UMH Properties, Nuveen Enter into Manufactured Housing JV
The deal is expected to “lead to a high-quality acquisition pipeline” amid growing demand.
UMH Properties and Nuveen Real Estate have entered into a joint venture agreement to pursue greenfield development or acquisitions of new manufactured housing communities. It is launching with an initial capital commitment of $170 million
UMH will have a 40% stake in the JV and serve as the managing member and operating member.
The REIT will also have the right to purchase these communities from the JV after a certain period of time, “which should lead to a high-quality acquisition pipeline,” CEO Samuel A. Landy said in prepared remarks.
Manufactured Housing Valuations at All-Time High
Valuations for manufactured housing communities hit an all-time high in the second quarter, buoyed by a surge in activity by institutional investors flooding the space.
Early Q3 data shows that transaction volume has reached the highest trailing four-quarter level on record at $4.5 billion, and research from JLL suggests occupancy and rent will grow at a similar rate as demand for affordable housing continues apace.
Not surprisingly, institutional investors are flocking to manufactured housing assets as deal activity in the niche sector picks up speed.
UMH Invests in Florida Communities
UMH has entered into agreements to acquire three to-be-built communities that will contain 804 sites in Florida for a total purchase price of approximately $90 million.
These three communities will all be considered for the JV. The first community contains 219 sites and has an approximate purchase price of $23 million. This acquisition is expected to close by January 2022. UMH is also looking at several other deals that fit the JV’s investment criteria that will be considered as potential acquisition opportunities.
UMH to Help US Meet Demand
Landy notes that the US needs at least 5.5 million new homes to keep pace with demand, with that number increasing to 6.8 million when considering obsolescence.
“Through this joint venture, UMH and Nuveen Real Estate intend to make significant investments in developing and acquiring new communities to help to ease the affordable housing crisis,” Landy said.
UMH Properties owns and operates 127 manufactured home communities containing approximately 24,000 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama and South Carolina.