UMH PROPERTIES, INC. Fair Value Disclosure
NOTE 15 - FAIR VALUE MEASUREMENTS
The Company follows ASC 825, Fair Value Measurements, for financial assets and liabilities recognized at fair value on a recurring basis. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including marketable securities. The fair value of these certain financial assets and liabilities was determined using the following inputs at December 31, 2022 and 2021 (in thousands):
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| December 31, 2022: | ||||||||||||||||
| Equity Securities - Preferred Stock | $ | 1,043 | $ | 1,043 | $ | 0 | $ | 0 | ||||||||
| Equity Securities - Common Stock | 41,135 | 41,135 | 0 | 0 | ||||||||||||
| Total | $ | 42,178 | $ | 42,178 | $ | 0 | $ | 0 | ||||||||
| December 31, 2021: | ||||||||||||||||
| Equity Securities - Preferred Stock | $ | 1,740 | $ | 1,740 | $ | 0 | $ | 0 | ||||||||
| Equity Securities - Common Stock | 112,008 | 112,008 | 0 | 0 | ||||||||||||
| Total | $ | 113,748 | $ | 113,748 | $ | 0 | $ | 0 | ||||||||
In addition to the Company’s investment in Marketable Securities at Fair Value, the Company is required to disclose certain information about fair values of its other financial instruments, as defined in ASC 825-10, Financial Instruments. Estimates of fair value are made at a specific point in time, based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. All of the Company’s marketable securities have quoted market prices. However, for a portion of the Company’s other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties, future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only and, therefore, cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates.
The fair value of cash and cash equivalents and notes receivables approximates their current carrying amounts since all such items are short-term in nature. The fair value of marketable securities is primarily based upon quoted market values. The fair value of variable rate mortgages payable and loans payable approximate their current carrying amounts since such amounts payable are at approximately a weighted average current market rate of interest. The estimated fair value of fixed rate mortgage notes payable is based on discounting the future cash flows at a year-end risk adjusted borrowing rate currently available to the Company for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. As of December 31, 2022, the fair and carrying value of fixed rate mortgages payable amounted to $503.5 million and $513.7 million, respectively. As of December 31, 2021, the fair and carrying value of fixed rate mortgages payable amounted to $458.4 million and $456.7 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Feb 28, 2023 | Showing above |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 5, 2020 | |
| 2018 | Mar 7, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 8, 2017 | |
| 2015 | Mar 9, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.