Blackstone Reportedly Makes Play For Manufactured Housing Space
By Erika Morphy at GlobeSt.com
But is the space ready for Blackstone and other institutional investors?
Blackstone’s headquarters in Midtown Manhattan
NEW YORK CITY–Blackstone Group has entered the manufactured housing sector, according to a report in Bloomberg.
The private equity giant is, according to the publication, the buyer of a 14-park manufactured housing portfolio that Tricon Capital Group announced it had sold earlier this month for $172 million. It identified the buyer as an institutional asset manager but according to unnamed sources speaking to Bloomberg, Blackstone is the purchaser.
Tricon is netting $84 million from the sale.
Can Manufactured Housing Support Blackstone?
If this acquisition is a sign of further deals to come from Blackstone it should prove to be interesting times for this asset class. There have been very few institutional investments in manufactured housing despite its strong fundamentals because the category is so fractured among the owners and few portfolio deals come to market.
One notable exception was a few years ago when Denver-based Yes! Communities, a portfolio of opportunistic real estate funds managed by Stockbridge Capital Group, recapped its three manufactured housing portfolios in a deal that has been valued at $2 billion. Stockbridge sold a 71% equity interest in its three manufactured home community portfolios to two global institutional investors, one of which is GIC, the sovereign wealth fund of Singapore. As part of the transaction Fannie Mae provided two credit facilities of $1 billion, making it the largest manufactured housing transaction it had underwritten to that point.
But for the most part, equity for this space comes from country club and family office money.
Hints of Scale
Yet there are hints that manufactured housing could conceivably support more institutional capital flows. The scale of the asset class is expanding as the GSEs have included manufactured housing in their Duty to Serve mandate. Housing advocates are also urging policy-makers to consider manufactured housing as a partial solution to the affordable housing crisis. In a recent research brief, the Urban Institute noted that if buyers of manufactured homes were encouraged to choose mortgages over chattel loans that could make manufactured housing more affordable, potentially leading to an increase in demand and supply.
Also, the CMBS market has become more competitive for manufactured housing after Fannie Mae and Freddie Mac entered the market in 2014. The CMBS market countered where it could–it is difficult for the regimented CMBS market to compete on, say, loan flexibility–by considering RV parks or hybrid manufacturing housing-RV parks, lower quality loans and smaller balance loan deals.