Some of us thought nrf paid too much per lot, about 50,000, when it bought its mfg housing communities.
SUI at 6/30/13 has an undepreciated original cost per lot of about 27,700.
Today's print WSJ has an article about Carlyle buying two Florida communities, both over 55 restricted, for 30.8 million. The communities were identified but the number of lots was not disclosed, so I looked them up.
Per the websites, they contain 366 lots, so the average cost per lot is 84,153. The weighted average (my calc) of the average monthly rents reported in the WSJ is 610 (vs 439 at sui). So, if 610 per lot gets 84,153, then 439 per lot should get 60,563 per lot at sui x 68,200 lots = 4.13 billion - 1.5 B of debt = 2.63 B / 40 million shares = 65.75 per share.
The article went on to say a 315-lot community in Arizona recently sold for nearly 121,000 per lot, the highest ever in Arizona, per the article.
Another theme in the article is manufactured housing communities is gaining respect as an investment for the stable cash flow. They ain't "trailer parks" any more. Page C8 of the print edition.
Why do I do this work??......It's simple......nrf is by far my largest position and SUI is second largest by a good margin over the third largest. I learn all I can about my very large positions.
Thanks. Have not gotten to today's paper yet. One of these days I must get around to looking at NRF.
I am not sure a simple lot price tells you everything, though it is useful. By way of analogy, I imagine the "lot value" of Tiffany's stores is much greater than those of Family Dollar. The incremental revenue ($610-$439) may well flow to the bottom line, making the Carlyle communities more profitable than SUIs. A big part of any community is lot expansion - does the 366 lot figure include only developed lots, or include undeveloped lots that can represent expansion.
At $66, SUI would only be yielding 3.8%, absent dividend increases. SUI has not increased the dividend since early 2005 - but they are in a different position now, so that is likely to change. Big increases is a different question.
We both know the real world is capitalized noi on a community by community basis taking into account a multitude of other factors and attributes. My original rule of thumb of gross monthly rents to a recent transaction is an academic nothing compared to actual transactional methodology.
Nevertheless, I'd vote for 2 shares of ELS stock for each share of SUI (a tax deferred merger) even though that meant a 50 cent dividend (initially) instead of 63 cents. I think Shiffman has been growing for Shiffman instead of the shareholders. ELS could probably make money on a 2 shares for 1 basis by cutting out the excessive compensation at sui in addition to other savings.