Hometown America Buys Manufactured Housing Behemoth Chateau

GREENWOOD VILLAGE, CO-Chateau Communities Inc., the nation’s largest owner and operator of manufactured home communities, has been offered to be purchased by Chicago-based Hometown America LLC, one of the nation’s largest privately-held owners of manufactured home communities.

The $2.2 billion deal trumps an earlier unsolicited offer from real estate financier Sam Zell’s Manufactured Home Communities Inc. of $1.82 billion. Manufactured Home Communities is also based in Chicago, but is publicly traded.

Under the latest agreement, which was unanimously approved by the boards of both companies, Hometown America will acquire all of the outstanding shares and common units of Chateau Communities for $29.25 per share or unit in cash.

The transaction represents a premium of approximately 16% over the closing price on Wednesday, and a premium of approximately 28% to Chateau Communities’ average closing price over the past 30 trading days.

The transaction has a total equity value of approximately $1 billion basedupon Chateau Communities’ approximately 35 million common shares and unitsoutstanding.

Hometown America will also assume Chateau Communities’ net debt and preferred stock of approximately $1.2 billion.

The transaction also offers holders of Chateau Communities’ common units the option (in lieu of cash) to continue their interest in the form of preferred units.

“Chateau Communities has a high-quality portfolio of properties and offers a strongpresence in markets we find attractive. Chateau Communities has assembled atalented and dedicated team and we look forward to working with them tocontinue to build upon and grow the community platform they have created,” says Rich Cline, Chief Executive Officer of Hometown America.

Rees F. Davis, Jr., Chief Executive Officer of Chateau Communities, had this to say: “This is an outstanding transaction for our shareholders and for ourcompany. Our board conducted an extensive evaluation and, after examining anumber of alternatives, determined that this transaction was in the best interests of our shareholders and other stakeholders. We are confident that our residents, employees and communities will also be well served.”

The merger is subject to approval of two-thirds of Chateau Communities’shares outstanding and a majority of Chateau Communities’ units. Certain of Chateau Communities’ OP unit holders, representing a majority of theoutstanding units, have agreed to vote in favor of the transaction.

Hometown America has committed financing for the transaction. The companiesanticipate that the transaction can be completed this fall. UBS Warburg LLC acted as financial advisor to Hometown America. Goldman,Sachs & Co. acted as financial advisor to Chateau Communities. Wachtell,Lipton, Rosen & Katz acted as legal counsel to Hometown America. Clifford Chance US LLP acted as legal counsel to Chateau Communities.

Chaeau’s portfolio consists of 201 communities, with an aggregate of approximately 67,600 residential homesites and 1,400 park model/RV sites, and 35 managed communities with approximately 7,800 sites.

Hometown acquires, develops and manages manufactured housing communities. It is one of the largest private owners of manufactured home communities and is one of the top 10 operatorsin the country.