Investment giant Brookfield has begun whittling a portfolio of more than 160 mobile home parks it started acquiring in 2017 as prices per unit for such properties have soared this year.
U.S. mobile home properties have come into favor as the need for affordable housing mounts, causing values to rise even at a time of high interest rates that have curtailed other types of real estate investments over the past two years.
Brookfield sold nearly 80 mobile home parks to multiple buyers for a total of $1.6 billion, according to a person familiar with the situation. In addition, Brookfield is in active discussion of disposing another 80 comparable properties, the person said.
Among the buyers is Farmington Hills, Michigan-based RHP Properties, loan data from housing finance giant Freddie Mac shows. RHP is the third-largest owner of manufactured home sites in the country, according to Mobile Home University, a data service for investors.
RHP’s purchase price was not disclosed in the Freddie Mac loan documents, but the deal could end up being one of the largest mobile home portfolios purchased this year based on the total loan value of $272.7 million.
Brookfield declined to comment to CoStar News. RHP did not respond to requests for additional information.
Investor interest rising
Investors have more than doubled what they are paying for manufactured housing this year over last year, an indicator of robust demand. The price per unit nationally has shot up from $64,296 in the fourth quarter of 2023 to $138,125 per unit so far this quarter, according to CoStar data.
Pricing is uneven across the country however with some markets seeing declines, Derek Harris, founder and principal of Harri5 Manufactured Housing & Commercial Brokerage, said in an interview with CoStar News. The problem over the past two years has been the difficulty in getting financing as capitalization rates have moved up along with borrowing costs, said Harris, who was not involved in the Blackstone and RHP transactions.
There has been $2.4 billion in total sales volume of all mobile home parks nationally so far this year — on pace with last year’s volume, according to CoStar data. Neither of the past two years comes close to matching the annual high of $9.9 billion in 2021.
But while transactions have stalled, rent increases have not, Harris said.
Rents on pad sites for mobile homes are climbing. The most recent estimate shows a 6.2% growth rate, according to the Manufactured Housing Institute, a national industry trade group.
“So, we're getting closer to being able to meet seller expectations and making deals underwrite,” Harris said. “There's a lot of demand on the buy side and there's more money on the sidelines. So, buyers will become more aggressive to meet seller expectations.”
Sign of sales
Brookfield first started acquiring the mobile home parks it sold in early 2017, according to commercial mortgage-backed securities loan documents. In March of that year, the firm purchased a portfolio of 135 properties from NorthStar Realty Finance and RHP Properties with RHP retaining an approximately 5% ownership share.
A major portion of the portfolio was refinanced in two 2021 CMBS deals. Current CMBS documents show that properties are beginning to be released as collateral on the securitized loans — a sign that they have been sold.
This month, Freddie Mac loan documents showed it acquired newly originated loans on 21 of the properties previously securitized. A subsidiary of PGIM Real Estate originated the acquisition loans totaling $272.7 million to affiliates of RHP. The loans were issued to limited liability corporations tied to RHP in Farmington Hills and signed by Ross Partrich, the firm's CEO, the documents said.
The loans are being used to pay off CMBS debt, according to various county court records where the properties are located.
The 21 properties total 4,757 units, according to CoStar data. Together they show a 7.3% vacancy rate.
Since they were previously financed in 2021, the properties have climbed in appraised value by 21%, according to CMBS and Freddie Mac loan documents. The portfolio was valued at $388.8 million three years ago and was appraised at $472 million for the new Freddie Mac loans.
Even as RHP could figure into being among the largest mobile home park buyers this year, the firm will also be among the most active sellers.
Last month, Canada’s QuadReal Property Group paid $330 million to RHP for a U.S. mobile home portfolio in Texas, Florida and Utah.
Freddie Mac did not disclose any additional information beyond what was in the batch of loan documents.
From 2018-2023, Freddie Mac provided $6.7 billion in financing to more than 46,000 manufactured home properties, according to the firm’s markets plan for 2025-2027 released last month. For the years 2025-2027, Freddie Mac expects to provide $3.4 billion in financing.