Article Courtesy of The
Daytona Beach News-Journal
By Clayton Park
Published December 1, 2020
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Two out-of-state investment companies have teamed up to acquire a pair of
55-and-older manufactured home communities in Port Orange and have put another
one, The Falls mobile home park in Ormond Beach, under contract.
The trio of deals are
expected to top $170 million.
Bob Miller, the CEO of Cleveland, Tennessee-based MHM
Communities, confirmed that his company and Glen Allen,
Virginia-based Capital Square 1031 are the new owners of the
Maplewood Estates and neighboring Treasure Isle Estates
communities on Spruce Creek Road.
"We're joint venture partners. I'm the operating partner,"
Miller said of the entity created to acquire the two Port
Orange communities for just under $53 million.
Miller confirmed that the joint venture also signed a
contract to buy The Falls at Ormond at 105 Clyde Morris
Blvd., but said he was barred by a nondisclosure agreement
from discussing details until the sale closes. |
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The community is between Hand Avenue and West Granada Boulevard and was
built in 1984, according to mhvillage.com, an independent web site that
lists homes for sale at mobile home parks.
The community is currently owned by the family that owns Jacobsen Homes, a
Safety Harbor-based manufacturer of modular homes. Many if not all the homes
listed for resale at The Falls were made by Jacobsen Homes.
Mobile home park may sell for over $120 million
Patricia Keough-Wilson, a board member for the statewide Federation of
Manufactured Home Owners of Florida, said she heard that The Falls is selling
for $128 million.
Frank Valenti, 72, president of the homeowners association at The Falls, said
his understanding is that the community is selling for more than $120 million,
but did not know the specific amount.
"I've heard rumors that the sale price could be anywhere in the $120s, but I
have no specific know of a number," he said. "I've also been told that the sale
is expected to close by mid-December."
A sale price of more than $120 million would be a new record for the most ever
paid for a single real estate property in Volusia County history.
The current record is the $96 million paid in July by Northwestern Mutual for
the Aberdeen at Ormond Beach 55-and-older manufactured home community less than
a mile down the street.
The 300-acre Aberdeen community has 533 home sites while 141-acre The Falls has
599.
Prior to July, the county's previous record for highest amount paid for a single
real estate property was the $64 million that Tennessee-based CBL & Associates
Properties paid in 2004 to acquire Volusia Mall in Daytona Beach.
The Maplewood Estates and the neighboring Treasure Isle Estates in Port Orange
were sold Sept. 17, according to county property records.
Maplewood Estates has 272 house lots, while Treasure Isle Estates has 150. The
combined size of the two communities is 77 acres.
The principal seller of Maplewood Estates and Treasure Isle Estates was Andy
Clark, owner and CEO of Port Orange-based All Aboard Properties. The sellers for
Maplewood Estates included his late father's trust, while the deal for Treasure
Isle Estates included $5 million paid separately to another local family that
owned the land, but not the community itself.
"Manufactured housing a hot commodity"
The real estate transactions are part of a growing national trend of
institutional investors acquiring 55-and-older manufactured home communities.
"Manufactured housing is no longer about mobility, but about affordability,"
according to a Feb. 7, 2020, article published by The Financial Times. "These
homes look pretty much like your typical ranch house but, depending on where you
might live, they might cost half the price. This makes manufactured housing a
hot commodity."
Bob Miller of MHM Communities said the trend of institutional investors
acquiring 55-and-older mobile home parks is "a consolidation of our industry
that's actually been going on for the past 20 years. (Before that) an awful lot
of these communities were owned by families.
"It's a natural progression. It infuses new capital into these communities
that's good for everyone."
Miller said his company and Capital Square see Daytona Beach, Ormond Beach and
Port Orange as "great markets with a strong retirement base."
He added that the two companies could acquire more 55-plus manufactured home
communities in the area, but said, "there are no others at this time that we can
discuss. You're going to be looking for synergies (by owning multiple
communities in the same area)."
Miller said MHM Communities and Capital Square acquire 55-plus manufactured home
communities as long-term investments. They also look to increase the value of
their properties by making improvements to enhance the quality of life for
residents.
"Our strategy is to upgrade, renovate and add amenities that are more desirable
today and that can improve the social dynamic in the communities," he said. "We
get people asking us to add amenities such as pickleball (courts) and dog
parks."
A recent online search for manufactured homes for resale in Port Orange produced
listings ranging in price from $9,900 to as high as $225,000. The website
mhvillage.com listed 35 homes for resale in The Falls. The listings ranged in
price from $17,000 to $79,900.
Rental fees to rise
The price of manufactured homes does not include the monthly rental fees charged
at mobile home parks for the home sites.
The current rental rate for home sites at Maplewood Estates is $547 a month,
said Sweeney.
"The new owners said it's going to go up to $600 a month on the first of the
year, but that will include lawn maintenance, which was a separate cost for
residents before that was left up to each homeowner to arrange," he said. "In
April (2021), they also plan on going up another $20 (a month) for real estate
taxes which we didn't get charged before."
Valenti guesses the current average rental rate at The Falls at Ormond to be
around $850 to $900 a month, which includes lawn maintenance service. He did not
know how much rental rates will go up, if at all, under the new owners.
"Our rents would be scheduled to change on Sept. 1, 2021, whether it be the
current owners if they didn't sell or the soon-to-be new owners" Valenti said.
"We will negotiate with management prior to that date." he said.
Miller recently met with Maplewood Estates and Treasure Isle Estates residents.
He told them some of the improvements planned for the communities. Both were
built in the mid-1970s.
"Everybody left happy. We all clapped," said Sandra Wolf, treasurer of the
Maplewood Estates Home Owners Association. "I like them. They've done what
they've said so far. I think they're going to be good."
Maplewood Estates had only 16 vacant house lots as of the end of October,
according to Pat Sweeney, HOA president. Treasure Isle Estates had "three or
four" vacancies at the time of its sale, according to Andy Clark.
Capital Square's website already lists the two Port Orange communities as a
single property under the Maplewood Estates name. It describes it as a
"riverfront community" with 412 home sites that are 95% occupied.
"Capital Square intends to make $3.3 million of strategic improvements," a video
on the company's website states. The improvements are "significantly enhancing
the quality as well as increasing occupancy, rents, and, ultimately, property
value."
Capital Square recently announced a private placement offering to investors
called CS1031 Maplewood Estates MHC, DST. The company seeks to raise $38.6
million in equity from accredited investors with a minimum investment of
$50,000.
"(Maplewood Estates) is Capital Square's third acquisition of a 55+, four- and
five-star manufactured housing community in a coastal market of Florida," said
Louis Rogers, CEO of Capital Square, in the news release. "These are some of the
most desirable assets in the country, highly sought after by institutional
investors."
Clark said "Capital Square has the wherewithal to take (Maplewood Estates and
Treasure Isle Estates) to the next level. I wholeheartedly agree with their
plans for the (mobile home) parks. If I kept them, I would have wanted to
eventually make those improvements. They're just able to do them faster than I
could."
Sweeney said the so-called "river" is actually an unnamed canal that feeds into
Spruce Creek and Rose Bay.
"Part of the park is waterfront, it's true," said Sweeney. "The new owners plan
on utilizing some of the vacant lots to add a dog park and different activities
(for residents)," he said, "They also plan on remodeling the clubhouse including
the kitchen. Every one of the homes (at Maplewood Estates) will have brick
pavers installed to replace the concrete driveways at no cost to residents."
"I think in the end when we see all the changes that they (the new owners) are
anticipating things will be better," Sweeney said.
"The new owners plan on having a first-right-of-refusal on your home," he added.
"They want to be able to counter offer (when residents get a serious offer to
sell to someone else) so they can turn around and either upgrade the house by
doing major repairs or replace it all together."
Miller acknowledged it is normal for residents of 55-and-older communities that
have changed owners to be concerned about steep rent increases.
That isn't what MHM Communities and Capital Square do, he said.
"We take a very slow and stable approach to what we call our legacy, or
existing, residents," Miller said. "If it takes six to 10 years to get up to
market rates, that's OK.
"These communities have a natural turnover rate that allows us to bring in new
residents who can start at market rate rents without our having to put (sudden
big rent increases) on the backs of existing residents," he said. "You have to
keep rent increases (for existing residents) very gradual and easy.
"We'll also acquire older homes that are dragging down the community and replace
them with new ones that can bring the value of other existing homes up. What's
unhealthy is when nobody reinvests in the community and home values go down to
where residents can't sell their homes because they aren't worth much."
Residents mixed on sale
Sweeney, 67, has been a resident at Maplewood Estates the past 20 years. He
moved there in his late 40s to live with his elderly mother who is now deceased.
"Hopefully I'll live the rest of my life here," he said.
"Andy's Dad was a good owner. He ran the park with a stern hand, but if you
followed the rules, he didn't bother you," Sweeney said of the late Douglas
Clark who died in a plane crash in 2009.
Douglas Clark and a then-business partner developed Maplewood Estates in the
mid-1970s. When the partnership broke up, the senior Clark and his son Andy
wound up becoming sole owners.
Andy Clark separately bought Treasure Isle Estates in 2007. The community was
built around the same time as Maplewood Estates.
Sweeney praised Andy Clark as "a good owner who ran Maplewood Estates with his
heart, not his wallet. There are always constant complainers, but now those
(Maplewood Estates) residents are wishing Andy was still here."
"It's nice that they (MHM Communities and Capital Square) do the upgrades, but a
lot of them figure (55-and-older mobile home parks) to be cash cows," said
Sweeney. "The problem (for residents) on a fixed income, how much can you take
from us?"
Frank Valenti of The Falls HOA sounded a more hopeful note.
"Everything Bob Miller has said so far has been promising in terms of what he
wants to do with the park. His plans seem like they will improve the amenities
of the park and also improve the quality of life of the residents," he said.
"What makes the development as good as it is, though, is the people. We have a
great group of residents who are there for each other and help each other when
needed. What more can you ask?"
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