UMH Properties (UMH), Nuveen Real Estate Grow Ties, Stock Up
UMH Properties UMH recently made headlines with its expansion of the joint venture partnership with Nuveen Real Estate. Reflecting positive sentiments, UMH shares were up more than 3% during Friday’s regular trading session.
The announcement, made on Nov 30, reveals a new joint venture focusing on the development of a new manufactured housing community in Honey Brook, PA, within the Philadelphia Metropolitan Statistical Area. UMH will hold a 40% stake in the joint venture and assume the roles of managing member, developer and operating member.
The community, spanning approximately 61 acres, is set to consist of 113 manufactured home sites. The project timeline indicates that construction will commence in the coming weeks, with an estimated completion period of 15 months.
UMH stands to gain from this venture through various revenue streams, including development fees, management fees, assets under management fees and a promote for exceeding Internal Rate of Return targets. Moreover, UMH retains the right to purchase the community from the joint venture after a specified period.
Samuel A. Landy, the president and CEO of UMH, expressed enthusiasm about the expanded partnership, highlighting the shared vision of developing high-quality residential communities to address the ongoing housing crisis. This venture provides UMH with the financial capacity to develop and acquire communities while minimizing the short-term impact on its funds from operations (FFO) during construction and lease-up.
The strategic location of the new community in close proximity to two existing UMH properties, boasting high occupancy rates of 98% and site rents exceeding $700 per month, positions the venture for success. Landy anticipates a robust sales and rental market, leading to a swift lease-up of the property upon completion.
This solidifies the growing relationship between UMH and Nuveen Real Estate, and the companies now own three assets together. The collaboration aligns with both entities' commitment to developing and acquiring high-quality residential communities.
Established in 1968, UMH Properties currently owns and operates 135 manufactured home communities, encompassing approximately 25,800 developed homesites across various states. Through a joint venture with Nuveen Real Estate, UMH also has an ownership interest in and operates two communities in Florida, containing 363 sites.
In conclusion, UMH's strategic expansion with Nuveen Real Estate positions the company for sustained growth in the manufactured housing sector. The collaboration leverages UMH's expertise and Nuveen's investment strategy, emphasizing the commitment to addressing the housing crisis while generating favorable returns for stakeholders. Investors should keep a close eye on this partnership as the development progresses as it holds the potential for both short-term gains and long-term stability in the real estate market.
Shares of this Zacks Rank #2 (Buy) company have risen 3.8% in the quarter-to-date period, marginally lagging the industry’s rise of 4.6%.
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Other Stocks to Consider
Some other top-ranked stocks from the residential REIT sector are Invitation Home INVH and American Homes 4 Rent AMH, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Invitation Home’s 2023 FFO per share is pegged at $1.79, suggesting year-over-year growth of 7.2%.
The Zacks Consensus Estimate for American Homes 4 Rent’s ongoing year’s FFO per share stands at $1.65, indicating growth of 7.1% from the year-ago quarter’s reported figure.
Note: Anything related to earnings presented in this write-up represents 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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