UMH Properties (UMH) Experiences Growth in Occupancy & Rent
UMH Properties’ UMH recent update on its third-quarter 2023 operating results reveals a promising trajectory, showcasing strong demand and growth in key areas. Particularly, increased occupancy combined with rent increases implemented throughout the year has led to a rise in its monthly rental charges.
This REIT, which specializes in the ownership and operation of manufactured home communities, noted that during the first two months of third-quarter 2023, the company achieved occupancy in approximately 234 rental homes, adding to its income-generating portfolio. Additionally, 25 new homes were sold, creating further opportunities for site rent. This led to an increase in overall occupancy of around 167 units, highlighting the company's ability to attract tenants and buyers.
Year-to-date figures are even more impressive, with approximately 845 rental homes being rented, leading to income-producing assets and 108 new homes sold. These numbers underscore UMH Properties' robust business model and its effective management of manufactured home communities.
UMH Properties hasn't just been focusing on occupancy, it has also implemented rent increases throughout the year. This strategy has paid off handsomely, resulting in a substantial uptick in monthly rental charges.
As of Sep 1, 2023, there was an increase of approximately $243,000 in monthly rental charges compared to Aug 1, 2023. For the first two months of the quarter, the increase amounted to an impressive $377,000. Year to date, monthly rental charges have soared by $1.2 million.
This boost in rental income is not only a testament to UMH Properties' strategic pricing decisions but also a positive reflection of the continued demand for manufactured home communities. The company's ability to capitalize on this demand speaks volumes about its management's effectiveness.
On the inventory front, UMH Properties noted that at the beginning of the year, its inventory stood at more than 1,000 homes. However, in the last eight months, it has substantially decreased, currently standing at approximately 488 homes.
While the figure is still above its normal levels, it is likely to rapidly decline as UMH remains focused on filling more than 100 homes a month. As a result of this inventory reduction, UMH Properties has witnessed a decrease in its floor plan loan balance, which translates into a reduction in floor plan interest expenses.
With healthy growth in occupancy rates, rental charges, and effective inventory management, UMH Properties is demonstrating its prowess in the manufactured home community sector. The preliminary results for third-quarter 2023 are encouraging, and indicate healthy demand for manufactured home communities and the company's ability to harness that demand for profitability.
However, a choppy macroeconomic environment and elevated interest rates remain concerns. Additionally, the company's upcoming release of its full third-quarter 2023 results on Nov 8, 2023, will be a key event to watch, for a comprehensive understanding of UMH's financial health and prospects.
Shares of this Zacks Rank #3 (Hold) company have declined 6% in the past six months, wider than its industry’s decline of 0.9%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Invitation Homes Inc. INVH and American Homes 4 Rent AMH. Both Invitation Homes and American Homes 4 Rent currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Invitation Homes’ current-year FFO per share has been revised marginally north over the past two months to $1.79.
The Zacks Consensus Estimate for American Homes 4 Rent’s 2023 FFO per share has been revised marginally north in the past month to $1.65.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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