UMH PROPERTIES, INC. (UMH) FY 2022 MD&A

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.

-39-

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.

-40-

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.

-41-

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.

-42-

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.

-44-

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.