No Shortage of Capital Chasing Manufactured Homes

The market for manufactured homes is strong from both homebuyers and investors. In fact, investors are actively chasing manufactured home deals at record rates.

“The appetite for MHC’s from investors and debt providers has never been stronger, with no shortage of capital in the market for virtually any MHC transaction profile from core to value-add. We’re even starting to see a trend of new developments coming online in markets around the country,” Zach Koucos, managing director at JLL Capital Markets, tells GlobeSt.com. “We’ve seen continued growth in demand for MHC’s nationwide, both in resident demand as well as from a capital markets perspective.”

The surge of capital is responding to record demand in this asset class. Unaffordable homeownership has pushed homebuyers into the manufactured homes market. As Koucos said, the trend is happening in many markets, but it is most pronounced in coastal markets. “Certainly the demand is amplified in coastal markets and major metropolitan areas, particularly on the part of investors and capital providers. Retirees and second homebuyers want to be in warm weather or coastal locations, with amenities such as a clubhouse, pool, fitness center, tennis courts, golf, and outdoor recreational space,” he says.

This has created demand for a higher-end segment of manufactured homes as well. “Luxury MHC’s offer a more affordable way to achieve this lifestyle. For working families and individuals who have been priced out of the single family home market, MHC’s offer more affordable community housing close to employment and schools in cities across the US,” says Koucos.

A joint venture between Treehouse Communities and an unnamed institutional investor in Phoenix has highlighted the activity for manufactured housing. The joint venture refinanced a 17-property portfolio in the area totaling $46.44 million. “This was a strategic recapitalization to bring in fresh equity and debt to invest back into the homes and common areas of these communities,” says Koucos. Their goal is to enhance the overall appeal and functionality of these communities, as well as the quality of life for current and future residents.”

In addition, the low interest rate market has made this a perfect opportunity for owners like this to refinance and make strategic business moves. “This historically low interest rate environment has been an extraordinary opportunity for our clients to utilize extremely low fixed and floating rate bridge and permanent debt to achieve their investment goals,” says Koucos. “Fannie Mae and Freddie Mac are both on track to exceed their 2019 MHC loan originations, and we’re seeing an ever growing field of capital sources interested in MHC’s including life insurance companies, debt funds, regional banks, CMBS / conduits, bridge, and structure finance providers.”