Key insights
- UMH Properties amended its credit facility, increasing borrowing capacity and extending the maturity to 2030. Interest rates were reduced, enhancing financial flexibility. This signals positive internal financial management and access to capital, which could support growth and potentially lead to increased investment in the manufactured housing sector. The impact on the broader US equity market is limited but incrementally positive.
UMH Properties Inc. (UMH) announced it entered into a Third Amended and Restated Credit Agreement to modify and extend its existing unsecured revolving credit facility. The real estate investment trust specializes in manufactured home communities.
The amended facility provides $260 million in available borrowings with a $340 million accordion feature, bringing total potential availability to $600 million, subject to obtaining commitments from additional lenders. The agreement extends the maturity date from November 7, 2026 to May 7, 2030, with an optional one-year extension available subject to certain conditions including payment of an extension fee.
The facility is syndicated with BMO Capital Markets Corp., JPMorgan Chase Bank N.A., and Wells Fargo Bank N.A. as joint lead arrangers and joint book runners, with BMO Bank N.A. as administrative agent.
Availability under the amended facility is limited to 60% of the value of unencumbered communities owned entirely by the company. The value of these communities increased through a reduction in the capitalization rate from 6.5% to 6.0% applied to net operating income generated by the properties.
Interest rates were reduced by approximately 35 to 40 basis points depending on the company’s leverage ratio. Rates now equal the Secured Overnight Financing Rate plus 1.30% to 1.90%, or BMO’s prime lending rate plus 0.30% to 0.90%.
"The expansion and extension of our Facility will further enhance our liquidity and strengthen the financial flexibility and balance sheet of our Company as we continue to execute our growth strategy," said Samuel A. Landy, president and chief executive officer.
UMH Properties owns and operates 145 manufactured home communities containing approximately 27,100 developed homesites, of which 11,200 contain rental homes, and over 1,000 self-storage units across 12 states.