.5 million for the year ended December
31, 2023 to $83.9 million for the year ended December 31, 2024 and interest earned on excess cash during 2024. The weighted average interest
rate earned on notes receivables increased 10 basis points and was 7.1% and 7.0% as of December 31, 2024 and 2023, respectively.

Dividend
income decreased from $2.3 million for the year ended December 31, 2023 to $1.5 million for the year ended December 31, 2024, or 37%.
This decrease was due to reduced dividends from a combination of our smaller securities portfolio and the weighted average yield on our
dividends received from our marketable securities investments. The weighted average yield decreased 220 basis points from 6.7% in 2023
to 4.5% in 2024.

The
Company recognized a realized loss on sales of marketable securities of $3.8 million for the year ended December 31, 2024. The Company
recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The increase (decrease)
in fair value of marketable securities amounted to an increase of $1.2 million and a decrease of $3.6 million for the years ended December
31, 2024 and 2023, respectively. As of December 31, 2024, the Company had total net unrealized losses of $38.5 million in its REIT securities
portfolio.

Interest
expense, including amortization of financing costs, decreased from $32.5 million for the year ended December 31, 2023 to $27.3 million
for the year ended December 31, 2024, or 16%. This decrease was due to a decrease in the average balance of mortgages and loans from
$626.2 million at December 31, 2023 to $551.9 million at December 31, 2024. The weighted average interest rate on our total debt decreased
from 4.6% at December 31, 2023 to 4.4% at December 31, 2024, respectively.

2023
vs. 2022

Rental
and related income increased from $170.4 million for the year ended December 31, 2022 to $189.7 million for the year ended December 31,
2023, or 11%. This increase was primarily due to the acquisitions made during 2022, as well as increases in rental rates, same property
occupancy and additional rental homes. During 2023, the Company raised rental rates by 5% to 6% at most communities. Overall
occupancy was 86.7% and 84.6% at December 31, 2023 and 2022, respectively. Overall occupancy includes communities acquired in 2023 and
2022 which had an average occupancy of 60%, at the time of acquisition. As of December
31, 2023, we had approximately 10,000 rental homes with an occupancy rate of 94.0%.

Community
operating expenses increased from $75.7 million for the year ended December 31, 2022 to $81.3 million for the year ended December 31,
2023, or 8%. This increase was primarily due to expenses pertaining to recently acquired communities during 2022, as well as increases
in payroll, rental home expenses, real estate taxes, waste removal, water expenses and sewer expenses.

Community
NOI increased from $94.8 million for the year ended December 31, 2022 to $108.4 million for the year ended December 31, 2023, or 14%.
This increase was primarily due to the acquisitions during 2022, and an increase in rental rates, occupancy and rental homes. The operating
expense ratio (defined as community operating expenses divided by rental and related income) improved 150 basis points from 44.4% in
2022 to 42.9% for 2023.

Sales
of manufactured homes increased from $25.3 million for the year ended December 31, 2022 to $31.2 million for the year ended December
31, 2023, or 23%. The total number of homes sold increased from 301 homes in 2022 to 341 homes in 2023. There was a 14% increase in new
homes sold from 144 new homes sold in 2022 to 164 new homes sold in 2023. The Company’s average sales price increased 8% in 2023
and was approximately $91,000 for the year ended December 31, 2023 and $84,000 for the year ended December 31, 2022. Cost of sales of
manufactured homes increased from $17.6 million for the year ended December 31, 2022 to $21.1 million for the year ended December 31,
2023, or 20%. The gross profit percentage was 32% and 31% for 2023 and 2022, respectively. Selling expenses increased from $5.3 million
for the year ended December 31, 2022 to $6.9 million for the year ended December 31, 2023, or 32%. Gain from the sales operations, excluding
interest on the financing of inventory, increased 24% and amounted to a gain of $3.1 million and $2.5 million for the years ended December
31, 2023 and 2022, respectively.

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General
and administrative expenses increased from $19.0 million for the year ended December 31, 2022 to $19.7 million for the year ended December
31, 2023, or 4%. This increase was due to an increase in payroll, personnel costs and non-cash stock-based compensation. General and
administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividends and
other income) was approximately 8.0% and 7.6% for the years ended December 31, 2023 and 2022, respectively.

Depreciation
expense increased from $48.8 million for the year ended December 31, 2022 to $55.7 million for the year ended December 31, 2023, or 14%.
This increase was primarily due to the acquisitions and the increases in rental homes during 2023 and 2022.

Interest
income increased from $4.1 million for the year ended December 31, 2022 to $5.0 million for the year ended December 31, 2023, or 22%.
This increase was primarily due to an increase in the average balance of notes receivable from $58.6 million for the year ended December
31, 2022 to $71.5 million for the year ended December 31, 2023. The weighted average interest rate earned on these notes receivables
increased 30 basis points and was 7.0% and 6.7% as of December 31, 2023 and 2022, respectively.

Dividend
income decreased from $2.9 million for the year ended December 31, 2022 to $2.3 million for the year ended December 31, 2023, or 20%.
This decrease was due to reduced dividends from a combination of our smaller securities portfolio and the weighted average yield on our
dividends received from our marketable securities investments decreasing 90 basis points from 7.6% in 2022 to 6.7% in 2023.

The
Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The Company recognized
a realized gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022 primarily as a result of the cash
consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The decrease in fair value
of marketable securities amounted to $3.6 million and $21.8 million for the years ended December 31, 2023 and 2022, respectively. As
of December 31, 2023, the Company had total net unrealized losses of $39.7 million in its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $26.4 million for the year ended December 31, 2022 to $32.5 million
for the year ended December 31, 2023, or 23%. This increase was mainly due to the interest incurred on the $102.7 million of Series A
Bonds the Company issued in 2022 in an offering to investors in Israel, an increase in the average balance of total debt and an increase
in interest rates. The average balance of our total debt was approximately $734.5 million in 2023 and $637.1 million in 2022.

Non-U.S.
GAAP Measures

In
addition to the results reported in accordance with U.S. GAAP, management’s discussion and analysis of financial condition and
results of operations include certain non-U.S. GAAP financial measures that in management’s view of the business we believe are
meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to
certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-U.S.
GAAP financial measures as determined and presented by us may not be comparable to related or similarly titled measures reported by other
companies, and include Community Net Operating Income (“Community NOI”), Funds from Operations Attributable to Common Shareholders
(“FFO”) and Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”).

We
define Community NOI as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance,
community salaries, utilities, insurance and other expenses. We believe that Community NOI is helpful to investors and analysts as a
direct measure of the actual operating results of our manufactured home communities, rather than our Company overall. Community NOI should
not be considered a substitute for the reported results prepared in accordance with U.S. GAAP. Community NOI should not be considered
as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor
is it indicative of funds available for our cash needs, including our ability to make cash distributions.

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The
Company’s Community NOI for the years ended December 31, 2024, 2023 and 2022 is calculated as follows (in thousands):

We
assess and measure our overall operating results based upon FFO, an industry performance measure which management believes is a useful
indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure
of a REIT. FFO, as defined by Nareit, represents net income (loss) attributable to common shareholders, as defined by accounting principles
generally accepted in the U.S. (“U.S. GAAP”), excluding gains or losses from sales of previously depreciated real estate
assets, impairment charges related to depreciable real estate assets, the change in the fair value of marketable securities, and the
gain or loss on the sale of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization.
Included in the Nareit FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation
of Nareit FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities,
and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the
adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair value
of marketable securities from our FFO calculation. Nareit created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance.
We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding certain
one-time charges. FFO and Normalized FFO should be considered as supplemental measures of operating performance used by REITs. FFO and
Normalized FFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost
basis. However, other REITs may use different methodologies to calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized
FFO may not be comparable to all other REITs. The items excluded from FFO and Normalized FFO are significant components in understanding
the Company’s financial performance.

FFO
and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative
to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii)
are not alternatives to cash flow as a measure of liquidity. FFO and Normalized FFO, as calculated by the Company, may not be comparable
to similarly titled measures reported by other REITs.

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The
Company’s FFO and Normalized FFO attributable to common shareholders for the years ended December 31, 2024, 2023 and 2022 are calculated
as follows (in thousands):

Liquidity
and Capital Resources

The
Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity
demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions,
capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental
homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability
to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable
securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of
real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the
DRIP, and access to the capital markets, including sales of Common Stock and Series D Preferred Stock through its At-the-Market Sale
Programs. In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including
acquisitions. The Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit facility or
lines of credit, incur other indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital
markets, including through the Company’s At-the-Market Sale Programs. In order to provide continued financial flexibility to
opportunistically access the capital markets, on March 12, 2024, the Company implemented its March 2024 Common ATM Program which
allowed the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150
million, from time to time through the distribution agents. In addition, on September 16, 2024, the Company terminated the use of
its successful March 2024 Common ATM Program and implemented a new September 2024 Common ATM Program which allows the Company to
offer and sell shares of the Company’s Common Stock, having an aggregate sales price of up to $150 million, from time to time
through the distribution agents. Additionally, during 2024 the Company expanded the borrowing capacity on its unsecured revolving
credit facility from $180 million in available borrowings to $260 million in available borrowings.

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The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto
otherwise vacant sites. As part of this plan, we intend to continue to seek opportunities, through our opportunity zone fund, to acquire
communities that require substantial capital investment and are located in qualified opportunity zones. In addition, on behalf of our
joint venture with Nuveen Real Estate, we will continue to seek opportunities to acquire manufactured home communities that are under
development and/or newly developed and meet certain other investment guidelines. There is no guarantee that any of these additional opportunities
will materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and
success of our joint venture depends on the availability of suitable properties which meet the Company’s investment criteria and
appropriate financing. Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate
communities are not available, fewer acquisitions will be made.

The
Company continues to strengthen its capital and liquidity positions. During the year ended December 31, 2024, the Company issued and
sold 12.5 million shares of Common Stock through our Common ATM Programs at a weighted average price of $17.92 per share, generating
gross proceeds of $224.5 million and net proceeds of $220.6 million, after offering expenses.

Through
our 2023 Preferred ATM Program, the Company issued and sold a total of 1.2 million shares of our Series D Preferred Stock generating
gross proceeds of $28.5 million and net proceeds after offering expenses of $28.0 million during the year ended December 31,
2024.

As
of December 31, 2024, $89.8 million of Common Stock remained available
for sale under the September 2024 Common ATM Program and $17.6 million in shares of Series D Preferred Stock remained available for sale
under the 2023 Preferred ATM Program. Subsequent to year end, the Company issued and sold 270,000 shares of Common Stock under the September
2024 Common ATM Program for gross proceeds of $4.9 million. Subsequent to year end, the Company issued and sold a total of 49,000 shares
of Preferred Stock under the 2023 Preferred ATM Program for gross proceeds of $1.1 million.

In
addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price
of approximately 95% of market. During 2024, amounts received under the DRIP, including dividends reinvested of $3.2 million, totaled
$10.2 million. The Company issued a total of 623,000 shares under the DRIP during 2024.

The
Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $35 million revolving
line of credit for the financing of homes that was not utilized at December 31, 2024, revolving credit facilities totaling $103.0 million
to finance inventory purchases, that were not utilized at December 31, 2024 and $55.0 million available on our lines of credit secured
by rental homes and rental homes leases.

As
of December 31, 2024, the Company had $99.7 million of cash and cash equivalents and marketable securities of $31.9 million. The Company operated 139 communities (including 137 communities in which the
Company owned either a 100% interest or a majority interest and two communities owned by the Company’s joint venture with Nuveen),
of which 52 are unencumbered. Except for communities in the borrowing base for our unsecured credit facility, these unencumbered communities
can be used to raise additional funds. Our marketable securities, unencumbered properties, and lines of credit provide the Company with
additional liquidity. The Company holds a 40% equity interest in the entities formed under its joint venture with Nuveen, which owns two
newly developed communities that are unencumbered and one community in the process of being developed that is also unencumbered.

The
Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through
mortgages. During 2024, total investment property, including rental homes, increased 8% or $130.1 million. We have also expanded three
communities for a total of 190 additional home sites.  See
Note 3 of the Notes to Consolidated Financial Statements for additional information on our acquisitions and Note 7 of the Notes to Consolidated
Financial Statements for related debt transactions. The Company continues to evaluate acquisition opportunities. The funds for these
acquisitions (including the Company’s 40% share of acquisition costs that may be incurred pursuant to its joint venture with Nuveen
Real Estate) may come from bank borrowings, proceeds from the DRIP, and private placements or public offerings of debt, Common Stock
or Preferred Stock, including under the September 2024 Common ATM Program or the 2023 Preferred ATM Program or any other at-the-market
sale programs that the Company may commence.  To the extent that funds or appropriate properties are not available, fewer acquisitions
will be made.

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The
Company owned approximately 10,300 rental homes, or approximately 40% of our total homesites as of December 31, 2024. During 2024,
our rental home portfolio increased by 565 homes and we sold 201 rental homes, representing a net increase of $49.8 million. The Company markets these rental
homes for sale to existing residents. The Company estimates that in 2025 it will order approximately 700 to 800 manufactured homes to
use as rental units at its properties for a total invoice cost of approximately $55 million to $60 million. Rental home rates on new homes
range from approximately $850 to $2,000 per month, including lot rent, depending on size, location and market conditions. During 2024,
the Company also invested approximately $42 million in other improvements to its communities.

The
following table summarizes cash flow activity for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Net
cash provided by (used in) operating activities decreased by $38.5 million in 2024 primarily due to an increase in Community NOI and
an increase in inventory. Net cash provided by (used in) operating activities increased by $127.3 million in 2023 primarily due to a
decrease in inventory.

Net
cash used in investing activities decreased by $25.7 million in 2024, primarily due to the decrease in purchase of investment
property and equipment. Net cash used in investing activities increased by $40.7 million in 2023, primarily due to the purchase of
investment property and equipment and additions to land development and the decrease in proceeds from sales of marketable
securities.

Net
cash provided by financing activities increased by $33.6 million in 2024 to $102.6 million. The Company issued and sold 12.5 million
shares of its Common Stock during 2024 through the Common ATM Programs, raising net proceeds of approximately $220.6 million. The Company
also received $10.2 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 1.2 million shares
of its Series D Preferred Stock during 2024 through the 2023 Preferred ATM Program, raising net proceeds of approximately $28.0
million. During 2024, the Company distributed to our common shareholders a total of $62.3 million, including dividends reinvested. In
addition, the Company also paid $19.2 million in preferred dividends during 2024. The Company also made principal payments on its mortgages
and loans, net of new debt financing, totaling $77.7 million.

Net cash provided by financing activities increased by $21.1 million in
2023 to $69.1 million. The Company issued and sold 9.4 million shares of its Common Stock during 2023 through its then-current Common
Stock at-the-market sale programs, raising net proceeds of approximately $145.8 million. The Company also received $9.0 million, including
dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.6 million shares of its Series D Preferred Stock during
2023 through the 2023 Preferred ATM Program, raising net proceeds of approximately $55.7 million. During 2023, the Company distributed
to our common shareholders a total of $51.7 million, including dividends reinvested. In addition, the Company also paid $16.7 million
in preferred dividends during 2023. The Company also made principal payments on its mortgages and loans, net of new debt financing, totaling
$73.8 million.

Cash
flows were primarily used for capital improvements, payment of dividends, purchase of inventory
and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing communities. The Company meets maturing
mortgage obligations by using a combination of positive cash flows and refinancing. The dividend payments were primarily made from cash
flows from operations.

Excluding expansions and rental home purchases, the Company is budgeting approximately
$20 to $30 million in capital improvements for 2025.

-51-

The
Company’s significant commitments and contractual obligations relate to its mortgages, loans payable and other indebtedness, acquisitions
of manufactured home communities, retirement benefits, and the lease on its corporate offices as described in Note 10 to the Consolidated
Financial Statements.

The
Company recently entered into a preliminary agreement with a leading national homebuilder regarding the potential formation of a
joint venture to develop approximately 131 acres of undeveloped land adjacent to one of the Company’s existing manufactured
home communities in southern New Jersey. If necessary governmental approvals can be obtained, the purpose of the joint venture would
be to construct roads, infrastructure and other site improvements on the property and then sell the improved lots to an affiliate of
the Company’s joint venture partner, which would construct luxury single family residential homes to sell to purchasers. It is
envisioned that the joint venture partner would fully fund the costs of required site improvements, to the extent not financed by a
third-party construction lender, and would obtain all required approvals. The Company would contribute the real property to the
joint venture and receive a percentage of the sale price of each home. If the parties elect to proceed, it is anticipated that the
joint venture partner would seek preliminary subdivision and site plan approvals over the next two years and, if these approvals are
obtained, the joint venture would then be formally established. Pursuit of this project would be contingent upon execution of
definitive documentation setting forth the terms of certain agreements between the parties. There can be no assurance that the
Company and its potential joint venture partner will reach agreement or proceed with this arrangement or that required governmental
approvals can be obtained. The parties are currently
engaged in a 90-day due diligence period during which they intend to commence preliminary discussions with the municipality relating
to the necessary approvals.

As
of December 31, 2024, the Company had total assets of $1.6 billion and total liabilities of $647.8 million. Our net debt (net of cash
and cash equivalents) to total market capitalization decreased 32% and as of December 31, 2024 and 2023 was approximately 21% and 31%,
respectively. Our net debt, less securities (net of cash and cash equivalents and marketable securities) to total market capitalization
decreased 37% and as of December 31, 2024 and 2023 was approximately 19% and 30%, respectively. As of December 31, 2024, the Company has 23 mortgages
totaling $115.2 million due within the next 12 months, of which 10 mortgages totaling $45.9 million are due in the first and second
quarters of 2025.  We are in the process of refinancing these mortgages with Fannie Mae.  We believe that proceeds from these
refinancings will exceed their current balances.

The
Company believes that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available on the lines of
credit, together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations
and generate funds for new investments over the next several years.

Contractual
Obligations

The
Company has investments in entities formed under its joint venture relationship with Nuveen Real Estate which are accounted for under
the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial
decisions for the joint venture entities. The terms of the joint venture arrangements require the Company to fund 40% and Nuveen to fund
60% of the total capital contributions made by the members. See Item 2 – “Properties” and Note 5, “Investment
in Joint Venture,” of the Notes to Consolidated Financial Statements for additional information.

Our
other primary contractual obligations relate to our loans and mortgages payable and other indebtedness, our operating lease obligations
and our obligations regarding the financing of our home sales. See Note 2 “Summary of Significant Accounting Policies”, Note
7 “Loans and Mortgages Payable”, Note 10 “Related Party Transactions and Other Matters” and Note 14 “Commitments,
Contingencies and Legal Matters” of the Notes to Consolidated Financial Statements for additional information.

Critical
Accounting Policies and Estimates

Our
consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Actual results could differ
from these estimates.

For
additional information regarding our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements.

-52-

Recent
Accounting Pronouncements

See
Note 2 of the Notes to Consolidated Financial Statements.

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

2023
Accomplishments

During
2023, UMH made substantial progress on multiple fronts – generating solid operating results, achieving strong growth and improving
our financial position. We have:

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.

-41-

The
Company is a Maryland corporation that operates as a self-administered, self-managed REIT with headquarters in Freehold, New Jersey.
The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured
home spaces on an annual or month-to-month basis to residents. The Company also leases manufactured homes to residents and, through its
wholly-owned taxable REIT subsidiary, S&F, sells and finances the sale of manufactured homes to residents and prospective residents
of our communities and for placement on customers’ privately-owned land. During 2022, the Company also formed an opportunity zone
fund to acquire, develop and redevelop manufactured housing communities requiring substantial capital investment and located in areas
designated as Qualified Opportunity Zones by the Treasury Department pursuant to a program authorized under the 2017 Tax Cuts and Jobs
Act to encourage long-term investment in economically distressed areas. The Company currently holds a 77% percentage interest in the
opportunity zone fund.

As
of December 31, 2023, we owned and operated 135 manufactured home communities (including two communities acquired through the
opportunity zone fund) containing approximately 25,800 developed homesites. These communities are located in New Jersey, New York,
Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. UMH has continued to execute our
growth strategy of purchasing well-located communities in our target markets, including the energy-rich Marcellus and Utica Shale
regions. During the year ended December 31, 2023, we purchased one community located in Georgia, for an aggregate purchase price of
$3.7 million, through our opportunity zone fund. This acquisition added 118 developed homesites to our portfolio. The Company also
operates two communities in Florida owned by the Company’s joint venture with Nuveen Real Estate that was originally formed in
December 2021. On November 30, 2023, the Company expanded its joint venture relationship with Nuveen Real Estate and formed a new
joint venture entity focused on the development of a new manufactured housing community located in Honey Brook, Pennsylvania. As
with the original 2021 joint venture entity, UMH has a 40% stake in the new joint venture entity and serves as the managing member,
developer and operating member. The Honey Brook community, once complete, is expected to contain 113 manufactured home sites situated on
approximately 61 acres.

The
Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of
manufactured homes, the sale and finance of manufactured homes and the brokering of home sales, self-storage leases, oil and gas
leases, cable service agreements and from appreciation in the values of the manufactured home communities and vacant land owned by
the Company. In addition, the Company receives property management and other fees from its joint venture arrangements with Nuveen and from its
opportunity zone fund. Management views the Company as a single segment based on its method of internal reporting in addition to its
allocation of capital and resources.

Occupancy
in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2023, total income increased 13%
from the prior year due to the acquisition and rental programs, rent increases and the growth of our sales business. Community NOI
(as defined below) increased 14% from the prior year. Overall occupancy increased 210 basis points from 84.6% as of December 31,
2022 to 86.7% as of December 31, 2023. Overall occupancy includes communities acquired in 2023 and 2022 with an average occupancy of
60%. Same property occupancy, which includes communities owned and operated as of January 1, 2022, increased 230 basis points from
86.2% as of December 31, 2022 to 88.5% as of December 31, 2023. (Unless expressly indicated, information in
this report with respect to the Company’s properties, including financial and operating results for the year ended December
31, 2023, does not include the properties owned by the Company’s joint venture with Nuveen.)

Demand
for quality affordable housing remains healthy while inventory is scarce. Our property type offers substantial comparative value that
should result in continued high demand.

The
macro-economic environment and current housing fundamentals continue to favor home rentals. Due to climbing mortgage rates, the higher
cost of buying a home versus renting one is at its most extreme since 1996. Rental homes in a manufactured home community allow the resident
to obtain the efficiencies of factory-built housing and the amenities of community living for less than the cost of other forms of affordable
housing. We continue to see strong demand for rental homes. During 2023, our portfolio of rental homes increased by 871 homes, net. Occupied
rental homes represent approximately 42.0% of total occupied sites. Occupancy in rental homes continues to be strong and was at 94.0%
as of December 31, 2023. We compare favorably with other types of rental housing, including apartments, and we will continue to allocate
capital to rental home purchases, as demand dictates.

The
Company holds a portfolio of marketable equity securities of other REITs with a fair value of $34.5 million as of December 31, 2023,
representing 1.9% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio
provides the Company with additional diversification, liquidity and income. As of December 31, 2023, 99% consisted of REIT common stocks and 1% of the
Company’s portfolio consisted of REIT preferred stocks. The Company does not intend to increase its investment in the REIT securities portfolio.

-42-

The
Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The
Company’s weighted average yield on the securities portfolio was approximately 6.7% at December 31, 2023. At December 31, 2023,
the Company had unrealized losses of $39.7 million in its REIT securities portfolio. During 2023, the Company sold positions in securities,
generating a net realized gain of $183,000.

The
Company continues to strengthen its balance sheet. During the year ended December 31, 2023, through an At-the-Market Sale Program
for our Common Stock that was established in April 2023 (the “2023 Common ATM Program”) and a prior At-the-Market Sale
Program established in 2022, the Company issued and sold a total of 9.4 million shares of our Common Stock, generating gross
proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses. Additionally, during 2023 the Company raised
approximately $9.0 million in new capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”).

During
the year ended December 31, 2023, through an At-the-Market Sale Program for our Preferred Stock that was established in January 2023
(the “2023 Preferred ATM Program”) and a prior At-the-Market Sale Program established in 2020, the Company issued and sold
a total of approximately 2.6 million shares of our Series D Preferred Stock, generating gross proceeds of $56.7 million and net proceeds
of $55.7 million, after offering expenses.

The
Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained
through the issuance of common and preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

On
December 31, 2023, the Company had approximately $57.3 million in cash and cash equivalents and $110 million available on our credit
facility, with an additional $400 million potentially available pursuant to an accordion feature. We also had $143.5 million available
on our revolving lines of credit for the financing of home sales and the purchase of inventory and $55 million available on our lines
of credit secured by rental homes and rental homes leases. Subsequent to year end, the Company paid down approximately $20 million on its credit facility (see Note 17).

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities, that over
time, are expected to yield in excess of our cost of funds and investing in physical improvements, including adding rental homes
onto otherwise vacant sites. In 2022 and 2023, we added a total of eight manufactured home communities to our portfolio,
encompassing approximately 1,600 developed sites. These manufactured home communities were acquired with an average occupancy rate
of 60%. The Company will utilize the rental home program to increase occupancy rates and improve operating results at these
communities. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities that
require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through our joint venture
arrangement with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are under development
and/or newly developed and meet certain other investment guidelines. There is no guarantee that acquisition opportunities will
continue to materialize or that the Company will be able to take advantage of such opportunities. The growth of our real estate
portfolio and success of the joint venture with Nuveen will depend on the availability of suitable properties which meet the
Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is
significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties.

See
PART I, Item 1- Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant
to the Company, the Company’s lines of business and principal products and services, and the opportunities, challenges and risks
on which the Company is focused.

-43-

Acquisitions
in 2023 and 2022

The
following table lists the property acquisitions completed by the Company during the years ended December 31, 2023 and 2022:

Mighty Oak, acquired in January
2023, and Garden View Estates, acquired in August 2022, were acquired through the Company’s opportunity zone fund.

In addition to the acquisitions shown above, in November 2023, 61 acres of land located in Honey Brook, Pennsylvania, previously owned by the Company,
with a carrying value cost basis of $3.8 million, was contributed to an entity formed under our joint venture with Nuveen for the purpose
of developing a new manufactured housing community, which, once complete, is expected to contain 113 sites. The Company was reimbursed by Nuveen for
60% of the carrying value of this land.

Also,
on December 23, 2022, an entity formed as part of our Nuveen joint venture closed on the acquisition of Rum Runner, a newly
developed all-age, manufactured home community located in Sebring, Florida, for a total purchase price of $15.1 million. This
community contains 144 developed homesites situated on approximately 20 acres.

Results
of Operations

2023
vs. 2022

Rental
and related income increased from $170.4 million for the year ended December 31, 2022 to $189.7 million for the year ended December 31,
2023, or 11%. This increase was primarily due to the acquisitions made during 2022, as well as increases in rental rates, same property
occupancy and additional rental homes. During 2023, the Company raised rental rates by 5% to 6% at most communities. Rent increases
vary depending on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects
revenues. The Company has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future.
Overall occupancy was 86.7% and 84.6% at December 31, 2023 and 2022, respectively. Overall occupancy includes communities acquired in
2023 and 2022 which had an average occupancy of 60%, at the time of acquisition. Demand for rental homes continues to be strong. As of
December 31, 2023, we had approximately 10,000 rental homes with an occupancy rate of 94.0%. We continue to evaluate the demand for rental
homes and will invest in additional homes as demand dictates.

Community
operating expenses increased from $75.7 million for the year ended December 31, 2022 to $81.3 million for the year ended December 31,
2023, or 8%. This increase was primarily due to expenses pertaining to recently acquired communities during 2022, as well as increases in payroll, rental home expenses,
real estate taxes, waste removal, water expenses and sewer expenses.

Community
NOI increased from $94.8 million for the year ended December 31, 2022 to $108.4 million for the year ended December 31, 2023, or
14%. This increase was primarily due to the acquisitions during 2022, and an increase in rental rates, occupancy and rental homes. The operating expense ratio (defined as community operating
expenses divided by rental and related income) improved 150 basis points from 44.4% in 2022 to 42.9% for 2023. Many recently
acquired communities have deferred maintenance requiring higher than normal expenditures in the first few years of ownership. Since
most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios are expected to continue to
improve. Due to the Company’s ability to increase its rental rates annually (subject to limitations on rent increases in
certain jurisdictions), increasing costs due to inflation and changing prices have generally not had a material effect on revenue
and income from continuing operations.

-44-

Sales
of manufactured homes increased from $25.3 million for the year ended December 31, 2022 to $31.2 million for the year ended December
31, 2023, or 23%. The total number of homes sold increased from 301 homes in 2022 to 341 homes in 2023. There were a 14% increase in
new homes sold from 144 new homes sold in 2022 to 164 new homes sold in 2023. The Company’s average
sales price increased 8% in 2023 and was approximately $91,000 for the year ended December 31, 2023 and $84,000 for the year ended
December 31, 2022. Cost of sales of manufactured homes increased from $17.6 million for the year ended December 31, 2022 to $21.1
million for the year ended December 31, 2023, or 20%. The gross profit percentage was 32% and 31% for 2023 and 2022, respectively.
Selling expenses increased from $5.3 million for the year ended December 31, 2022 to $6.9 million for the year ended December 31,
2023, or 32%. Gain from the sales operations, excluding interest on the financing of inventory, increased 24% and amounted to a gain
of $3.1 million and $2.5 million for the year ended December 31, 2023 and 2022, respectively. Many of the costs associated with
sales, such as salaries, and to an extent, advertising and promotion, are fixed. Despite an increase in mortgage rates, home prices
have continued their rise as fewer sellers are listing homes and inventories decline resulting in the inherent relative
affordability of our property type becoming more and more apparent, which should result in increased demand. The Company continues
to be optimistic about future sales and rental prospects given the fundamental need for affordable housing. The Company believes
that sales of new homes produce new rental revenue and represent an investment in the upgrading of our communities.

General
and administrative expenses increased from $19.0 million for the year ended December 31, 2022 to $19.7 million for the year ended December
31, 2023, or 4%. This increase was due to an increase in payroll, personnel costs and non-cash stock-based compensation. General and
administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividends and
other income) was approximately 8.0% and 7.6% for the years ended December 31, 2023 and 2022, respectively.

Depreciation
expense increased from $48.8 million for the year ended December 31, 2022 to $55.7 million for the year ended December 31, 2023, or 14%.
This increase was primarily due to the acquisitions and the increases in rental homes during 2023 and 2022.

Interest
income increased from $4.1 million for the year ended December 31, 2022 to $5.0 million for the year ended December 31, 2023, or 22%.
This increase was primarily due to an increase in the average balance of notes receivable from $58.6 million for the year ended December
31, 2022 to $71.5 million for the year ended December 31, 2023. The weighted average interest rate earned on these notes receivables increased 30 basis points and was 7.0% and 6.7%
as of December 31, 2023 and 2022, respectively

Dividend
income decreased from $2.9 million for the year ended December 31, 2022 to $2.3 million for the year ended December 31, 2023, or
20%. This decrease was due to reduced dividends from a combination of our smaller securities portfolio and the weighted average
yield on our dividends received from our marketable securities investments decreasing 90 basis points from 7.6% in 2022 to 6.7% in 2023.

The
Company recognized a realized gain on sales of marketable securities of $183,000 for the year ended December 31, 2023. The Company
recognized a realized gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022 primarily as a
result of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The decrease in fair value of marketable securities amounted to $3.6
million and $21.8 million for the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had
total net unrealized losses of $39.7 million in its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $26.4 million for the year ended December 31, 2022 to $32.5
million for the year ended December 31, 2023, or 23%. This increase was mainly due to the interest incurred on the $102.7 million of
Series A Bonds the Company issued in 2022 in an offering to investors in Israel, an increase in the average balance of total debt
and an increase in interest rates. The average balance of our total debt was approximately $734.5 million in 2023 and $637.1 million
in 2022.

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2022
vs. 2021

Rental
and related income increased from $159.0 million for the year ended December 31, 2021 to $170.4 million for the year ended December 31,
2022, or 7%. This increase was due to the acquisitions during 2021 and 2022, as well as an increase in rental rates and additional rental
homes. During 2022, the Company raised rental rates by 4% to 5% at most communities. Rent increases vary depending on overall market
conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring
communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 84.6% and 86.0% at
December 31, 2022 and 2021, respectively. Overall occupancy includes communities acquired in 2022 and 2021, which had an average occupancy
of 66% and 59%, respectively, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2022, we
had approximately 9,100 rental homes with an occupancy rate of 93.3%.

Community
operating expenses increased from $68.0 million for the year ended December 31, 2021 to $75.7 million for the year ended December 31,
2022, or 11%. This increase was primarily due to new acquisitions, and increases in waste removal, tree removal, water and sewer, insurance,
real estate taxes, travel and payroll and personnel costs.

Community
NOI increased from $91.0 million for the year ended December 31, 2021 to $94.8 million for the year ended December 31, 2022, or 4%. This
increase was primarily due to the acquisitions during 2021 and 2022 and an increase in rental rates and rental homes. The operating expense
ratio (defined as community operating expenses divided by rental and related income) was 42.8% in 2021 compared to 44.4% for 2022.

Sales
of manufactured homes decreased from $27.1 million for the year ended December 31, 2021 to $25.3 million for the year ended December
31, 2022, or 6%. The total number of homes sold in 2022 was 301 homes as compared to 370 homes in 2021. There were 144 new homes sold
in 2022 as compared to 182 in 2021. The Company’s average sales price was approximately $84,000 and $73,000 for the years ended
December 31, 2022 and 2021, respectively. Cost of sales of manufactured homes decreased from $20.1 million for the year ended December
31, 2021 to $17.6 million for the year ended December 31, 2022, or 13%. The gross profit percentage was 31% and 26% for 2022 and 2021,
respectively. Selling expenses increased from $4.8 million for the year ended December 31, 2021 to $5.3 million for the year ended December
31, 2022, or 10%. Gain from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less
selling expenses less interest on the financing of inventory) amounted to a gain of $2.0 million for the year ended December 31, 2022
and 2021, respectively.

General
and administrative expenses increased from $14.1 million for the year ended December 31, 2021 to $19.0 million for the year ended December
31, 2022, or 35%. These increases were mainly due to non-recurring expenses relating to the cost of previously issued special restricted
stock grants for the groundbreaking Fannie Mae financing completed in 2020, expenses for the joint venture with Nuveen, the opportunity
zone fund, the issuance of the Series A Bonds, early extinguishment of debt and other legal expenses. These non-recurring expenses totaled
$3.5 million for the year ended December 31, 2022, compared to $2.0 million for the year ended December 31, 2021. General and administrative
expenses also increased due to an increase in personnel costs, stock-based compensation and travel. General and administrative expenses,
excluding non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividend and other income) was 7.6% and
6.2% at December 31, 2022 and 2021, respectively.

-46-

Depreciation
expense increased from $45.1 million for the year ended December 31, 2021 to $48.8 million for the year ended December 31, 2022, or 8%.
This increase was primarily due to the acquisitions and the increase in rental homes during 2022 and 2021.

Interest
income increased from $3.4 million for the year ended December 31, 2021 to $4.1 million for the year ended December 31, 2022, or 22%.
This increase was primarily due to an increase in the average balance of notes receivable from $48.6 million for the year ended December
31, 2021 to $58.6 million for the year ended December 31, 2022.

Dividend
income decreased from $5.1 million for the year ended December 31, 2021 to $2.9 million for the year ended December 31, 2022, or 43%.
This decrease was primarily due to reduced dividends from the reduction of our securities holdings. Dividends received from our marketable
securities investments were at a weighted average yield of approximately 7.1% and 4.4% as of December 31, 2022 and 2021, respectively.

The
Company recognized a net gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022, primarily as a result
of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The Company
recognized a gain on sales of marketable securities of $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair
value of marketable securities decreased from an increase of $25.1 million for the year ended December 31, 2021 to a decrease of $21.8
million for the year ended December 31, 2022. As of December 31, 2022, the Company had total net unrealized losses of $36.1 million in
its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $19.2 million for the year ended December 31, 2021 to $26.4
million for the year ended December 31, 2022, or 38%. This increase was mainly due to interest on the Series A Bonds issued in 2022, an increase
in loans payable and an increase in interest rates.

Non-U.S.
GAAP Measures

In
addition to the results reported in accordance with U.S. GAAP, management’s discussion and analysis of financial condition and
results of operations include certain non-U.S. GAAP financial measures that in management’s view of the business we believe are
meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to
certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-U.S.
GAAP financial measures as determined and presented by us may not be comparable to related or similarly titled measures reported by other
companies, and include Community Net Operating Income (“Community NOI”), Funds from Operations Attributable to Common Shareholders
(“FFO”) and Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”).

We
define Community NOI as rental and related income less community operating expenses such as real estate taxes, repairs and maintenance,
community salaries, utilities, insurance and other expenses. We believe that Community NOI is helpful to investors and analysts as a
direct measure of the actual operating results of our manufactured home communities, rather than our Company overall. Community NOI should
not be considered a substitute for the reported results prepared in accordance with U.S. GAAP. Community NOI should not be considered
as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor
is it indicative of funds available for our cash needs, including our ability to make cash distributions.

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The
Company’s Community NOI for the years ended December 31, 2023, 2022 and 2021 is calculated as follows (in thousands):

We
assess and measure our overall operating results based upon FFO, an industry performance measure which management believes is a useful
indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure
of a REIT. FFO, as defined by NAREIT, represents net income (loss) attributable to common shareholders, as defined by accounting principles
generally accepted in the U.S. (“U.S. GAAP”), excluding gains or losses
from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, the change in
the fair value of marketable securities, and the gain or loss on the sale of marketable securities plus certain non-cash items such as
real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper - 2018 Restatement, is an option pertaining to
assets incidental to our main business in the calculation of NAREIT FFO to make an election to include or exclude gains and losses on
the sale of these assets, such as marketable equity securities, and include or exclude mark-to-market changes in the value recognized
on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented,
we have elected to exclude the change in the fair value of marketable securities from our FFO calculation. NAREIT created FFO as a non-U.S.
GAAP supplemental measure of REIT operating performance. We define Normalized Funds from Operations Attributable to Common Shareholders
(“Normalized FFO”), as FFO, excluding certain one-time charges. FFO and Normalized FFO should be considered as supplemental
measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an expense and may facilitate
the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and
Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded from FFO and
Normalized FFO are significant components in understanding the Company’s financial performance.

FFO
and Normalized FFO (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative
to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii)
are not alternatives to cash flow as a measure of liquidity. FFO and Normalized FFO, as calculated by the Company, may not be comparable
to similarly titled measures reported by other REITs.

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The
Company’s FFO and Normalized FFO attributable to common shareholders for the years ended December 31, 2023, 2022 and 2021 are calculated
as follows (in thousands):

Liquidity
and Capital Resources

The
Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity
demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions,
capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental
homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability
to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable
securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of
real estate investments, availability of bank borrowings, lines of credit, and other incurrence of indebtedness, proceeds from the
DRIP, and access to the capital markets, including through its Common and Preferred ATM Programs. In addition to cash generated
through operations, the Company uses a variety of sources to fund its cash needs, including acquisitions. The Company may sell
marketable securities from its investment portfolio, borrow on its unsecured credit facility or lines of credit, incur other
indebtedness, finance and refinance its properties, and/or raise capital through the DRIP and capital markets, including through the
Company’s ATM Programs. In order to provide financial flexibility to opportunistically access the capital markets, the Company
implemented a new 2023 Preferred ATM Program on January 10, 2023 that allows the Company to offer and sell shares of the
Company’s 6.375% Series D Cumulative Redeemable Preferred Stock having an aggregate sales price of up to $100 million from
time to time through its sales agent, B. Riley Securities, Inc. In addition, on April 4, 2023, the Company implemented a new 2023
Common ATM Program that allows the Company to offer and sell shares of the Company’s Common Stock having an aggregate sales
price of up to $150 million from time to time through the distribution agents for the 2023 Common ATM Program. Additionally, the
Company amended its unsecured line of credit to expand available borrowing capacity from $100 million to $180 million and
expanded/obtained new loans and lines of credit secured by rental homes, rental homes leases and notes receivable.

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The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto
otherwise vacant sites. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire
communities that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, through our
joint venture relationship with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that are
under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that any of these
additional opportunities will materialize or that the Company will be able to take advantage of such opportunities. The growth of
our real estate portfolio and success of our joint venture will depend on the availability of suitable properties which meet the
Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is
significant. To the extent that funds or appropriate communities are not available, fewer acquisitions will be made.

The
Company continues to strengthen its capital and liquidity positions. During the year ended December 31, 2023, the Company issued and
sold 9.4 million shares of Common Stock through our Common ATM Programs at a weighted average price of $15.81 per share, generating gross
proceeds of $148.6 million and net proceeds of $145.8 million, after offering expenses.

Through
our Preferred ATM Programs, the Company issued and sold a total of 2.6 million shares of our Series D Preferred Stock generating gross
proceeds of $56.7 million and net proceeds after offering expenses of $55.7 million during the year ended December 31, 2023.

As
of December 31, 2023, $37.0 million of Common Stock remained available for sale under the 2023 Common ATM Program and $46.1 million in
shares of Series D Preferred Stock remained available for sale under the 2023 Preferred ATM Program. Subsequent to year end, the Company
issued and sold 1.2 million shares of Common Stock under the 2023 Common ATM Program for gross proceeds of $19.2 million. Subsequent
to year end, the Company issued and sold a total of 121,000 shares of Preferred Stock under the 2023 Preferred ATM Program for gross
proceeds of $2.8 million.

In
addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price
of approximately 95% of market. During 2023, amounts received under the DRIP, including dividends reinvested of $2.7 million, totaled
$9.0 million. The Company issued a total of 612,000 shares under the DRIP during 2023.

The
Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $35 million revolving
line of credit for the financing of homes that was not utilized at December 31, 2023, revolving credit facilities totaling $108.5 million
to finance inventory purchases, that were not utilized at December 31, 2023 and $55.0 million available on our lines of credit secured
by rental homes and rental homes leases.

As
of December 31, 2023, the Company had $57.3 million of cash and cash equivalents and marketable securities of $34.5 million. The
Company owned 135 communities (including two communities acquired through the opportunity zone fund) of which 48 are unencumbered.
The Company’s non-mortgaged properties and marketable securities provide us with additional liquidity. As of December 31,
2023, the Company also held a 40% equity interest in the entities formed under its joint venture with Nuveen Real Estate, which
own two newly developed communities that are unencumbered and one community in the process of being developed. The Company believes
that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available on the lines of credit,
together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations
over the next several years.

The
Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily
through mortgages. During 2023, total investment property, including rental homes, increased 11% or $147.5 million. The Company acquired one manufactured home community totaling 118 developed sites at a purchase price of $3.7 million through the Company’s opportunity zone fund. See Note 3 of
the Notes to Consolidated Financial Statements for additional information on our acquisitions and Note 7 of the Notes to
Consolidated Financial Statements for related debt transactions. The Company continues to evaluate acquisition opportunities. The
funds for these acquisitions (including the Company’s 40% share of acquisition costs that may be incurred pursuant to its joint
venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the DRIP, and private placements or public offerings
of debt, Common Stock or Preferred Stock, including under the Common ATM Program or the Preferred ATM Program. To the extent that
funds or appropriate properties are not available, fewer acquisitions will be made.

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The
Company owned approximately 10,000 rental homes, or approximately 39% of our total homesites as of December 31, 2023. During 2023,
our rental home portfolio increased by 871 homes, net of rental home sales, or $93.7 million. The Company markets these rental homes
for sale to existing residents. The Company estimates that in 2024 it will order approximately 800 to 900 manufactured homes to use
as rental units at its properties for a total invoice cost of approximately $60 million to $65 million. Rental
home rates on new homes range from approximately $790 to $2,000 per month, including lot rent, depending on size, location and
market conditions. During 2023, the Company also invested approximately $30 million in other improvements to its
communities.

The
following table summarizes cash flow activity for the years ended December 31, 2023, 2022 and 2021 (in thousands):

Net
cash provided by (used in) operating activities increased by $127.3 million in 2023 primarily due to a decrease in inventory. Net cash
provided by (used in) operating activities decreased by $72.4 million in 2022 primarily due to an increase in inventory.

Net
cash used in investing activities increased by $40.7 million in 2023, primarily due to the purchase of investment property and equipment
and additions to land development. Net cash used in investing activities increased by $30.5 million in 2022, primarily due to the purchase
of manufactured home communities and investment property and equipment, partially offset by the proceeds from sales of marketable securities.

Net
cash provided by financing activities increased by $21.1 million in 2023 to $69.1 million. The Company issued and sold 9.4 million shares
of its Common Stock during 2023 through the Common ATM Programs, raising net proceeds of approximately $145.8 million. The Company also
received $9.0 million, including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.6 million shares
of its Series D Preferred Stock during 2023 through the Preferred ATM Programs, raising net proceeds of approximately $55.7 million.
During 2023, the Company distributed to our common shareholders a total of $51.7 million, including dividends reinvested. In addition,
the Company also paid $16.7 million in preferred dividends during 2023. The Company also made principal payments on its mortgages and
loans, net of new debt financing, totaling $73.8 million.

Net
cash provided by financing activities decreased by $77.6 million in 2022 to $48.0 million. The Company obtained new debt financing totaling $238.9 million, net of principal repayments and financing
costs, through mortgages, short-term borrowings and the issuance in Israel of
our Series A Bonds. The Company issued and sold 5.0 million shares of its Common Stock during 2022 through the Common ATM Programs, raising net proceeds
of approximately $100.8 million. The Company also received $7.8 million, including dividends reinvested, through the DRIP. In addition,
the Company issued and sold 406,000 shares of its Series D Preferred Stock during 2022 through the 2020 Preferred ATM Program, raising
net proceeds of approximately $9.1 million. During 2022, the Company redeemed all 9.9 million issued and outstanding shares of its 6.75%
Series C Preferred Stock for $247.1 million. During 2022, the Company distributed to our common shareholders a total of $43.4 million,
including dividends reinvested. In addition, the Company also paid $24.6 million in preferred dividends during 2022.

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Cash
flows were primarily used for purchases of manufactured home communities, capital improvements, payment of dividends, purchase of
inventory and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing communities. The
Company meets maturing mortgage obligations by using a combination of positive cash flows and refinancing. The dividend payments
were primarily made from cash flows from operations.

Cash
flows used for capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured
home communities that provide water or sewer service. Excluding expansions and rental home purchases, the Company is budgeting approximately
$20 to $30 million in capital improvements for 2024.

The
Company’s significant commitments and contractual obligations relate to its mortgages, loans payable and other indebtedness, acquisitions
of manufactured home communities, retirement benefits, and the lease on its corporate offices as described in Note 10 to the Consolidated
Financial Statements.

The
Company has 2,134 acres of undeveloped land which could be developed in the future. The Company continues to analyze the best use of its
vacant land.

As
of December 31, 2023, the Company had total assets of $1.4 billion and total liabilities of $720.8 million. Our net debt (net of
cash and cash equivalents) to total market capitalization decreased 18% and as of December 31, 2023 and 2022 was approximately 31%
and 38%, respectively. Our net debt, less securities (net of cash and cash equivalents and marketable securities) to total market
capitalization decreased 17% and as of December 31, 2023 and 2022 was approximately 30% and 36%, respectively.

The
Company believes that it has the ability to meet its obligations and to generate funds for new investments.

Contractual
Obligations

The
Company has investments in entities formed under its joint venture relationship with Nuveen Real Estate which are accounted for
under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating
and financial decisions for the joint venture entities. The terms of the joint venture arrangements require the Company to fund 40%
and Nuveen to fund 60% of the total capital contributions made by the members. See Item 2 –
“Properties” and Note 5, “Investment in Joint Venture,” of the Notes to Consolidated Financial Statements
for additional information.

Our
other primary contractual obligations relate to our loans and mortgages payable and other indebtedness, our operating lease obligations
and our obligations regarding the financing of our home sales. See Note 2 “Summary of Significant Accounting Policies”, Note
7 “Loans and Mortgages Payable”, Note 10 “Related Party Transactions and Other Matters” and Note 14 “Commitments,
Contingencies and Legal Matters” of the Notes to Consolidated Financial Statements for additional information.

Critical
Accounting Policies and Estimates

Our
consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Actual results could differ
from these estimates.

For
additional information regarding our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements.

Recent
Accounting Pronouncements

See
Note 2 of the Notes to Consolidated Financial Statements.

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

2022
Accomplishments

During
2022, 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-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.

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The
Company is a Maryland corporation that operates as a self-administered, self-managed REIT with headquarters in Freehold, New Jersey.
The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured
home spaces on an annual or month-to-month 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.

As
of December 31, 2022, we owned and operated 134 manufactured home communities (including one community acquired through the opportunity
zone fund) containing approximately 25,600 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania,
Tennessee, Indiana, Michigan, Maryland, Alabama and South Carolina. UMH has continued to execute our growth strategy of purchasing well-located
communities in our target markets, including the energy-rich Marcellus and Utica Shale regions. During the year ended December 31, 2022,
we purchased seven communities located in Alabama, Michigan, New Jersey, Ohio, Pennsylvania and South Carolina, for an aggregate purchase
price of $86.2 million. These acquisitions added approximately 1,486 developed homesites to our portfolio. Since January 1, 2023, we have acquired one additional community, located
in Georgia and containing 118 developed homesites, through our opportunity zone fund. The Company also operates
two communities in Florida owned by the Company’s joint venture with Nuveen that was formed in December 2021.

The
Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of manufactured
homes, the sale and finance of manufactured homes and the brokering of home sales and revenue under cable service agreements as well
as 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 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.
The Company also invests in equity securities of other REITs which the Company generally limits to no more than approximately 15% of
its undepreciated assets. As of December 31, 2022, the securities portfolio represented 2.5% of undepreciated assets.

Occupancy
in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2022, total income increased 5% from
the prior year due to the acquisition and rental programs, rent increases and the growth of our sales business. Community NOI (as defined
below) increased 4% from the prior year. Overall occupancy was 84.6% and 86.0% at December 31, 2022 and 2021, respectively. Overall occupancy
includes communities acquired in 2022 with an average occupancy of 66%. Same property occupancy, which includes communities owned and
operated as of January 1, 2021, was 86.6% and 86.8% as of December 31, 2022 and 2021, respectively. (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, 2022, does not include the properties owned by the Company’s joint venture with Nuveen.)

Demand
for quality affordable housing remains healthy. Conventional single-family home prices continue their rise supported by low inventories
and increasing sales. As for-sale inventory remains limited, a large share of housing demand will be looking at alternative forms of
housing. Our property type offers substantial comparative value that should result in increased demand.

The
macro-economic environment and current housing fundamentals continue to favor home rentals. 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 2022, our portfolio of rental homes increased
by 392 homes. Occupied rental homes represent approximately 39.2% of total occupied sites. Occupancy in rental homes continues to be
strong and is at 93.3% as of December 31, 2022. We compare favorably with other types of rental housing, including apartments, and we
will continue to allocate capital to rental home purchases, as demand dictates.

The
Company holds a portfolio of marketable equity securities of other REITs with a fair value of $42.2 million as of December 31, 2022, representing
2.5% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio provides the Company
with additional diversification, liquidity and income, and serves as a proxy for real estate when more favorable risk adjusted returns
are not available. As of December 31, 2022, 2% of the Company’s portfolio consisted of REIT preferred stocks and 98% consisted
of REIT common stocks.

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The
Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The
Company’s weighted average yield on the securities portfolio was approximately 7.1% at December 31, 2022. At December 31, 2022,
the Company had unrealized losses of $36.1 million in its REIT securities portfolio. During 2022, the Company sold positions in securities,
generating a net realized gain of $6.4 million.

The
Company continues to strengthen its balance sheet. During the year ended December 31, 2022, through an At-the-Market Sale Program
for our Common Stock that was established in March 2022 (the “2022 Common ATM Program”) and a prior At-the-Market Sale
Program established in 2021, the Company issued and sold a total of 5.0 million shares of our Common Stock, generating gross proceeds of $102.6 million
and net proceeds of $100.8 million, after offering expenses. Additionally, the Company raised approximately $7.8 million in new
capital through the Dividend Reinvestment and Stock Purchase Plan (“DRIP”).

During
the year ended December 31, 2022, through an At-the-Market Sale Program for our Preferred Stock originally established in 2020 (the
“2020 Preferred ATM Program”), the Company issued and sold a total of approximately 406,000 shares of our Series D Preferred
Stock, generating gross proceeds of $9.3 million and net proceeds of $9.1 million, after offering expenses.

During
the year ended December 31, 2022, the Company also issued $102.7 million of its new 4.72% Series A Bonds due 2027 in an offering to investors
in Israel and received $98.7 million in net proceeds, after offering expenses.

The
Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained
through the issuance of common and preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

On
December 31, 2022, the Company had approximately $29.8 million in cash and cash equivalents and $25 million available on our credit facility,
with an additional $400 million potentially available pursuant to an accordion feature. We also had $19.4 million available on our revolving
lines of credit for the financing of home sales and the purchase of inventory and $14.9 million available on our line of credit secured
by rental homes and rental homes leases.

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then making physical improvements, including adding rental homes onto otherwise
vacant sites. In 2021 and 2022, we added a total of ten manufactured home communities to our portfolio, encompassing approximately 2,029
developed sites. These manufactured home communities were acquired with an average occupancy rate of 64%. The Company will utilize the
rental home program to seek to increase occupancy rates and improve operating results at these communities. As part of this plan, we
intend to seek opportunities, through our opportunity zone fund, to acquire communities that require substantial capital investment and
are located in Qualified Opportunity Zones. In addition, on behalf of our recently-formed joint venture with Nuveen Real Estate, we will
seek opportunities to acquire manufactured home communities that are under development and/or newly developed and meet certain other
investment guidelines. There is no guarantee that acquisition opportunities will continue to materialize or that the Company will be
able to take advantage of such opportunities. The growth of our real estate portfolio and success of the joint venture depends on the
availability of suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the
market areas in which the Company operates is significant and affects acquisitions, occupancy levels, rental rates and operating expenses
of certain properties.

See
PART I, Item 1- Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant
to the Company, the Company’s lines of business and principal products and services, and the opportunities, challenges and risks
on which the Company is focused.

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Acquisitions
in 2022 and 2021

The
following table lists the property acquisitions completed by the Company during the years ended December 31, 2022 and 2021:

In
addition to the acquisitions shown above, in November 2022, we acquired vacant land in Honeybrook, Pennsylvania (near two of our
existing communities) with approvals for the future development of a manufactured home community containing approximately 113
sites.

In
addition, on December 22, 2021, the Company’s joint venture with Nuveen closed on the acquisition of Sebring Square, a newly developed
all-age, manufactured home community located in Sebring, Florida, for a total purchase price of $22.2 million. This community contains
219 developed homesites situated on approximately 39 acres. On December 23, 2022, the joint venture closed on the acquisition of Rum
Runner, a newly developed all-age, manufactured home community also located in Sebring, Florida, for a total purchase price of $15.1
million. This community contains 144 developed homesites situated on approximately 20 acres.

Results
of Operations

2022
vs. 2021

Rental
and related income increased from $159.0 million for the year ended December 31, 2021 to $170.4 million for the year ended December 31,
2022, or 7%. This increase was due to the acquisitions during 2021 and 2022, as well as an increase in rental rates and additional rental
homes. During 2022, the Company raised rental rates by 4% to 5% at most communities. Rent increases vary depending on overall market
conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company has been acquiring
communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was 84.6% and 86.0% at
December 31, 2022 and 2021, respectively. Overall occupancy includes communities acquired in 2022 and 2021, which had an average occupancy
of 66% and 59%, respectively, at the time of acquisition. Demand for rental homes continues to be strong. As of December 31, 2022, we
had approximately 9,100 rental homes with an occupancy rate of 93.3%. We continue to evaluate the demand for rental homes and will invest
in additional homes as demand dictates.

Community
operating expenses increased from $68.0 million for the year ended December 31, 2021 to $75.7 million for the year ended December 31,
2022, or 11%. This increase was primarily due to new acquisitions, and increases in waste removal, tree removal, water and sewer, insurance,
real estate taxes, travel and payroll and personnel costs.

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Community
NOI increased from $91.0 million for the year ended December 31, 2021 to $94.8 million for the year ended December 31, 2022, or 4%.
This increase was primarily due to the acquisitions during 2021 and 2022 and an increase in rental rates and rental homes. The
operating expense ratio (defined as community operating expenses divided by rental and related income) was 42.8% in 2021 compared to
44.4% for 2022. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first
few years of ownership. In addition, expansions of our communities may require investments in infrastructure before we can generate
revenue from additional sites. Because most of the community expenses consist of fixed costs, as occupancy rates increase, these
expense ratios are expected to continue to improve. Since the Company has the ability to increase its rental rates annually (subject to limitations on rent increases in certain jurisdictions),
increasing costs due to inflation and changing prices have generally not had a material effect on revenues and income from
continuing operations.

Sales
of manufactured homes decreased from $27.1 million for the year ended December 31, 2021 to $25.3 million for the year ended December
31, 2022, or 6%. The total number of homes sold in 2022 was 301 homes as compared to 370 homes in 2021. There were 144 new
homes sold in 2022 as compared to 182 in 2021. The Company’s average sales price was approximately $84,000 and $73,000 for the
years ended December 31, 2022 and 2021, respectively. Cost of sales of manufactured homes decreased from $20.1 million for the year
ended December 31, 2021 to $17.6 million for the year ended December 31, 2022, or 13%. The gross profit percentage was 31% and 26%
for 2022 and 2021, respectively. Selling expenses increased from $4.8 million for the year ended December 31, 2021 to $5.3 million
for the year ended December 31, 2022, or 10%. Gain from the sales operations (defined as sales of manufactured homes less cost of
sales of manufactured homes less selling expenses less interest on the financing of inventory) amounted to a gain of $2.0 million
for the year ended December 31, 2022 and 2021, respectively. Many of the costs associated with sales, such as rent, salaries, and to
an extent, advertising and promotion, are fixed. Home prices have continued their rise as fewer sellers are listing homes and
inventories decline. With the passage of time, the inherent relative affordability of our property type becomes more and more
apparent, which should result in increased demand. The Company continues to be optimistic about future sales and rental prospects
given the fundamental need for affordable housing. The Company believes that sales of new homes produce new revenue and represent an
investment in the upgrading of our communities.

General
and administrative expenses increased from $14.1 million for the year ended December 31, 2021 to $19.0 million for the year ended
December 31, 2022, or 35%. These increases were mainly due to non-recurring expenses relating to the cost of previously issued
special restricted stock grants for the groundbreaking Fannie Mae financing completed in 2020, expenses for the joint venture with
Nuveen, the opportunity zone fund, the issuance of the Series A Bonds, early extinguishment of debt and other legal expenses. These
non-recurring expenses totaled $3.5 million for the year ended December 31, 2022, compared to $2.0 million for the year ended
December 31, 2021. General and administrative expenses also increased due to an increase in personnel costs, stock-based
compensation and travel. General and administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue
(total income plus interest, dividend and other income) was 7.6% and 6.2% at December 31, 2022 and 2021, respectively.

Depreciation
expense increased from $45.1 million for the year ended December 31, 2021 to $48.8 million for the year ended December 31, 2022, or 8%.
This increase was primarily due to the acquisitions and the increase in rental homes during 2022 and 2021.

Interest
income increased from $3.4 million for the year ended December 31, 2021 to $4.1 million for the year ended December 31, 2022, or 22%.
This increase was primarily due to an increase in the average balance of notes receivable from $48.6 million for the year ended December
31, 2021 to $58.6 million for the year ended December 31, 2022.

Dividend
income decreased from $5.1 million for the year ended December 31, 2021 to $2.9 million for the year ended December 31, 2022, or 43%.
This decrease was primarily due to reduced dividends from the reduction of our securities holdings. Dividends received from our marketable
securities investments were at a weighted average yield of approximately 7.1% and 4.4% as of December 31, 2022 and 2021, respectively.

The
Company recognized a net gain on sales of marketable securities of $6.4 million for the year ended December 31, 2022, mainly as a result
of the cash consideration received in the MREIC merger, partially offset by a loss on sale of other marketable securities. The Company
recognized a gain on sales of marketable securities of $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair
value of marketable securities decreased from an increase of $25.1 million for the year ended December 31, 2021 to a decrease of $21.8
million for the year ended December 31, 2022. As of December 31, 2022, the Company had total net unrealized losses of $36.1 million in
its REIT securities portfolio.

-43-

Interest
expense, including amortization of financing costs, increased from $19.2 million for the year ended December 31, 2021 to $26.4 million
for the year ended December 31, 2022, or 38%. This increase was mainly due to interest on the Series A Bonds, an increase in loans payable
and an increase in interest rates.

2021
vs. 2020

Rental
and related income increased from $143.3 million for the year ended December 31, 2020 to $159.0 million for the year ended December 31,
2021, or 11%. This increase was due to the acquisitions during 2020 and 2021, as well as an increase in rental rates, same property occupancy
and additional rental homes. During 2021, the Company raised rental rates by 3% to 4% at most communities. Rent increases vary depending
on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company
has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was
86.0% and 85.0% at December 31, 2021 and 2020, respectively. Overall occupancy includes communities acquired in 2021 and 2020, which
had an average occupancy of 59% and 64%, respectively, at the time of acquisition. Same property occupancy has increased from 85.4% at
December 31, 2020 to 87.1% at December 31, 2021. (The same property occupancy rate is exclusive of the sites at Memphis Blues, which
is under redevelopment due to a flood in 2011.) Demand for rental homes continues to be strong. As of December 31, 2021, we had approximately
8,700 rental homes with an occupancy rate of 95.5%. We continue to evaluate the demand for rental homes and will invest in additional
homes as demand dictates.

Community
operating expenses increased from $63.2 million for the year ended December 31, 2020 to $68.0 million for the year ended December 31,
2021, or 8%. This increase was primarily due to new acquisitions, and increases in snow removal costs, tree removal, water and sewer,
real estate taxes and payroll and personnel costs.

Community
NOI increased from $80.2 million for the year ended December 31, 2020 to $91.0 million for the year ended December 31, 2021, or 13%.
This increase was primarily due to the acquisitions during 2020 and 2021 and an increase in rental rates, occupancy and rental homes.
The operating expense ratio (defined as community operating expenses divided by rental and related income) improved from 44.1% in 2020
to 42.8% for 2021. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first
few years of ownership. In addition, expansions of our communities may require investments in infrastructure before we can generate revenue
from additional sites. Because most of the community expenses consist of fixed costs, as occupancy rates increase, these expense ratios
are expected to continue to improve. Since the Company has the ability to increase its rental rates annually, increasing costs due to
inflation and changing prices have generally not had a material effect on revenues and income from continuing operations.

Sales
of manufactured homes increased from $20.3 million for the year ended December 31, 2020 to $27.1 million for the year ended December
31, 2021, or 34%. The total number of homes sold was 370 homes in 2021 as compared to 323 homes in 2020. There were 182 new homes sold
in 2021 as compared to 140 in 2020. The Company’s average sales price was approximately $73,000 and $63,000 for the years ended
December 31, 2021 and 2020, respectively. Cost of sales of manufactured homes increased from $14.4 million for the year ended December
31, 2020 to $20.1 million for the year ended December 31, 2021, or 39%. The gross profit percentage was 26% and 29% for 2021 and 2020,
respectively. Selling expenses decreased from $4.9 million for the year ended December 31, 2020 to $4.8 million for the year ended December
31, 2021, or 3%. Gain from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less
selling expenses less interest on the financing of inventory) increased from a gain of $768,000 for the year ended December 31, 2020
to a gain of $2.0 million for the year ended December 31, 2021. Many of the costs associated with sales, such as rent, salaries, and
to an extent, advertising and promotion, are fixed. The National Association of Realtors reported that in December 2021, sales of existing
homes grew 9% from December 2020. Home prices have continued their rise as fewer sellers are listing homes and inventories decline. With
the passage of time, the inherent relative affordability of our property type becomes more and more apparent, which should result in
increased demand.

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General
and administrative expenses increased from $11.1 million for the year ended December 31, 2020 to $14.1 million for the year ended December
31, 2021, or 27%. These increases were due to an increase in personnel costs, including an increase in the bonus accrual based on FFO
metrics and an increase in stock-based compensation, including special restricted stock grants for the 2020 groundbreaking Fannie Mae
financing. General and administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus
interest, dividend and other income) was 6.2% and 6.4% at December 31, 2021 and 2020, respectively.

Depreciation
expense increased from $41.7 million for the year ended December 31, 2020 to $45.1 million for the year ended December 31, 2021, or 8%.
This increase was primarily due to the acquisitions and the increase in rental homes during 2021 and 2020.

Interest
income increased from $2.9 million for the year ended December 31, 2020 to $3.4 million for the year ended December 31, 2021, or 15%.
This increase was primarily due to an increase in the average balance of notes receivable from $40.4 million for the year ended December
31, 2020 to $48.6 million for the year ended December 31, 2021.

Dividend
income decreased from $5.7 million for the year ended December 31, 2020 to $5.1 million for the year ended December 31, 2021, or
11%. This decrease was primarily due to reduced dividends from our securities holdings. Dividends received from our marketable
securities investments were at a weighted average yield of approximately 4.4% and 4.7% as of December 31, 2021 and 2020,
respectively.

Gain
on sales of marketable securities amounted to $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair value of
marketable securities increased from an unrealized loss of $14.1 million for the year ended December 31, 2020 to an unrealized gain of
$25.1 million for the year ended December 31, 2021. As of December 31, 2021, the Company had total net unrealized losses of $14.3 million
in its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $18.3 million for the year ended December 31, 2020 to $19.2 million
for the year ended December 31, 2021, or 5%. The average balance of mortgages payable was approximately $462.0 million during 2021 as
compared to approximately $421.5 million during 2020. The weighted average interest rate on mortgages, not including the effect of unamortized
debt issuance costs, was 3.8% at both December 31, 2021 and 2020.

Non-GAAP
Measures

In
addition to the results reported in accordance with GAAP, management’s discussion and analysis of financial condition and results
of operations include certain non-GAAP financial measures that in management’s view of the business we believe are meaningful as
they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting
conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-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 GAAP. Community NOI should not be considered as an
alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it
indicative of funds available for our cash needs, including our ability to make cash distributions.

-45-

The
Company’s Community NOI is calculated as follows (in thousands):

We
assess and measure our overall operating results based upon FFO, an industry performance measure which management believes is a
useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating
performance measure of a REIT. FFO, as defined by NAREIT, represents net income (loss) attributable to common shareholders, as
defined by accounting principles generally accepted in the U.S. (“U.S. GAAP”), excluding extraordinary items, as defined
under U.S. GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable
real estate assets, the change in the fair value of marketable securities, and the gain or loss on the sale of marketable securities
plus certain non-cash items such as real estate asset depreciation and amortization. Included in the NAREIT FFO White Paper - 2018
Restatement, is an option pertaining to assets incidental to our main business in the calculation of NAREIT FFO to make an election
to include or exclude gains and losses on the sale of these assets, such as marketable equity securities, and include or exclude
mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO
White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair value of marketable
securities from our FFO calculation. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating performance. We
define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding certain one-time charges. FFO and Normalized FFO should be considered
as supplemental measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an
expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different
methodologies to calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other
REITs. The items excluded from FFO and Normalized FFO are significant components in understanding the Company’s financial
performance.

FFO
and Normalized FFO (i) do not represent Cash Flow from Operations as defined by GAAP; (ii) should not be considered as an alternative
to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii)
are not alternatives to cash flow as a measure of liquidity. FFO and Normalized FFO, as calculated by the Company, may not be comparable
to similarly titled measures reported by other REITs.

The
Company’s FFO and Normalized FFO attributable to common shareholders are calculated as follows (in thousands except footnotes):

-46-

Liquidity
and Capital Resources

The Company operates as a REIT deriving its income primarily from real
estate rental operations. The Company’s principal liquidity demands have historically been, and are expected to continue to be,
distributions to the Company’s shareholders, acquisitions, capital improvements, development and expansions of properties, debt
service, purchases of manufactured home inventory and rental homes, financing of manufactured home sales and payments of expenses relating
to real estate operations. The Company’s ability to generate cash adequate to meet these demands is dependent primarily on income
from its real estate investments and marketable securities portfolio, the sale of real estate investments and marketable securities, refinancing
of mortgage debt, leveraging of real estate investments, availability of bank borrowings or lines of credit, proceeds from the DRIP and
access to the capital markets. In addition to cash generated through operations, the Company uses a variety of sources to fund its cash
needs, including acquisitions. Specifically, the Company may sell marketable securities from its investment portfolio, borrow on its unsecured
credit facility or lines of credit, finance and refinance its properties, and/or raise capital through the DRIP and capital markets. In
order to provide financial flexibility to opportunistically access the capital markets, the Company implemented its 2022 Common ATM Program.
The 2022 Common ATM Program allows the Company to offer and sell shares of the Company’s Common Stock, having an aggregate sales
price of up to $150 million from time to time through the Distribution Agents. During 2022, the Company also maintained its 2020 Preferred
ATM Program which allowed the Company to offer and sell shares of the Company’s Series D Preferred Stock, having an aggregate sales
price of up to $100 million from time to time. All shares of Series D Preferred Stock available for sale under the 2020 Preferred ATM
Program have been sold and accordingly, subsequent to year end, the Company established a new 2023 Preferred ATM Program under which the
Company may sell additional shares of the Company’s Series D Preferred Stock having an aggregate sales price of up to $100 million
from time to time.

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto
otherwise vacant sites. As part of this plan, we intend to seek opportunities, through our opportunity zone fund, to acquire communities
that require substantial capital investment and are located in Qualified Opportunity Zones. In addition, on behalf of our joint venture
with Nuveen, we will seek opportunities to acquire manufactured home communities that are under development and/or newly
developed and meet certain other investment guidelines. There is no guarantee that any of these additional opportunities will materialize
or that the Company will be able to take advantage of such opportunities. The growth of our real estate portfolio and success of our
joint venture depends on the availability of suitable properties which meet the Company’s investment criteria and appropriate financing.
Competition in the market areas in which the Company operates is significant. To the extent that funds or appropriate communities are
not available, fewer acquisitions will be made.

The
Company continues to strengthen its capital and liquidity positions and maintains financial flexibility. During the year ended December
31, 2022, the Company issued and sold 5.0 million shares of Common Stock through our Common ATM Programs at a weighted average price
of $20.58 per share, generating gross proceeds of $102.6 million and net proceeds of $100.8 million, after offering expenses.

-47-

Through
our 2020 Preferred ATM Program, the Company issued and sold a total of 406,000 shares of our Series D Preferred Stock generating
gross proceeds of $9.3 million and net proceeds after offering expenses of $9.1 million during the year ended December 31,
2022.

As
of December 31, 2022, $55.4 million of Common Stock remained available for sale under the 2022 Common ATM Program and $2.9 million
in shares of Series D Preferred Stock remained available for sale under the 2020 Preferred ATM Program. Subsequent to year end, the
Company issued and sold 1.9 million shares of Common Stock under the 2022 Common ATM Program for gross proceeds of $32.7 million.
Subsequent to year end, the Company issued and sold a total of 640,000 shares of Preferred Stock under the 2020 Preferred ATM
Program and the 2023 Preferred ATM Program for gross proceeds of $14.6 million.

During
2022, the Company also issued $102.7 million of its new 4.72% Series A Bonds due in 2027 in an offering to investors in Israel and
received $98.7 million in net proceeds, after offering expenses.

In
addition, the Company has a DRIP in which participants can purchase original issue shares of Common Stock from the Company at a price
of approximately 95% of market. During 2022, amounts received under the DRIP, including dividends reinvested of $2.8 million, totaled
$7.8 million. The Company issued a total of 430,000 shares under the DRIP during 2022.

The
Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $20 million revolving
line of credit for the financing of homes, of which $10 million was utilized at December 31, 2022, revolving credit facilities totaling
$73.5 million to finance inventory purchases, of which $64.1 million was utilized at December 31, 2022 and $14.9 million available on
our line of credit secured by rental homes and rental homes leases.

As
of December 31, 2022, the Company had $29.8 million of cash and cash equivalents and marketable securities of $42.2 million. The Company
owned 134 communities (including one community acquired through the opportunity zone fund) of which 36 are unencumbered. The Company’s
marketable securities and non-mortgaged properties provide us with additional liquidity. As of December 31, 2022, the Company also held
a 40% equity interest in its joint venture with Nuveen Real Estate, which owns two newly developed communities that are unencumbered. The Company believes that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available
on the lines of credit, together with the ability to finance and refinance its properties will provide sufficient funds to adequately
meet its obligations over the next several years.

The
Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through
mortgages. During 2022, total investment property, including rental homes, increased 15% or $186.5 million. The Company made acquisitions
of seven manufactured home communities totaling 1,486 developed sites at an aggregate purchase price of $86.2 million. These acquisitions
were funded by the use of our unsecured credit facility, in addition to mortgages. See Note 3 of the Notes to Consolidated Financial
Statements for additional information on our acquisitions and Note 7 of the Notes to Consolidated Financial Statements for related debt
transactions. In addition, in December 2022, the Company’s joint venture with Nuveen Real Estate acquired one newly-developed community
in Florida containing 144 developed homesites, for a total purchase price of $15.1 million, 40% of which was funded by the Company. The
Company continues to evaluate acquisition opportunities. The funds for these acquisitions (including the Company’s 40% share of
acquisition costs that may be incurred by the joint venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the
DRIP, and private placements or public offerings of debt, Common Stock or Preferred Stock, including under the Common ATM Program or the Preferred
ATM Program. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.

The
Company owned approximately 9,100 rental homes, or approximately 36% of our total homesites as of December 31, 2022. During 2022, our
rental home portfolio increased by 392 homes or $39.4 million. The Company markets these rental homes for sale to existing residents.
The Company estimates that in 2023 it will order approximately 700-800 manufactured homes to use as rental units at its properties for
a total cost, including setup, of approximately $60 million. Rental home rates on new homes range from approximately $650-$1,500 per
month, including lot rent, depending on size, location and market conditions. During 2022, the Company also invested approximately $42
million in other improvements to its communities.

-48-

Additionally,
the Company has investments in marketable equity securities of other REITs. The REIT securities portfolio provides the Company with additional
liquidity and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. The Company generally
limits its marketable securities investments to no more than approximately 15% of its undepreciated assets. During 2022, the securities
portfolio decreased 63% or $71.6 million primarily due to sales, including as a result of the MREIC merger, with a cost basis of $49.8
million, as well as a net decrease in the fair value of $21.8 million. The Company also earned dividend income of $2.9 million. The Company
from time to time may purchase these securities on margin when there is an adequate yield spread.

The
following table summarizes cash flow activity for the years ended December 31, 2022, 2021 and 2020 (in thousands):

Net
cash (used in) provided by operating activities decreased by $73.1 million in 2022 primarily due to an increase in inventory. Net cash
provided by operating activities remained relatively stable in 2021.

Net
cash used in investing activities increased by $29.8 million in 2022, primarily due to the purchase of manufactured home communities
and investment property and equipment, partially offset by the proceeds from sales of marketable securities. Net cash used in investing
activities decreased by $9.4 million in 2021, primarily due to a decrease in acquisitions of manufactured homes and the proceeds from
sales of marketable securities offset by the increase in purchase of manufactured home communities and investment in the joint venture.

Net
cash provided by financing activities decreased by $77.6 million in 2022 to $48.0 million. The Company obtained new debt financing
through mortgages, short term borrowings and the issuance of our Series A Bonds totaling $260.4 million, net of principal repayments
and financing costs. The Company issued and sold 5.0 million shares of its Common Stock during 2022 through the Common ATM Programs,
raising net proceeds of approximately $100.8 million. The Company also received $7.8 million, including dividends reinvested,
through the DRIP. In addition, the Company issued and sold 406,000 shares of its Series D Preferred Stock during 2022 through the
2020 Preferred ATM Program, raising net proceeds of approximately $9.1 million. During 2022, the Company redeemed all 9.9 million
issued and outstanding shares of its 6.75% Series C Preferred Stock for $247.1 million. During 2022, the Company distributed to our
common shareholders a total of $43.4 million, including dividends reinvested. In addition, the Company also paid $24.6 million in
preferred dividends during 2022.

Net
cash provided by financing activities increased by $79.1 million in 2021 to $125.6 million. The Company received $9.8 million,
including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.2 million shares of its Series D
Preferred Stock during 2021 through the 2020 Preferred ATM Program, raising net proceeds of approximately $53.2 million. The Company
also issued and sold 8.2 million shares of its Common Stock during 2021 through its Common ATM Programs, raising net proceeds of
approximately $179.1 million. During 2021, the Company had principal repayments and financing costs on debt totaling $260.4 million,
net of new mortgage financing. During 2021, the Company distributed to our common shareholders a total of $35.0 million,
including dividends reinvested. In addition, the Company also paid $29.8 million in preferred dividends during 2021.

-49-

Cash
flows were primarily used for purchases of manufactured home communities, capital improvements, payment of dividends, purchases of marketable
securities, purchase of inventory and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing
communities. The Company meets maturing mortgage obligations by using a combination of cash flows and refinancing. The dividend payments
were primarily made from cash flows from operations.

Cash
flows used for capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured
home communities that provide water or sewer service. Excluding expansions and rental home purchases, the Company is budgeting approximately
$16 million in capital improvements for 2023.

The
Company’s significant commitments and contractual obligations relate to its mortgages, loans payable and other indebtedness, acquisitions
of manufactured home communities, retirement benefits, and the lease on its corporate offices as described in Note 10 to the Consolidated
Financial Statements.

The
Company has 2,066 acres of undeveloped land which it could develop in the future. The Company continues to analyze the
best use of its vacant land.

As
of December 31, 2022, the Company had total assets of $1.3 billion and total liabilities of $793.4 million. Our net debt (net of cash
and cash equivalents) to total market capitalization as of December 31, 2022 and 2021 was approximately 38% and 16%, respectively. Our
net debt, less securities (net of cash and cash equivalents and marketable securities) to total market capitalization as of December
31, 2022 and 2021 was approximately 36% and 11%, respectively.

The
Company believes that it has the ability to meet its obligations and to generate funds for new investments.

Contractual
Obligations

The
Company has an investment in its joint venture with Nuveen Real Estate which is accounted for under the equity method of accounting as
we have the ability to exercise significant influence, but not control, over the operating and financial decisions for the joint venture.
The terms of the joint venture require the Company to fund 40% of the total capital contributions made by the members to the joint venture.
See Item 2 – “Properties-Joint Venture with Nuveen” and
“Note 5, “Investment in Joint Venture,” of the Notes to Consolidated Financial Statements for additional information.

Our
other primary contractual obligations relate to our loans and mortgages payable and other indebtedness, our operating lease obligations
and our obligations regarding the financing of our home sales. See Note 2 “Summary of Significant Accounting Policies”, Note
7 “Loans and Mortgages Payable”, Note 10 “Related Party Transactions and Other Matters” and Note 14 “Commitments,
Contingencies and Legal Matters” of the Notes to Consolidated Financial Statements for additional information.

Impact
of COVID-19

The
following discussion is intended to provide certain information regarding the impacts of the COVID-19 pandemic on our business and management’s
efforts to respond to those impacts.

We
continue to monitor our operations and government recommendations and have taken steps to make the safety, security and welfare of our
employees, their families and our residents a top priority.

Collections
are consistent with pre-pandemic levels and we have collected 96% of January 2023 site and home rent as of today’s date. Some of
our residents benefitted from the federal government’s funding of the Emergency Rental Assistance Programs that were enacted in
each state.

The
impact of the COVID-19 pandemic remains uncertain and dependent on future developments, including the possible emergence of new variants
of the original virus and the ongoing roll-out of vaccines and their efficacy. We will continue to monitor these rapidly evolving developments
and respond in the best interests of our employees, residents and shareholders. At this time, we believe that the COVID-19 pandemic and
its consequences will not have a material adverse effect on our operations.

-50-

Critical
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 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.

Significant
accounting policies are defined as those that involve significant judgment and potentially could result in materially different results
under different assumptions and conditions. Management believes the following critical accounting policy is affected by our more significant
judgments and estimates used in the preparation of the Company’s consolidated financial statements. For a detailed description
of this and other accounting policies, see Note 2 of the Notes to Consolidated Financial Statements included in this Form 10-K.

Acquisitions

The
Company accounts for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and allocates the purchase
price of the property based upon the fair value of the assets acquired, which generally consist of land, site and land improvements,
buildings and improvements and rental homes. The Company allocates the purchase price of an acquired property generally determined by
internal evaluation as well as third-party appraisal of the property obtained in conjunction with the purchase.

In
January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805), Clarifying
the Definition of a Business”. ASU 2017-01 seeks to clarify the definition of a business with the objective of adding guidance
to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.
The definition of a business affects many areas of accounting including acquisitions, disposals, intangible assets and consolidation.
The adoption of ASU 2017-01 was effective for annual periods beginning after December 15, 2017, including interim periods within those
periods. The amendments should be applied prospectively on or after the effective dates. Early adoption is permitted. The Company adopted
this standard effective January 1, 2017, on a prospective basis. The Company evaluated its acquisitions and has determined that its acquisitions
of manufactured home communities during 2021 and 2022 should be accounted for as acquisitions of assets. As such, transaction costs,
primarily consisting of broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, related
to acquisitions are capitalized as part of the cost of the acquisitions, which is then subject to a purchase price allocation based on
relative fair value. Prior to the adoption of ASU 2017-01, the Company’s acquisitions were considered an acquisition of a business
and therefore, the acquisition costs were expensed.

Recent
Accounting Pronouncements

See
Note 2 of the Notes to Consolidated Financial Statements.

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

2021
Accomplishments

During
2021, UMH made substantial progress on multiple fronts – generating solid operating results, achieving strong growth and improving
our financial position. We have:

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Refer
to the discussion below in this Item 7, Management’s Discussion and Analysis of Financial Condition, Results of Operations,
and Non-GAAP Measures, contained in this Form 10-K for information regarding the presentation of community NOI, and for the presentation
and reconciliation of funds from operations and normalized funds from operations to net income (loss) attributable to common shareholders.

Overview

The
following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the historical Consolidated Financial Statements and Notes thereto included elsewhere in this
Form 10-K.

The
Company is a Maryland corporation that operates as a self-administered, self-managed REIT with headquarters in Freehold, New Jersey.
The Company’s primary business is the ownership and operation of manufactured home communities, which includes leasing manufactured
home spaces on an annual or month-to-month 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.

As
of December 31, 2021, we owned and operated 127 manufactured home communities containing approximately 24,000 developed homesites. These
communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama and South Carolina.
UMH has continued to execute our growth strategy of purchasing well-located communities in our target markets, including the energy-rich
Marcellus and Utica Shale regions. During the year ended December 31, 2021, we purchased three manufactured home communities, located
in Alabama, Ohio and South Carolina, for an aggregate purchase price of $18.3 million. These acquisitions added approximately 543
developed homesites to our portfolio. The Company also operates one community in Florida owned by the Company’s joint venture
with Nuveen Real Estate that was formed in December 2021.

The
Company earns income from the operation of its manufactured home communities, leasing of manufactured homesites, the rental of manufactured
homes, the sale and finance of manufactured homes and the brokering of home sales and revenue under cable service agreements as well
as 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 with Nuveen Real Estate. Management views the Company as a single
segment based on its method of internal reporting in addition to its allocation of capital and resources. The Company also invests in
equity securities of other REITs which the Company generally limits to no more than approximately 15% of its undepreciated assets.

Occupancy
in our properties, as well as our ability to increase rental rates, directly affects revenues. In 2021, total income increased 14% from
the prior year due to the acquisition and rental programs, rent increases and the growth of our sales business and Community NOI
(as defined below) increased 13% from the prior year. Overall occupancy was 86.0% and 85.0% at December 31, 2021 and 2020, respectively.
Overall occupancy includes communities acquired in 2021 with an average occupancy of 59%. Same property occupancy, which includes communities
owned and operated as of January 1, 2020, increased from 85.4% at December 31, 2020 to 87.1% at December 31, 2021. (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, 2021, does not include the property owned by the Company’s joint venture with Nuveen Real Estate.)

Sales
of manufactured homes performed well during 2021, increasing by 34% year-over-year. Demand for quality affordable housing remains healthy.
Conventional single-family home prices continue their rise supported by low inventories and increasing sales. As for-sale inventory remains
limited, a large share of housing demand will be looking at alternative forms of housing. Our property type offers substantial comparative
value that should result in increased demand.

The
macro-economic environment and current housing fundamentals continue to favor home rentals. 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 2021, our portfolio of rental homes increased
by 454 homes. Occupied rental homes represent approximately 40.2% of total occupied sites. Occupancy in rental homes continues to be
strong and is at 95.5% as of December 31, 2021. We compare favorably with other types of rental housing, including apartments, and we
will continue to allocate capital to rental home purchases, as demand dictates.

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The
Company holds a portfolio of marketable equity securities of other REITs with a fair value of $113.7 million at December 31, 2021,
representing 7.2% of our undepreciated assets (total assets excluding accumulated depreciation). The REIT securities portfolio provides
the Company with additional diversification, liquidity and income, and serves as a proxy for real estate when more favorable risk adjusted
returns are not available. As of December 31, 2021, 2% of the Company’s portfolio consisted of REIT preferred stocks and
98% consisted of REIT common stocks.

The
Company invests in these REIT securities and, from time to time, may use margin debt when an adequate yield spread can be obtained. The
Company’s weighted average yield on the securities portfolio was approximately 4.4% at December 31, 2021. At December 31, 2021,
the Company had unrealized losses of $14.3 million in its REIT securities portfolio. During 2021, the Company sold positions in securities,
generating realized gains of 2.3 million. It is our intent to hold these securities for investment on a long-term basis.

The
Company continues to strengthen its balance sheet. During 2021, the Company raised approximately $9.8 million in new capital through
the Dividend Reinvestment and Stock Purchase Plan (“DRIP”). During the year ended December 31, 2021, through an At-the-Market
Sale Program for our Series C Preferred Stock and Series D Preferred Stock (the “2020 Preferred ATM Program”), the Company
issued and sold a total of 2.2 million shares of our Series D Preferred Stock, generating gross proceeds of $54.1 million and net proceeds
of $53.2 million, after offering expenses.

During
the year ended December 31, 2021, through an At-the-Market Sale Program for our Common Stock (the “2020 Common ATM Program”),
that we commenced in June 2020 and an At-the-Market Sale Program (the “2021 Common ATM Program”) that we commenced
in August 2021, the Company issued and sold a total of 8.2 million shares of our Common Stock, generating gross proceeds of $182.0 million
and net proceeds of $179.1 million, after offering expenses.

The
Company believes that its capital structure, which allows for the ownership of assets using a balanced combination of equity obtained
through the issuance of common stock, preferred stock and debt, will enhance shareholder returns as the properties appreciate over time.

At
December 31, 2021, the Company had approximately $116.2 million in cash and cash equivalents and $50 million available on our credit
facility, with an additional $50 million potentially available pursuant to an accordion feature. We also had $31.6 million available
on our revolving lines of credit for the financing of home sales and the purchase of inventory and $15 million available on our line
of credit secured by rental homes and rental homes leases. Subsequent to year end, the Company completed an offering to investors
in Israel of $102.7 million principal amount of its 4.72% Series A Bonds due February 28, 2027.

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then making physical improvements, including adding rental homes onto otherwise
vacant sites. In 2020 and 2021, we added a total of five manufactured home communities to our portfolio, encompassing approximately 850
developed sites. These manufactured home communities were acquired with an average occupancy rate of 61%. The Company will utilize the
rental home program to seek to increase occupancy rates and improve operating results at these communities. In addition, on behalf
of our recently-formed joint venture with Nuveen Real Estate, we will seek opportunities to acquire manufactured home communities that
are under development and/or newly developed and meet certain other investment guidelines. There is no guarantee that acquisition
opportunities will continue to materialize or that the Company will be able to take advantage of such opportunities. The growth
of our real estate portfolio and success of the joint venture depends on the availability of suitable properties which meet the
Company’s investment criteria and appropriate financing. Competition in the market areas in which the Company operates is significant
and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties.

See
PART I, Item 1- Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant
to the Company, the Company’s lines of business and principal products and services, and the opportunities, challenges and risks
on which the Company is focused.

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Acquisitions
in 2021 and 2020

The
following table lists the property acquisitions completed by the Company during the years ended December 31, 2021 and 2020:

In
addition to the acquisitions shown above, on December 22, 2021, the Company, on behalf of its joint venture with Nuveen Real Estate,
closed on the acquisition of Sebring Square, a newly developed manufactured home community located in Sebring, Florida containing 219
developed homesites, for a total purchase price of $22.2 million. This community is situated on approximately 39 acres and is now open
for occupancy. The joint venture realized minimal revenue from this community during 2021.

Results
of Operations

2021
vs. 2020

Rental
and related income increased from $143.3 million for the year ended December 31, 2020 to $159.0 million for the year ended December 31,
2021, or 11%. This increase was due to the acquisitions during 2020 and 2021, as well as an increase in rental rates, same property occupancy
and additional rental homes. During 2021, the Company raised rental rates by 3% to 4% at most communities. Rent increases vary depending
on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company
has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was
86.0% and 85.0% at December 31, 2021 and 2020, respectively. Overall occupancy includes communities acquired in 2021 and 2020, which
had an average occupancy of 59% and 64%, respectively, at the time of acquisition. Same property occupancy has increased from 85.4% at
December 31, 2020 to 87.1% at December 31, 2021. (The same property occupancy rate is exclusive of the sites at Memphis Blues,
which is under redevelopment due to a flood in 2011.) Demand for rental homes continues to be strong. As of December 31, 2021,
we had approximately 8,700 rental homes with an occupancy rate of 95.5%. We continue to evaluate the demand for rental homes and
will invest in additional homes as demand dictates.

Community
operating expenses increased from $63.2 million for the year ended December 31, 2020 to $68.0 million for the year ended December 31,
2021, or 8%. This increase was primarily due to new acquisitions, and increases in snow removal costs, tree removal, water and sewer,
real estate taxes and payroll and personnel costs.

Community
NOI increased from $80.2 million for the year ended December 31, 2020 to $91.0 million for the year ended December 31, 2021, or 13%.
This increase was primarily due to the acquisitions during 2020 and 2021 and an increase in rental rates, occupancy and rental homes.
The operating expense ratio (defined as community operating expenses divided by rental and related income) improved from 44.1% in 2020
to 42.8% for 2021. Many recently acquired communities have deferred maintenance requiring higher than normal expenditures in the first
few years of ownership. In addition, expansions of our communities may require investments in infrastructure before we can generate
revenue from additional sites. Because most of the community expenses consist of fixed costs, as occupancy rates increase, these
expense ratios are expected to continue to improve. Since the Company has the ability to increase its rental rates annually, increasing
costs due to inflation and changing prices have generally not had a material effect on revenues and income from continuing operations.

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Sales
of manufactured homes increased from $20.3 million for the year ended December 31, 2020 to $27.1 million for the year ended December
31, 2021, or 34%. The total number of homes sold was 370 homes in 2021 as compared to 323 homes in 2020. There were 182 new homes sold
in 2021 as compared to 140 in 2020. The Company’s average sales price was approximately $73,000 and $63,000 for the years ended
December 31, 2021 and 2020, respectively. Cost of sales of manufactured homes increased from $14.4 million for the year ended December
31, 2020 to $20.1 million for the year ended December 31, 2021, or 39%. The gross profit percentage was 26% and 29% for 2021 and 2020,
respectively. Selling expenses decreased from $4.9 million for the year ended December 31, 2020 to $4.8 million for the year ended December
31, 2021, or 3%. Gain from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less
selling expenses less interest on the financing of inventory) increased from a gain of $768,000 for the year ended December 31, 2020
to a gain of $2.0 million for the year ended December 31, 2021. Many of the costs associated with sales, such as rent, salaries, and
to an extent, advertising and promotion, are fixed. The National Association of Realtors reported that in December 2021, sales of existing
homes grew 9% from December 2020. Home prices have continued their rise as fewer sellers are listing homes and inventories decline. With
the passage of time, the inherent relative affordability of our property type becomes more and more apparent, which should
result in increased demand. The Company continues to be optimistic about future sales and rental prospects given the fundamental need
for affordable housing. The Company believes that sales of new homes produce new revenue and represent an investment in the upgrading
of our communities.

General
and administrative expenses increased from $11.1 million for the year ended December 31, 2020 to $14.1 million for the year ended December
31, 2021, or 27%. These increases were due to an increase in personnel costs, including an increase in the bonus accrual based on FFO
metrics and an increase in stock-based compensation, including special restricted stock grants for the 2020 groundbreaking Fannie Mae
financing. General and administrative expenses, excluding non-recurring expenses, as a percentage of gross revenue (total income plus
interest, dividend and other income) was 6.2% and 6.4% at December 31, 2021 and 2020, respectively.

Depreciation
expense increased from $41.7 million for the year ended December 31, 2020 to $45.1 million for the year ended December 31, 2021, or 8%.
This increase was primarily due to the acquisitions and the increase in rental homes during 2021 and 2020.

Interest
income increased from $2.9 million for the year ended December 31, 2020 to $3.4 million for the year ended December 31, 2021, or 15%.
This increase was primarily due to an increase in the average balance of notes receivable from $40.4 million for the year ended December
31, 2020 to $48.6 million for the year ended December 31, 2021.

Dividend
income decreased from $5.7 million for the year ended December 31, 2020 to $5.1 million for the year ended December 31, 2021, or 11%.
This decrease was primarily due to reduced dividends from our securities holdings. Dividends received from our marketable securities
investments were at a weighted average yield of approximately 4.4% and 4.7% at December 31, 2021 and 2020, respectively.

Gain
on sales of marketable securities amounted to $2.3 million for the year ended December 31, 2021. Increase (decrease) in fair value of
marketable securities increased from an unrealized loss of $14.1 million for the year ended December 31, 2020 to an unrealized gain of
$25.1 million for the year ended December 31, 2021. As of December 31, 2021, the Company had total net unrealized losses of $14.3 million
in its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $18.3 million for the year ended December 31, 2020 to $19.2 million
for the year ended December 31, 2021, or 5%. The average balance of mortgages payable was approximately $462.0 million during 2021 as
compared to approximately $421.5 million during 2020. The weighted average interest rate on mortgages, not including the effect of unamortized
debt issuance costs, was 3.8% at both December 31, 2021 and 2020.

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2020
vs. 2019

Rental
and related income increased from $128.6 million for the year ended December 31, 2019 to $143.3 million for the year ended December 31,
2020, or 11%. This increase was due to the acquisitions during 2019 and 2020, as well as an increase in rental rates, same property occupancy
and additional rental homes. During 2020, the Company raised rental rates by 3% to 4% at most communities. Rent increases vary depending
on overall market conditions and demand. Occupancy, as well as the ability to increase rental rates, directly affects revenues. The Company
has been acquiring communities with vacant sites that can potentially be occupied and earn income in the future. Overall occupancy was
85.0% and 82.0% at December 31, 2020 and 2019, respectively. Overall occupancy includes communities acquired in 2020 and 2019, which
had an average occupancy of 64% and 62%, respectively, at the time of acquisition. Same property occupancy increased from 83.6% at December
31, 2019 to 86.8% at December 31, 2020. The same property occupancy rate is exclusive of the sites at Memphis Blues, which is under redevelopment
due to a flood in 2011. As of December 31, 2020, we had approximately 8,300 rental homes with an occupancy of 94.6%.

Community
operating expenses remained relatively stable increasing from $61.7 million for the year ended December 31, 2019 to $63.2 million for
the year ended December 31, 2020, or 2%.

Community
NOI increased from $66.9 million for the year ended December 31, 2019 to $80.2 million for the year ended December 31, 2020, or 20%.
This increase was primarily due to the acquisitions during 2019 and 2020 and an increase in rental rates, occupancy and rental homes.
The operating expense ratio (defined as community operating expenses divided by rental and related income) was 47.5% and 44.1%, excluding
non-recurring operating expenses, for the years ended December 31, 2019 and 2020, respectively.

Sales
of manufactured homes increased from $18.0 million for the year ended December 31, 2019 to $20.3 million for the year ended December
31, 2020, or 13%. The total number of homes sold was 323 homes in 2020 as compared to 299 homes in 2019. There were 140 new homes sold
in 2020 as compared to 135 in 2019. The Company’s average sales price was approximately $63,000 and $60,000 for the years ended
December 31, 2020 and 2019, respectively. Cost of sales of manufactured homes increased from $12.9 million for the year ended December
31, 2019 to $14.4 million for the year ended December 31, 2020, or 11%. The gross profit percentage was 29% and 28% for 2020 and 2019,
respectively. Selling expenses decreased from $5.1 million for the year ended December 31, 2019 to $4.9 million for the year ended December
31, 2020, or 3%. Gain from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less
selling expenses less interest on the financing of inventory) increased from a loss of $290,000 for the year ended December 31, 2019
to a gain of $768,000 for the year ended December 31, 2020. Many of the costs associated with sales, such as rent, salaries, and to an
extent, advertising and promotion, are fixed. The National Association of Realtors reported that in December 2020, sales of existing
homes grew 22% from December 2019.

General
and administrative expenses increased from $10 million for the year ended December 31, 2019 to $11.1 million for the year ended December
31, 2020, or 10%. These increases were due to an increase in personnel costs, including an increase in incentive compensation based on
FFO metrics and an increase in matching contributions associated with our 401(k) Plan. General and administrative expenses, excluding
non-recurring expenses, as a percentage of gross revenue (total income plus interest, dividend and other income) was 6.4% and 6.3% at
December 31, 2020 and 2019, respectively.

Depreciation
expense increased from $36.8 million for the year ended December 31, 2019 to $41.7 million for the year ended December 31, 2020, or 13%.
This increase was primarily due to the acquisitions and the increase in rental homes during 2020 and 2019.

Interest
income increased from $2.6 million for the year ended December 31, 2019 to $2.9 million for the year ended December 31, 2020, or 11%.
This increase was primarily due to an increase in the average balance of notes receivable from $33.1 million for the year ended December
31, 2019 to $40.4 million for the year ended December 31, 2020.

-41-

Dividend
income decreased from $7.5 million for the year ended December 31, 2019 to $5.7 million for the year ended December 31, 2020, or 24%.
This decrease was primarily due to reduced dividends from our securities holdings, as many REITs reduced their dividends in 2020 due
to the COVID-19 pandemic. Dividends received from our marketable securities investments were at a weighted average yield of approximately
4.7% and 6.3% at December 31, 2020 and 2019, respectively.

Increase
(decrease) in fair value of marketable securities decreased from an unrealized gain of $14.9 million for the year ended December 31,
2019 to an unrealized loss of $14.1 million for the year ended December 31, 2020. This decrease was due to the effects of the COVID-19
pandemic on prices in the securities market. As of December 31, 2020, the Company had total net unrealized losses of $39.4 million in
its REIT securities portfolio.

Interest
expense, including amortization of financing costs, increased from $17.8 million for the year ended December 31, 2019 to $18.3 million
for the year ended December 31, 2020, or 3%. This increase was primarily due to the $106 million Fannie Mae credit facility we entered
into during August 2020. The average balance of mortgages payable was approximately $421.5 million during 2020 as compared to approximately
$352.4 million during 2019. The weighted average interest rate on mortgages, not including the effect of unamortized debt issuance costs,
was 3.8% at December 31, 2020 as compared to 4.1% at December 31, 2019.

Non-GAAP
Measures

In
addition to the results reported in accordance with GAAP, management’s discussion and analysis of financial condition and results
of operations include certain non-GAAP financial measures that in management’s view of the business we believe are meaningful as
they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting
conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-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 GAAP. Community NOI should not be considered as an
alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it
indicative of funds available for our cash needs, including our ability to make cash distributions.

The
Company’s Community NOI is calculated as follows (in thousands):

We
assess and measure our overall operating results based upon FFO an industry performance measure which management believes is a
useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance
measure of a REIT. FFO, as defined by NAREIT, represents net income (loss) attributable to common shareholders, as defined by accounting
principles generally accepted in the U.S. (“U.S. GAAP”), excluding extraordinary items, as defined under U.S. GAAP, gains
or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, and
the change in the fair value of marketable securities plus certain non-cash items such as real estate asset depreciation and amortization.
Included in the NAREIT FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation
of NAREIT FFO to make an election to include or exclude gains and losses on the sale of these assets, such as marketable equity securities,
and include or exclude mark-to-market changes in the value recognized on these marketable equity securities. In conjunction with
the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude the change in the fair
value of marketable securities from our FFO calculation. NAREIT created FFO as a non-U.S. GAAP supplemental measure of REIT operating
performance. We define Normalized Funds from Operations Attributable to Common Shareholders (“Normalized FFO”), as FFO, excluding
gains and losses realized on marketable securities investments and certain one-time charges. FFO and Normalized FFO should be considered
as supplemental measures of operating performance used by REITs. FFO and Normalized FFO exclude historical cost depreciation as an expense
and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to
calculate FFO and Normalized FFO and, accordingly, our FFO and Normalized FFO may not be comparable to all other REITs. The items excluded
from FFO and Normalized FFO are significant components in understanding the Company’s financial performance.

-42-

FFO
and Normalized FFO (i) do not represent Cash Flow from Operations as defined by GAAP; (ii) should not be considered as an alternative
to net income (loss) as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii)
are not alternatives to cash flow as a measure of liquidity. FFO and Normalized FFO, as calculated by the Company, may not be comparable
to similarly titled measures reported by other REITs.

The
Company’s FFO and Normalized FFO attributable to common shareholders are calculated as follows (in thousands except footnotes):

Liquidity
and Capital Resources

The
Company operates as a REIT deriving its income primarily from real estate rental operations. The Company’s principal liquidity
demands have historically been, and are expected to continue to be, distributions to the Company’s shareholders, acquisitions,
capital improvements, development and expansions of properties, debt service, purchases of manufactured home inventory and rental
homes, financing of manufactured home sales and payments of expenses relating to real estate operations. The Company’s ability
to generate cash adequate to meet these demands is dependent primarily on income from its real estate investments and marketable
securities portfolio, the sale of real estate investments and marketable securities, refinancing of mortgage debt, leveraging of
real estate investments, availability of bank borrowings or lines of credit, proceeds from the DRIP and access to the capital
markets. In addition to cash generated through operations, the Company uses a variety of sources to fund its cash needs, including
acquisitions. Specifically, the Company may sell marketable securities from its investment portfolio, borrow on its unsecured credit
facility or lines of credit, finance and refinance its properties, and/or raise capital through the DRIP and capital markets. In
order to provide financial flexibility to opportunistically access the capital markets, the Company has implemented At-the-Market
Sales Programs for both our common and preferred stock. The 2021 Common ATM Program, commenced in August 2021, allowed
the Company to offer and sell shares of the Company’s common stock, having an aggregate sales price of up to $100
million from time to time through the Distribution Agents for the 2021 Common ATM Program. All shares of Common Stock available
to be sold under the 2021 Common ATM Program have been sold. The Company intends to commence a new At-the-Market Sales
Program for its common stock during the first quarter of 2022. The Company’s 2020 Preferred ATM Program allows the Company
to offer and sell shares of the Company’s Series C Preferred Stock and/or Series D Preferred Stock, having an aggregate sales
price of up to $100 million from time to time.

-43-

The
Company intends to continue to increase its real estate investments. Our business plan includes acquiring communities that over time
are expected to yield in excess of our cost of funds and then investing in physical improvements, including adding rental homes onto
otherwise vacant sites. In addition, on behalf of our recently-formed joint venture with Nuveen Real Estate, we will seek opportunities
to acquire manufactured home communities that are under development and/or newly developed and meet certain other investment guidelines.
There is no guarantee that any of these additional opportunities will materialize or that the Company will be able to take advantage
of such opportunities. The growth of our real estate portfolio and success of our joint venture depends on the availability of
suitable properties which meet the Company’s investment criteria and appropriate financing. Competition in the market areas in
which the Company operates is significant. To the extent that funds or appropriate communities are not available, fewer acquisitions
will be made.

The
Company continues to strengthen its capital and liquidity positions and maintains financial flexibility. Through our 2020 Preferred ATM
Program, the Company issued and sold a total of 2.2 million shares of our Series D Preferred Stock generating gross proceeds of $54.1
million and net proceeds after offering expenses of $53.2 million during the year ended December 31, 2021.

During
the year ended December 31, 2021, the Company issued and sold 8.2 million shares of Common Stock through our 2020 Common ATM Program
and our 2021 Common ATM Program at a weighted average price of $22.14 per share, generating gross proceeds of $182.0 million and
net proceeds of $179.1 million, after offering expenses.

As
of December 31, 2021, $4.0 million of common stock remained available for sale under the 2021 Common ATM Program and $12.2 million
in shares of Series C Preferred Stock and/or Series D Preferred Stock remained available for sale under the 2020 Preferred ATM Program.
Subsequent to year end, in January 2022, the Company issued and sold 300,000 shares of Common Stock under the 2021 Common ATM
Program for gross proceeds of $8.0 million.

In
addition, the Company has a DRIP in which participants can purchase original issue shares of common stock from the Company at
a price of approximately 95% of market. During 2021, amounts received under the DRIP, including dividends reinvested of $3.5 million,
totaled $9.8 million. The Company issued a total of 503,000 shares under the DRIP during 2021.

The
Company also has the ability to finance home sales, inventory purchases and rental home purchases. The Company has a $20 million revolving
line of credit for the financing of homes, of which $6 million was utilized at December 31, 2021, and revolving credit facilities totaling
$28.5 million to finance inventory purchases, of which $10.9 million was utilized at December 31, 2021.

As
of December 31, 2021, the Company had $116.2 million of cash and cash equivalents and marketable securities of $113.7 million. The Company
owned 127 communities of which 28 are unencumbered. The Company’s marketable securities and non-mortgaged properties provide us
with additional liquidity. As of December 31, 2021, the Company also held a 40% equity interest in its joint venture with Nuveen Real
Estate, which owns one newly developed community that is unencumbered. Subsequent to year end, the Company completed an offering
to investors in Israel of $102.7 million of its new unsecured 4.72% Series A Bonds due February 28, 2027. The Company believes
that cash on hand, funds generated from operations, the DRIP and capital markets, the funds available on the lines of credit,
together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations over
the next several years.

The
Company’s focus is on real estate investments. The Company has historically financed purchases of real estate primarily through
mortgages. During 2021, total investment property, including rental homes, increased 9% or $96.6 million. The Company made acquisitions
of three manufactured home communities totaling 543 developed sites at an aggregate purchase price of $18.3 million. These acquisitions
were funded by the use of our unsecured credit facility. See Note 3 of the Notes to Consolidated Financial Statements for additional
information on our acquisitions and Note 6 of the Notes to Consolidated Financial Statements for related debt transactions. In addition,
in December 2021, the Company’s joint venture with Nuveen Real Estate acquired one newly-developed community in Florida containing
219 developed homesites, for a total purchase price of $22.2 million, 40% of which was funded by the Company. The Company continues
to evaluate acquisition opportunities. The funds for these acquisitions (including the Company’s 40% share of acquisition costs
that may be incurred by the joint venture with Nuveen Real Estate) may come from bank borrowings, proceeds from the DRIP, and private
placements or public offerings of debt, common or preferred stock, including under a new ATM Program for the Company’s
common stock expected to be commenced in the first quarter of 2022 or the 2020 Preferred ATM Program. To the extent that funds
or appropriate properties are not available, fewer acquisitions will be made.

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The
Company owned approximately 8,700 rental homes, or approximately 36% of our total homesites as of December 31, 2021. During 2021, our
rental home portfolio increased by 454 homes or $33.7 million. The Company markets these rental homes for sale to existing residents.
The Company estimates that in 2022 it will order approximately 700-800 manufactured homes to use as rental units at its properties
for a total cost, including setup, of approximately $56 million. Rental home rates on new homes range from approximately $650-$1,500
per month, including lot rent, depending on size, location and market conditions. During 2021, the Company also invested approximately
$25 million in other improvements to its communities.

Additionally,
the Company has investments in marketable equity securities of other REITs. The REIT securities portfolio provides the Company with additional
liquidity and income and serves as a proxy for real estate when more favorable risk adjusted returns are not available. The Company generally
limits its marketable securities investments to no more than approximately 15% of its undepreciated assets. During 2021, the securities
portfolio increased 10% or $10.6 million primarily due to a net unrealized gain of $25.1 million, realized gain of $2.3 million
partially offset by sales of $14.5 million. The Company had dividend income earned of $5.1 million. The Company from time to time may
purchase these securities on margin when there is an adequate yield spread.

The
following table summarizes cash flow activity for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Net
cash provided by operating activities remained relatively stable in 2020 and 2021. Net cash provided by operating activities increased
by $28.3 million in 2020 to $66.8 million. This increase was primarily due to an increase in Community NOI and a decrease in inventory
in 2020 compared to an increase in 2019.

Net
cash used in investing activities decreased by $9.4 million in 2021, primarily due to a decrease in acquisitions of manufactured homes
and the proceeds from sales of marketable securities offset by the increase in purchase of manufactured home communities and investment
in the joint venture. Net cash used in investing activities decreased by $18.6 million in 2020, primarily due to a decrease in acquisitions
of manufactured homes.

Net
cash provided by financing activities increased by $79.1 million in 2021 to $125.6 million. The Company received $9.8 million,
including dividends reinvested, through the DRIP. In addition, the Company issued and sold 2.2 million shares of its Series D Preferred
Stock during 2021 through the 2020 Preferred ATM Program, raising net proceeds of approximately $53.2 million. The Company also
issued and sold 8.2 million shares of its Common Stock during 2021 through the 2020 Common ATM Program and 2021 Common
ATM Program, raising net proceeds of approximately $179.1 million. During 2021, the Company distributed to our common shareholders
a total of $35.0 million, including dividends reinvested. In addition, the Company also paid $29.8 million in preferred dividends.

Net
cash provided by financing activities decreased by $43.5 million in 2020 to $46.5 million. The Company obtained new mortgages of $106
million. The Company also received $9.2 million, including dividends reinvested, through the DRIP. In addition, in 2020 the Company issued
and sold 134,000 shares of its Series C Preferred Stock and 3.8 million shares of its Series D Preferred Stock through the 2019 Preferred
ATM Program (described below) and the 2020 Preferred ATM Program, raising net proceeds during 2020 of approximately $96.1 million.
The Company also issued and sold 135,000 shares of its Common Stock through the 2020 Common ATM Program, raising net proceeds of approximately
$1.7 million. In October 2020, the Company voluntarily redeemed all of its Series B Preferred Stock for approximately $96.1 million.
During 2020, the Company distributed to our common shareholders a total of $29.8 million, including dividends reinvested. In addition,
the Company also paid $31.9 million in preferred dividends.

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Cash
flows were primarily used for purchases of manufactured home communities, capital improvements, payment of dividends, purchases of marketable
securities, purchase of inventory and rental homes, loans to customers for the sales of manufactured homes, and expansion of existing
communities. The Company meets maturing mortgage obligations by using a combination of cash flows and refinancing. The dividend payments
were primarily made from cash flows from operations.

Cash
flows used for capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured
home communities that provide water or sewer service. Excluding expansions and rental home purchases, the Company is budgeting approximately
$15 million in capital improvements for 2022.

The
Company’s significant commitments and contractual obligations relate to its mortgages, loans payable and other indebtedness,
acquisitions of manufactured home communities, retirement benefits, and the lease on its corporate offices as described in Note 9
to the Consolidated Financial Statements.

The
Company has approximately 1,800 acres of undeveloped land which it could develop over the next several years. The Company continues to
analyze the best use of its vacant land.

As
of December 31, 2021, the Company had total assets of $1.3 billion and total liabilities of $528.7 million. Our net debt (net of cash
and cash equivalents) to total market capitalization as of December 31, 2021 and 2020 was approximately 16% and 34%, respectively. Our
net debt, less securities (net of cash and cash equivalents and marketable securities) to total market capitalization as of December
31, 2021 and 2020 was approximately 11% and 28%, respectively.

The
Company believes that it has the ability to meet its obligations and to generate funds for new investments.

Contractual Obligations

The
Company has an investment in its joint venture with Nuveen Real Estate which is accounted for under the equity method of
accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions for
the joint venture. The terms of the joint venture require the Company to fund 40% of the total capital contributions made by the members
to the joint venture. See Note 5, “Investments in Joint Venture,” of the Notes to Consolidated Financial Statements for
additional information.

Our
other primary contractual obligations relate to our loans and mortgages payable and other indebtedness and our operating
lease obligations. See Note 2 “Summary of Significant Accounting Policies”, Note 6 “Loans and Mortgages Payable”
and Note 9 “Related Party Transactions and Other Matters” of the Notes to Consolidated Financial Statements for additional
information.

Impact
of COVID-19

The
following discussion is intended to provide certain information regarding the impacts of the COVID-19 pandemic on our business and management’s
efforts to respond to those impacts.

We
continue to monitor our operations and government recommendations and have taken steps to make the safety, security and welfare of our
employees, their families and our residents a top priority.

Collections
are consistent with pre-pandemic levels and we have collected 94% of January 2022 site and home rent as of today’s date. Some of
our residents benefitted from the federal government’s funding of the Emergency Rental Assistance Programs that were enacted in
each state.

The
impact of the COVID-19 pandemic remains uncertain and dependent on future developments, including the possible emergence of new variants
of the original virus and the ongoing roll-out of vaccines and their efficacy. We will continue to monitor these rapidly evolving developments
and respond in the best interests of our employees, residents and shareholders. At this time, we believe that the COVID-19 pandemic and
its consequences will not have a material adverse effect on our operations.

Critical
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 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.

Significant
accounting policies are defined as those that involve significant judgment and potentially could result in materially different results
under different assumptions and conditions. Management believes the following critical accounting policy is affected by our more significant
judgments and estimates used in the preparation of the Company’s consolidated financial statements. For a detailed description
of this and other accounting policies, see Note 2 of the Notes to Consolidated Financial Statements included in this Form 10-K.

-46-

Impairment
in Real Estate Investments

The
Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10,
Property, Plant & Equipment (“ASC 360-10”) to measure impairment in real estate investments. The Company’s primary
indicator of potential impairment is based on net operating income trends year over year. Rental properties are individually evaluated
for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted
basis without interest) from a rental property is less than the carrying value under its historical net cost basis. These expected future
cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition
and other factors. Upon determination that an other than temporary impairment has occurred, rental properties are reduced to their fair
value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost
to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is
actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair
value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded.

The
Company conducted a comprehensive review of all real estate asset classes in accordance with ASC 360-10-35-21, which indicates that asset
values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully
recoverable. The process entailed the analysis of property for instances where the net book value exceeds the estimated fair value. In
accordance with ASC 360-10-35-17, an impairment loss shall be recognized if the carrying amount of a long-lived asset is not recoverable
and exceeds its fair value. The Company utilizes the experience and knowledge of its internal valuation team to derive certain assumptions
used to determine an operating property’s cash flow. Such assumptions include lease-up rates, rental rates, rental growth rates,
and capital expenditures. The Company reviewed its operating properties in light of the requirements of ASC 360-10 and determined that,
as of December 31, 2021, the undiscounted cash flows over the holding period for these properties were in excess of their carrying values
and, therefore, no impairment charges were required.

Recent
Accounting Pronouncements

See
Note 2 of the Notes to Consolidated Financial Statements.