Activist Erez steps up sale pressure on UMH Properties

Activist investor Erez Asset Management is ramping up efforts to push UMH Properties to conduct a strategic review that could lead to a sale, according to reports. Erez Chairman and Chief Investment Officer Bruce Schanzer wrote a letter to UMH's Borda, stating that the firm perceives strong interest from strategic buyers and private equity investors in the REIT.

However, potential buyers have reportedly faced rebuffs or no response when attempting to engage with UMH. Erez contends that UMH should examine strategic alternatives, including a potential sale, to address what it views as a discrepancy between the company's real estate portfolio's value and its market valuation. Erez currently owns around 4.7% of UMH and intends to boost its stake to 5%, as per a source familiar with the situation.

UMH's market capitalization dropped to approximately $1.34 billion after shares fell 1.4% to $15.68 on Monday. UMH manages manufactured-home communities and rental self-storage facilities, founded by Eugene Landy in 1968 and still closely tied to the Landy family. Erez believes the company's portfolio is worth more than its current share price indicates, estimating UMH's net asset value to be between $21.25 and $24.25 a share based on a property-level assessment.

Schanzer attributes UMH's low public-market valuation to what Erez perceives as shortcomings in strategic execution and capital allocation. The activist's push comes after a previous attempt in May to sway UMH's board composition, which ultimately failed when independent director Matthew Hirsch retained his seat. Erez has urged UMH to engage with the firm over its assessment of the company's performance, capital allocation, valuation, and strategic alternatives.

While Schanzer hopes for a constructive collaboration, he warns that Erez may take further action if UMH refuses to engage or conduct a strategic review.