NorthStar Holds Initial Closing on $400M Housing Buy

NEW YORK CITY-NorthStar Realty Finance Corp. said Tuesday it had closed on $345 million of an approximately $400-million manufactured housing portfolio. The seller was not identified; this past April, NorthStar bought $865 million of manufactured housing from ARC Real Estate Holdings LLC, and its portfolio in this sector now runs to $1.6 billion and 29,000 pad rental sites.

The latest portfolio is comprised of 16 communities with approximately 5,900 pad rental sites located primarily in Denver and in the Texas cities of Austin and Dallas. Last week NRF sold more than 57 million shares of common stock, with proceeds going mainly toward financing the acquisition.

Commenting on the latest portfolio buy, NRF's chairman and CEO, David Hamamoto, cites the “stable cash flows, steady rental growth, very low turn-over rates and minimal capital expenditures” in the manufactured housing space. “Owning pad rental sites in manufactured housing communities is a very attractive, long-term business, and we will continue to seek opportunities to scale this business and maximize shareholder value.”

Long term, the REIT says it sees “strong future opportunities” in manufactured housing. The asset class has “highly fragmented ownership with approximately 39,000 communities covering over four million pad sites mostly owned by “mom and pops” and lacking institutional ownership and management,” with only two publicly traded manufactured housing companies.

Two weeks ago, NRF announced plans to spin off its asset management business into a separate publicly traded company in the form of a tax-free distribution. The newly formed company, to be known as NorthStar Asset Management, will enter into a 20-year contract to manage NRF as well as its non-traded REIT business. NorthStar Asset Management will also own NRF's broker-deakler business when the spin-off is completed.