Chateau Communities Plans Purchase of REIT

The N'Tandem portfolio consists of 33 communities with approximately 7,500 sites in 15 states. The portfolio is 80% occupied and carries a weighted average monthly rent of $300. When complete, the acquisition will bring Chateau's total portfolio to 235 owned communities, representing approximately 75,700 homesites in 36 states.

Total consideration for the acquisition will be approximately $150 million, representing an approximate 8% capitalization rate. Chateau will finance the acquisition by assuming $85 million of secured debt, $3 million of other liabilities and $16.5 million outstanding under N'Tandem's credit facility which Chateau currently guarantees. In addition, Chateau will borrow $5 million on its existing credit facilities and retire its loans and advances to N'Tandem.

"The incremental investment of $5 million provides us with the flexibility we need to maximize the value of this portfolio of assets," says Rees F. Davis Jr., president of Chateau. "Our assessment of the portfolio is that 35% of its net operating income is derived from quality assets that we believe fit well with our long-term asset ownership goals and strategy. About 50% of its net operating income is derived from three-to-five year hold properties where asset repositioning and/or market improvement will provide enhanced value."

He also says about 15% of the portfolio's net operating income is derived from assets that will be immediately sold because they do not meet Chateau's criteria as long-term investments. "This acquisition does not in any way detract from our broader commitment to step up our efforts on the property disposition side," he says.

The transaction is expected to close during the next 60 to 90 days, subject to the satisfaction of customary closing conditions, including approval of the transaction by shareholders representing at least two thirds of the outstanding N'Tandem shares.