Under the perception that Janet Yellen will not raise interest rates for a while, many investors have been searching for yield. Popular REITs like net lease stocks appreciated, but we have started to take notice in interest on other REIT sectors. For instance, manufactured homes have experienced some good gains.
There are three stocks that make up the manufactured home REIT sector. These stocks had around a 10% return last June, which was more than the average REIT. Even the undervalued UMH, whose portfolio is mainly focused on fracking regions in Pennsylvania and Ohio, have also rallied by 13% in June. Not to mention, that they are now accumulating over 20% a year to date return. The stock is yielding almost 6% and its dividends have not been covered yet.
As a result, all three of these stocks seem to be fairly priced, and we are not currently seeing any upside right now. It is still possible that Yellen could lend a hand to REIT stocks again, but this is not something that I would consider an investment strategy. With her short history, that is mainly made up of flip-flopping, it is fair to say that the Fed’s opinions have been swinging to the moods of the world’s economy.
Equity LifeStyle Properties has already released Q2 results. They have shown that the market fundamentals are continuing to hold strong. For manufactured business, which includes the majority of revenues, occupancy has increased for the 27th consecutive quarter. Plus the monthly rent base is continuing to trend upwards. For their Recreational Vehicle business, the same-store NOI rose by 6%.
Both Sun Communities and UMH Properties will release their Q2 results this week. Sun Communities are coming from the major acquisition of Carefree Communities. This caused an increase in its number of communities by approximately 44%. This will be the first time we will review the consolidated results of such a large company.
To sum up, I would wait for the Sun Communities and UMH Properties Q2 results. However, this time around I am not hopeful that there will be a window of opportunity.
Source: Sun Communities Inc.(NYSE:SUI), Equity LifeStyle Properties, I(NYSE:ELS), UMH Properties Inc.(NYSE:UMH)
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Disclosure: The author is long FCH, XHR, CLDT, and PEB.