Sam Landy, president and CEO of UMH Properties (NYSE: UMH), joined REIT.com for a CEO Spotlight video interview in Chicago at REITWeek 2013: NAREIT's Investor Forum.
UMH owns and operates manufactured home communities in seven states throughout the northeast. The company owns a portfolio of 68 manufactured home communities that hold approximately 12,800 home sites.
The REIT recently reported a strong jump in occupancy rates. Landy saidthose results were driven by a growth in the rental market, and UMH has cost advantages over competitors.
“If they’re paying $200,000 for 980 square feet and we’re paying $80,000 for 980 square feet, we could rent our homes out at $750 a month, where they have to be over $1,000 per month,” he said. “If we look at the markets we’re in and we rent our homes for at least $50 per month less than apartments, we generally generate a waiting list, and that’s what’s increasing occupancy.”
Landy added that in light of the regulatory measures enacted by the Dodd–Frank Wall Street Reform and Consumer Protection Act and the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), UMH has transitioned to both renting and selling homes. UMH filled about 200 rental units last year and plans to put in about 200 more rental units online this year.
UMH has also been active in the acquisitions market in 2013 so far. Landy said the company is operating at an 8 percent cap rate and is looking for vacant sites where it can generate sales income, add rentals and finance homes.
“We’ve done some acquisitions in Indiana and Tennessee where people built 300-space communities, sold about 150 homes in the good times, couldn’t sell in the bad times and wound up selling to us at about 8 percent cap. So, the upside is substantial should we fill those vacant sites.” he said.
However, he said finding deals is getting tougher as prices are starting to rise and cap rates are decreasing.
“But everybody talks about this great wealth transfer that’s going to occur, and that could generate individual deals for us,” Landy said.