Purchase of $865M Portfolio Pushes RHP Properties Upward

By Scott Baltic, Contributing Editor 

Salt Lake City

RHP Properties Inc., of Farmington Hills, Mich., is now the nation’s largest privately held owner and operator of manufactured-home communities, thanks to its most recent acquisition, of an $865 million manufactured-housing portfolio, the company announced Monday. The portfolio totals about 17,000 home sites in 71 communities in five states, including Utah, New York and Florida.

The acquisition was made in partnership with NorthStar Realty Finance Corp., New York. In a separate announcement last week, NorthStar stated that the transaction was financed with a $640 million non-recourse, 10-year mortgage with a fixed interest rate of 4.02 percent. The company anticipates an initial current yield of approximately 14 percent on its equity investment. 

David Hamamoto, NorthStar’s chairman and CEO, described the manufactured-housing sector in a release as having “consistently demonstrated stable cash flows, steady rental growth, very low turn-over rates and minimal capital expenditures.”

The ages and amenity packages of the just-purchased communities vary widely, RHP Properties CEO Ross Partrich told Commercial Property Executive, though most are aimed at RHP’s core market of working-class families. These communities typically have a club house for events and for private rental and often a swimming pool and/or a basketball court. 

“The sector is doing very well,” Partrich said, if only because there’s always demand for affordable housing.

Earlier this year, RHP, in partnership with NorthStar, completed a $333 million acquisition of 36 communities, primarily in metro Denver and in Wyoming, totaling 6,269 home sites. 

RHP’s current $2.25 billion portfolio includes 218 manufactured-home communities, totaling approximately 51,000 home sites across 25 states, and 13 apartment properties with more than 3,500 units in Michigan. 

In 2011, the average selling price of a new single- or multi-section manufactured home (average 1,470 square feet) was $60,600, versus $207,950 for the average new site-built home (average 2,494 square feet), according to a 2012 report by the Manufactured Housing Institute. The averages quoted, which do not include land costs in either case, are based on U.S Census Bureau figures. 

The costs per square foot work out to $41.22 for manufactured and $83.38 for site-built.

Also in 2011, site-built housing starts totaled around 431,000 versus nearly 52,000 manufactured homes shipped, for a breakdown of 89 percent versus 11 percent of the single-family market. 

Nationwide, about one-quarter of new manufactured homes are placed in communities and the remainder go onto private property, also according to the MHI report.