One of Yes! Communities' manufactured homes.

WASHINGTON, DC—Fannie Mae is providing two credit facilities to support, at $1 billion, what is the largest manufactured housing transaction it has underwritten to date. That deal, as people in this niche sector can well guess, is the recap of the manufactured housing assets belonging to the Denver-based Yes! Communities, a portfolio of opportunistic real estate funds managed by Stockbridge Capital Group. Earlier this week Stockbridge announced that it 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.

The portfolios will be consolidated into a newly-formed REIT called Yes Communities LLC.

Stockbridge will own a 29% stake in the new REIT. Stockbridge did not reveal the financial terms of the transaction. Fannie Mae's news release on its role in the deal, which came out after the initial deal was announced, sized the financing it arranged at $1 billion. The Wall Street Journal and other outlets valued the Yes! acquisition at around $2 billion.

Fannie Mae also said the $1-billion deal is backed by 120 communities in 13 states across the country.

Stockbridge indicated that its manufactured home portfolio includes 178 communities across 17 states, with more than 44,600 residential home sites, an inventory of over 11,500 manufactured homes and a portfolio of home loans.

A Growing Asset Class

The deal is significant as it signifies that institutional investors are recognizing the manufactured housing sector's value as an asset class.

“The manufactured housing sector is a unique and highly-attractive niche in the US residential market, which GIC has been exploring for some time,” according to Adam Gallistel, regional head for Americas at GIC Real Estate. “Given the relative lack of consolidation, it is very difficult to enter this sector in scale.”

Three Credit Facilities, One Line of Credit

Wells Fargo and KeyBank arranged the debt financing for the transaction, a complicated structure that included the two credit facilities from Fannie Mae, a credit facility from Freddie Mac and a syndicated line of credit. KeyBank arranged one Fannie Mae and one Freddie Mac credit facility totaling $733 million, and underwrote the $125 million syndicated credit line.

Eastdil Secured was lead financial advisor to Yes!, with KeyBanc Capital Markets, BofA Merrill Lynch and Citigroup Global Markets acting as financial advisors. JMP Securities and Deutsche Bank Securities also provided financial advisory services for the deal. Clifford Chance US served as legal counsel to Yes!, while Simpson Thacher & Bartlett LLP served as legal counsel to Stockbridge.

A Flexible Structure

The credit facility Fannie Mae provided is a fifteen-year old structured product that has been getting more attention lately due to its flexibility, VP of Multifamily Customer Engagement Phyllis Klein tells GlobeSt.com.

“It is similar to a revolving line of credit but can offer tranches of fixed, variable and other terms within the facility,” she says.

Klein said this was the largest manufactured housing deal for Fannie Mae, both in terms of the number of units involved and the deal size itself. It also was the first time it worked with two lenders in this space — as well as with Yes.

Manufactured housing is excluded from the GSEs' cap, so this deal will not close lending activities earlier than expected.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

Instant Insights /

Two Fannie Mae Credit Facilities Support $1B Manufactured Housing Deal

Related Stories

Recommended For You