What happened
The past year has been excellent for the shareholders of Properties of UMH (NYSE: UMH), an owner and operator of prefab housing communities that saw its stock price jump 84.5% in 2021, according to data provided by S&P Global Market Intelligence.
The Company is focused on renting and selling one-story homes of 1,000 to 2,500 square feet located in planned communities, at prices competitive with what the buyer or renter would pay for an equivalent or smaller apartment. . It clearly works.
UMH Properties is a real estate investment confidence (REIT), an investment option better known for going slow and steady than pedaling into the metal, but all that money pouring into the housing sector helped send this stock to a one-year price gain that has to roughly tripled that of the S&P 500.
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So what
Prefabricated housing means that the structure has been created as modules in a factory and assembled on a plinth, which saves time and money compared to what is generally known as stick construction .
Demand for lower-priced homes in these communities — particularly by retirees and aging millennials and others moving to the Sun Belt — has helped push up a pad’s average valuation and transaction volume for this type of housing at record levels.
UMH Properties is riding this wave as it continues its long run of profitability. Founded in 1968 as United Mobile Homes, operating as a public company since 1985 and organized as a REIT since 1992, the company now owns and operates 127 manufactured housing communities with approximately 24,000 residential sites in 11 states. If you had the foresight to invest $10,000 in the stock 10 years ago, you would have close to $50,000 now, nearly double what an index investment like the Vanguard S&P 500 ETF would have yielded during this time.
The metrics from the latest quarterly report also indicate how well things are going for this REIT. Rental occupancy reached 95% and home sales jumped 45% year-to-date, while same property net operating income (NOI) increased 15%, reflecting the ability to increase rent in the face of growing demand. It helped operating funds (FFO) – a key measure of REIT profitability – jumped 51% year-over-year in the third quarter, while rental occupancies hit 95% and manufactured home sales jumped 45% since the beginning of the year.
The company started the new year with a 5% increase in its dividend, to $0.20 per share from the $0.19 it had paid quarterly throughout 2021, and that after paying 0. $18 per share every quarter since the second quarter of 2008. So that’s a positive sign for income investors given this stock.
Now what
At the end of the year, UMH Properties entered into a joint venture agreement with giant Nuveen Real Estate, and the two have just made their first purchase: $22.2 million for a new 39-acre prefab housing community and 219 venues in Sebring, Florida scoring the UMH. entry into the Sunshine State.
The company also said in its year-end report that it added 622 rental units in 2021, giving it about 8,700 in this portfolio, and plans to add another 800-900 per year to the portfolio. to come up. It also has approximately 3,300 existing vacant lots to fill and nearly 1,800 acres of empty land that it plans to fill with an additional 7,300 finished lots. This all points to more revenue to share with shareholders.
“Workforce housing will remain a basic need in any environment,” the company said in that December report. The company’s seasoned approach to financing homeownership and rental units should find enough buyers and renters to keep UMH Properties profitable and investors well rewarded for years to come. also come.
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