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UMH CEO Sam Landy Touts and Tempers Manufactured Home Operation’s Expectations

April 10th, 2018 Comments off

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UMH Properties (UMH:NYSE) has both touted and tempered the results and expectations that investors may have with respect to one of the largest players in the manufactured home community (MHC) sector.

 

To provide a balanced view of the latest reports on the manufactured home (MH) community REIT (Real Estate Investment Trust) – UMH Properties – to MH Industry Professionals and investors, one must take a step back and establish some context.

The Daily Business News is the only MH Industry trade media that tracks their and other stocks connected to manufactured homes.  We’ve done so for years. The closing numbers on the UMH stock last night are linked here.


 

 So MHProNews and MHLivingNews.com has directly engaged with UMH Properties for years, as well as tracked reports about them by others.  MHProNews has interviewed UMH President Sam Landy a number of times.

 

The videos posted are both from 2017, but are revealing and relevant precisely as background.  They reflect their leadership’s thinking and company facts in brief.

MHProNews will follow up in the near term with a deeper data dive into UMH, and what that tells us about the trends in manufactured housing in general, as well as in the community sector.

Related reports to the state of the manufactured home industry after the end of the first quarter of 2018 are linked below. ## (News, analysis, and commentary.)  (Third party images are provided under fair use guidelines.)

Related Reports:

“Trailer House Trauma,” Fresh Look at Manufactured Housing’s Opportunities

Intelligence Report – MHI Producer Spotlights “the Plan” for MHCs, Community REITs

Sun Communities Annual Data and Manufactured Housing Industry Investor Presentation Highlights

Marketing, Web, Video, Consulting, Recruiting and Training Resources

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Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Manufactured Housing – Investors Taking Notice?

April 21st, 2017 Comments off
ManufacturedHousingInvestorsTakingNoticecreditNAREIT-postedtothedailybusinessnewsmhpronewsmhlivingnews

Credit: NAREIT.

While the value proposition for manufactured housing is well known to industry professionals, showing or explaining that value to the mainstream can be a challenge.

According to recent information from NAREIT, that appears to be changing.

New data shows that manufactured housing REITs now occupy an enviable place in real estate, combining a dearth of new supply with a heavy demand for affordable housing options.

Approximately ten new manufactured home communities have been built in the United States in the past two decades, an eye-popping anomaly among real estate sectors,” said Ryan Burke, an analyst at Green Street Advisors.

Aging baby boomers are driving demand at age-restricted communities, while all-age communities are popular with younger families looking for affordable housing options. Nowhere else in real estate do we see this complete lack of new supply and the favorable demand dynamics. It’s a pretty good story.”

R.W. Baird analyst Drew Babin agrees.

Manufactured housing REITs and existing owners of manufactured housing communities currently have a chokehold on the market,” said Babin.

While it may seem that the favorable metrics would be lost in the shuffle with investors, that isn’t the case. In 2016, manufactured housing REITs delivered returns of 28.5 percent, beating out apartment REITs by nearly ten percent, and single-family home REITs by nearly 14 percent.

ManufacturedHousingInvestorsTakingNoticecreditGreenStreet-RyanBurke-postedtothedailybusinessnewsmhpronewsmhlivingnews

Ryan Burke. Credit: Green Street Advisors.

As manufactured housing continues to outperform other sectors, particularly in the private market at the property level, there’s no way the outperformance will go unnoticed,” said Burke, who also addressed some of the challenges to entering the market.

Among the barriers to entering the manufactured housing market are the communities’ long lease-up periods. It can take more than five years to reach a stabilized occupancy level. It’s tough for a developer to be able to underwrite that lease-up period,” said Burke.

Other market analysts predict acquisitions in the space will be “episodic.” According to Green Street, manufactured housing REITs own about 1 percent of the estimated 50,000 manufactured housing communities in the U.S., but nearly 15 percent of the institutional-quality stock. (It should be noted that some MHC experts put the total number of communities at about 45,000 nationally).

With new supply largely non-existent, analysts believe that REITs will try to grow their portfolios through acquisitions, and through expanding existing sites. An example cited was Sun Communities 2016 acquisition of Carefree Communities Inc., for $1.7 billion.

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Credit: Sun Communities.

And, while there may be more “whale” sized acquisitions – like Carefree communities – available in the market, Burke says that he sees smaller deals on the horizon – at the right price.

Most of the manufactured housing parks [sic] are held by smaller investors that own up to three properties,” said Burke.

They hesitate to sell for several reasons: they make a good living from the properties; they would be hit with high taxes if they sold; and many sellers would be unsure how to reinvest the proceeds to achieve similar yields. There’s a whole lot of demand for these properties across the board from REITs and institutional investors and very few properties coming to market relative to other property types.”

Overall, analysts agree that manufactured housing REITs have strong growth potential, including the ability to expand existing sites where they own, or can acquire, additional land.

They’ve been very aggressive about doing that because it’s so hard to find entitled land. Oftentimes the best land is on their existing properties,” said Babin.

Some Mega Deals in Recent Years

The linked stories above are among several that involve Carlyle Group, UMH Properties, ELS and other private or public portfolio operators, often involving one hundred million to a billion dollars plus packages.

Does holding the number of new communities being created down impact the market?  Of course.  Does the time to fill a community – due to image or regulatory reasons – impact the market?  Again, yes.

Moguls Understand Value

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Credit: MHLivingNews.

The Daily Business NewsMHProNews and MHLivingNews have covered the case for manufactured housing as a viable solution to hope for the American Dream of home ownership at a reasonable price extensively, including Bloomberg making a statement to the same effect.

The ability to significantly cut down on production time, provide a high quality product to federal standards, all at a lower price point serves as the ideal solution to inventory and housing challenges. The titans of business recognize the opportunity as well, as giants and independents alike are actually “doubling down” on the industry.

SamZellELSCharimanCreditDailyBurinessNewsMHProNews

Sam Zell, ELS Chair, credit, MHProNews.

ELS Chairman Sam Zell has been famously quoted as correcting misconceptions about the industry, saying during this interview, “Everyone calls them trailer parks. Pencil head, it’s not a trailer park.

For more on manufactured housing being the solution that’s hiding in plain sight, see MHProNews and MHLivingNews Publisher L.A. “Tony” Kovach’s insight into the opportunity linked here. ##

 

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

 

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Freddie Mac may Finance Rental-only Community for UMH

June 24th, 2016 Comments off

sam_landy__reit_dot_comIn a video interview at REITWeek 2016:NAREIT’s Investor Forum, Sam Landy, President and CEO of UMH Properties, Inc. (NYSE:UMH), commenting on the 31 percent increase in core funds from operations (FFO) in Q1 2016, said: “It’s what we have been planning going back about six years when we started doing our acquisitions. If we improve the properties, add rental units, add marketing, the revenue’s going to go up, and it’s going to bring the FFO up.”

When asked what the next six months will bring for UMH, Landy says, “Eventually people are going to see that we are creating these results on a consistent basis which will drive the stock price up. Another exciting thing is, we may do our first rental-only community. Freddie Mac may be able to finance our community and our houses at their sub-four interest rates. It will be the first rental-only community in the country financed by Freddie Mac.”

As MHProNews knows, UMH owns and operates a portfolio of 98 manufactured home communities in seven northeast states, and also owns a portfolio of REIT securities. ##

(Photo credit: reit.com-Sam Landy, President and CEO of UMH Properties, Inc.)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

Manufactured Housing REITs Yield a Strong Return

July 29th, 2015 Comments off

urban_land_mag__figures_july_2015Baby boomers, rising rents, retirees and rising home prices are driving demand for affordable housing, which in turn is propelling the manufactured housing real estate investment trust (REIT) sector, pushing it to a year-to-date return of 13.13 percent, far above the -1.07 percent average for the FTSE NAREIT All Equity REIT.

As Urban Land Magazine reports, manufactured homes (MH) are more affordable than single-family site-built homes or apartments. The U. S. Census Bureau says the average sales price of an MH (net of Land) in 2013 was $64,000, with an average size of 1,470 square feet, and costing $43.54 a square foot. The average size of a site-built home sans land in 2013 was 2,662 at a cost per square foot of $93.70.

They noted that the development of new communities is constrained by the public’s poor perception of MH and also because MH is treated in an MHC as personal property instead of real property, therefore generating less tax revenue than traditional homes. This in turn has led to the expansion of REITs through acquisitions, fed by low interest rates and available financing. As MHProNews has reported most recently, Fannie Mae is a large source for MHC lending.

REITs own the infrastructure, shared amenities and the home sites they then lease to owners of manufactured homes, and sometimes have programs to sell homes to residents as well as rent homes. The high cost of moving an MH results in low turnover and high occupancy in the communities.

Equity LifeStyle Properties, the largest REIT in the sector with 340 communities (including those with RVs), beat analysts expectations in Q2 2015, and saw its funds from operations (FFO) gain 11 percent, $0.07 per share, over the same period last year.

Sun Communities is the second largest REIT in the sector. It recently acquired a 59 community portfolio from American Land Lease, expanding its presence in Florida.

While UMH Properties, Inc.–the smallest of these 3 REITs–has invested heavily in MHCs in the energy drilling areas in the Utica and Marcellus Shale Regions, raising some eyebrows because of the drop in oil prices. But they correctly respond with the powerful facts that they’ve added nearly five percent to its number of home sites and its stock price has increased 5.9 percent this year.

The lower cost of MH, demographic trends and barriers to over-building favor the MH REIT sector as an investment. ##

(Graphic credit: Urban Land Magazine)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Manufactured Homes Post the Top Returns

July 11th, 2015 Comments off

sun communities as of 12-22-2012 owns palm creek golf and rv esort communityAccording to the National Association of Real Estate Investment Trusts (REIT), in the first six months of 2015 manufactured homes were the REIT industry’s best performers, posting a 3.75 percent return. Self storage REITs came in a close second at 3.72 percent.

Apartments gained +0.82 % during the first half, while the office segment fell 5.25 %, retail dropped 7.24 % and the industrial sector plunged 11.33%. Of mortgage REITS, the commercial financing sector dropped 1.70% while the residential sector fell 6.12%.

As thinkadvisor informs MHProNews, for purposes of comparison, the dividend yield for the S&P 500 was 2.10%, while the S&P Composite 1500 returned 2.04%.

Strong, consistent dividend income is an important component of REIT performance,” said NAREIT president and CEO Steven Wechsler in a statement. He noted that stock exchange-listed REITs paid out $42 billion in dividends in 2014, up 35% from $34 billion paid out in 2013. ##

(Photo credit: Sun Communities, Inc.)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily business News-MHProNews.

Return on Investment for Manufactured Home Communities Grows

April 22nd, 2015 Comments off

umh_mfg_home__cedit_umhAs incomes stagnate, leading to higher demand for low-cost housing, manufactured home communities (MHC) are becoming a larger draw, and MHC owners are raising rents. In addition, few new MHCs are being built, so the larger companies such as Equity LifeStyle Properties, Sun Communities and UMH Properties, Inc., all three public real estate investment trusts (REITs), are buying out the smaller players, reducing competition, as wsj tells MHPronews.

I’ve been at this for about 10 years and I would say the demand right now for manufactured housing communities is at an all-time high,” said Jonathon McClellan of the national manufactured home communities group at Marcus & Millichap. M&M is a large real estate investment firm that brokers many MHC deals.

For the twelve month period that ended in March, the three REITs earned a return of 44 percent, the top performer in all the REIT categories, according to the National Association of Real Estate Investment Trusts (NAREIT).

As MHProNews understands, the cost of owning a manufactured home is most often less than renting an apartment, depending upon the market. Apartment rents have increased almost 15 percent over the past five years, and now average $1,131 a month, according to real estate research firm REIS Inc. It should be pointed out that rents in MHCs are rising less quickly than apartment rentals.

The National Association of Realtors (NAR) reports the median price for a single-family home in the U. S. was $202,600 in Feb., while average price for an MH was $64,200 in Nov. 2014. An average manufactured home purchased with a mortgage runs about $800 a month, half for the mortgage, the other half for rent in an MHC.

UMH Properties, Inc. Chairman of the Board Eugene W. Landy states his company is doing well because it is renting MH to families who cannot afford to purchase a home due to tight credit. “For many years, what we tried to do was build established communities with good service to the tenants and tenants all own their own homes,” he said. But now, “we’re like an apartment company.” It is also easier and less risky to rent units.

Last year UMH spent $42.6 million acquiring 14 MHCs with 1,600 homesites, and now owns 89 communities with 15,200 homesites. Occupancy for same site UMH homes increased from 81.5 percent in Q4 2013 to 83.2 percent for Q4 2014.

But if business is booming for manufactured home communities, who are so many operators, especially small ones, leaving the business? The answer in part is regulations. When federal regulations make it so hard for an independent operator to keep up with the requirements needed to sell homes and keep their spaces full, then only the larger operators can absorb that regulatory burden. The same trend is pushing smaller community banks out of business, namely, the high cost of regulatory compliance.

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(Photo credit: UMH Properties, Inc.-manufactured home)

matthew-silver-daily-business-news-mhpronews-com  Article submitted by Matthew J. Silver to Daily Business News-MHProNews.

MHC Investors to Present at Forum

May 23rd, 2013 Comments off

MarketWatch reports senior executives of MHC owner UMH Properties, Inc. will present at this year’s National Association of Real Estate Investment Trust’s (NAREIT) REITWeek Investor Forum June 5, 2013. Held at the Hilton Chicago, as MHProNews has learned independently, Northstar Realty Finance Corp. will also be among the presenters at the forum. UMH owns and operates 68 manufactured home communities comprised of 12,800 developed home sites in seven states. As we reported here April 16, 2013, Northstar is involved with RHP Properties in the recent $865 million acquisition of 71 manufactured home communities.

(Image credit: UMH Properties, Inc.)