Q&A ARA Newmark: Manufactured Housing Sector Insights
By Dennis Kaiser
ARA Newmark’s manufactured housing group recently earned MHC Broker of the Year for the fifth year straight year. The National Industry Awards, voted on by industry leaders and presented during that year’s Manufactured Housing Institute’s National Congress and Expo, recognizes the highest achievers from all sectors of the manufactured and modular housing industries.
Connect Media asked two members of the ARA Newmark team, Andrew Shih and Todd Fletcher, to provide some key takeaways from this year’s Manufactured Housing Conference.
Q: What trends/behaviors did you notice during the Manufactured Housing Conference this year?
Shih (pictured above left): Most of our formally scheduled meetings at the Manufactured Housing Conference were with new groups that we’d never met but who have already started buying or are poised to buy their first deal. Every buyer we spoke with cannot find enough communities to acquire, but the long time private owners typically do not want to buy at these now lower cap rates.
Q: Can you share some major takeaways in the manufactured housing space that you’ve seen in 2017?
Fletcher (pictured above right): The conduit market seems to have settled since the January 1st implementation of risk retention and they are ready to do business, and after a pause for about two quarters, sales activity seems to be accelerating as owners look to dispose of non-core assets or want to take some chips off the table. A greater number of large transactions occurred in the last year or are currently in the works than in previous years, and we found that equity sources are coming from all areas – from family office money to sovereign wealth, and everything in between.
Q: What are some trends or predictions that you have for 2017 and beyond?
Shih: There is still no meaningful chattel financing options*, but some groups have rolled out fairly sizeable programs. Additionally, many buyers are setting up temporary funding sources to acquire value-add communities quickly. This provides buyers the time to implement their business strategies before putting permanent long term financing on a property. All sources of debt seem to be aggressively chasing communities. Debt availability is strong, but the leverage and terms seem to be mostly reasonable, hopefully signaling that calm waters are still ahead in our immediate future.
* personal property loans made for the purchase or refinance of a manufactured home that is not permanently affixed to the real estate
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Financing
- ◦Sale/Acquisition
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