Stockbridge Amasses Manufactured Homes

By Jon Peterson

Working in conjunction with a Denver-based operating partner, San Francisco’s Stockbridge Capital Group has assembled a $1 billion manufactured-housing portfolio with properties across the United States.

Purchasing on behalf of the Stockbridge Real Estate Fund III, Stockbridge has acquired more than 10,000 mobile homes using $900 million in equity raised in 2008.

Two of the largest investors in the fund are Pennsylvania Public School Employees’ Retirement System and Teacher Retirement System of Texas, each of which has made a $200 million investment. The commingled fund has been marketed as an opportunity fund. The real estate manager hopes to achieve leveraged returns in the high teens.

“We view this as a pretty sizeable portfolio, and we hope to continue investing in this property type going forward,” said Jim Ratner, a managing director for Stockbridge.

The portfolio has been created along with Denver-based YES! Communities.

This month, the investment manager completed its latest acquisition of manufactured housing with the purchase of 42 communities totaling more than 10,500 homes. The homes are located in Iowa, Illinois, North Carolina, North Dakota, Nebraska, Oklahoma and South Carolina. The seller was Denver-based American Residential Communities LLC. The parties did not release a purchase price.

Stockbridge and YES! currently own no assets in California, though not for lack of trying. “We would like to own properties in California, but we think the assets here are expensive. There also is the fact that we focus on buying homes in all-age communities. Many of the properties in California are age-restricted, which we are not interested in,” Ratner said.

Stockbridge is the majority owner of the assets that are currently held by YES! and Strockbridge together.

YES! owns and operates 117 communities in 16 states around the country with more than 30,000 home sites. The portfolio has large concentrations in Texas, Tennessee, Florida, North Carolina and South Carolina. It is not clear what percentage of these homes that Stockbridge owns, and Ratner declined to be specific. Yes! declined comment for this story.

According to a document from Pennsylvania Public School, Stockbridge had initially targeted a capital raise of $2 billion to $3 billion for the fund.

“This is very affordable housing that is a need for many families across the country. The communities that we invest in offer alternatives for families. This includes that within the same community we can offer the option to buy or rent a home. We also provide financing,” he said.

Manufactured housing has emerged as an unlikely favorite among institutional investors, including Hometown America. The Chicago-based company is majority owned by the Washington State Investment Board. Hometown America owns 120 communities in 20 states, according to its Web site. Stockbridge classifies manufactured-housing investment as a value-add or opportunistic venture.

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