Now they are setting their sights on becoming even bigger. And perhaps, going public.
It all started just after the 2008-09 financial crisis, when Freestone’s founder Gary Furukawa purchased three manufactured home communities.
After operating them for a few years the value of his investment was clear.
The case study by Freestone Capital Management found that benefits of owning manufactured home communities include the increasing demand for low-income housing, and relatively low capital expense, among other factors.
Per their website, Freestone is known for diversified endowment-type portfolios – and they work with both wealth management and investing management for their 950 clients.
Investing in the manufactured home community sector on behalf of those clients made sense to them – and they’re preparing to continue to reap the benefits of this growing and much-needed industry.
According to Barrons, the firm has already invested $300 million in manufactured housing – specifically in communities that have around a 70 percent occupancy.
Right now, the report says that those investments are generating about a 7 percent yield. But as occupancy grows – their obvious goal – the return on those investments should rise even more over time.
“Our business case is to take [occupancy] to 95%, so the yield goes up a lot,” says Erik Morgan, senior advisor of the firm. “And we’re large enough to maybe take that private investment and make it public.”
“Our focus is typically on trying to find great businesses trading at attractive prices and owning those businesses for a long time,” Morgan says.
Morgan, who was named Barron’s Best Advisor in Washington, started off his career investing in those same sorts of stocks like Amazon – which ended up being a good investment in the long-haul – but he decided that wasn’t the direction in which he wanted to see his career go.
These days, working with Gary Furukawa and 29 other investors at Freestone, Morgan says they are looking to invest in cheap stocks, rather than the hot stocks that pose a higher risk to them and their clients.
Amazon remains a strong long-term opportunity, especially given the signals from their recent bid for acquisition of Whole Foods Market.
But Morgan believes that more traditional investments, like real estate – specifically the manufactured home community sector – are and should be their current focus.
With $300 million already invested in manufactured home land-lease communities, Gary Furukawa, Erik Morgan, and their 29 associates believe they are in the right market.
Affordable housing is something that will always be in demand. Manufactured homes appeal to more than just low-income workers, as even millionaires and celebrities own manufactured homes.
It’s clear they’re confident in their investment in manufactured home communities – and why wouldn’t they be? # # (News, analysis.)
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