Residential real estate investment trust (REIT) UMH Properties, Inc. UMH recently closed the acquisition of an Indiana community for a total price of $3,500,000. The buyout is a strategic fit for the company as it enables UMH Properties to strengthen its position in the Indiana market.
Notably, the community was developed in the early 2000s. It encloses 134 developed homesites on a land parcel spanning 58 acres. Further, it is 60% occupied.
Per management, the community was originally designed for 300 sites. Further, it sees significant upside potential by commencing development of additional 166 sites and renting the community to full. Moreover, the company anticipates leveraging on its robust platform to spur demand and occupancy at the property.
Per Samuel A. Landy, president and chief executive officer, "We are pleased to announce another acquisition in the Indiana market. Indiana has been one of our best performing markets."
Notably, the company has been making concerted efforts to capture the Indiana market through strategic acquisitions. In late May, it purchased a portfolio of two communities situated in Anderson. The company shelled out nearly 20.5 million for this buyout.
It consists of two all-age communities that offer a total of 669 homesites. The weighted average occupancy of the portfolio stands at 91%. Furthermore, this acquisition offers the company an opportunity to develop another 270 sites at the community.
Such densification efforts will help the company fortify its footprint in the market and command higher rents. Additionally, during second-quarter 2018 earnings call, the company announced an acquisition pipeline worth $81.5 million. This consisted of six properties which offer 2,100 home sites.
Nonetheless, growth through acquisitions requires large capital outlays and may dent the company’s liquidity position in the near term. In addition, it may require borrowing debt in order to execute such strategic moves, thereby increasing debt levels.
Shares of this Zacks Rank #3 (Hold) company have outperformed its industry over the past three months. While its shares have rallied 8.8%, the industry has gained 5.7%, during the same time period.
Nevertheless, over the last month, the company’s 2018 funds from operations (FFO) per share has been revised nearly 10% downward.
Key Picks
Better-ranked stocks from the REIT space include VICI Properties VICI, Park Hotels and Resorts, Inc. PK and PS Business Parks, Inc. PSB. All three stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VICI Properties’ Zacks Consensus Estimate for 2018 FFO per share has been revised upward by a cent over the past 60 days. Its shares have gained 7.4% in the past six months.
Park Hotels and Resorts’ FFO per share estimates for 2018 witnessed 1.3% upward revision in 60 days’ time. Its shares have appreciated 34% over the past six months.
PS Business Parks’ FFO per share estimates for the current year moved up marginally in the past 30 days to $6.39. The stock has rallied 16% in six months’ time.
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