A senior official with a multi-billion-dollar firm that already had ties to manufactured housing but was pondering more asked a variation on that question. That professional was impressed with the value proposition of manufactured housing.
Indeed, the facts support that senior corporate official’s reasons for being impressed. Publicly traded firms hit that chord time and again in their investor presentations. But that only begs the question. What explains the industry’s underperformance?
The Carlyle Group (NASDAQ:CG) is a well-known private equity firm. They have been working steadily for several years to increase their footprint in manufactured home communities, often in larger properties.
They have not been without controversy. The Warren Buffett dark money funded Tides Center in turn funds MHAction. MHAction is part of a coalition of activist groups that have pointed the harsh finger of blame on Carlyle and others in private equity for allegedly predatory tactics.
Carlyle’s recent press release, some other CG related mainstream news, a report from Berkeley and other comments will be pulled together for tonight’s featured focus. For newcomers, that follows our left-right market-moving headlines, the graphic snapshot of the markets at the closing bell today, plus some thought provoking quotes.
Quotes That Shed Light – American Social, Industry, National Issues…
Headlines from left-of-center CNN Business
- A site for women is in revolt
- The inside story of the toxic workplace culture at Refinery29
- Stocks post their worst day since the big coronavirus selloff in March
- Wall Street’s party is over. Coronavirus fears are back
- Even bankrupt stocks soared in the latest market rally
- Twitter deletes over 170,000 accounts, some of which tried to spin Covid-19 in China’s favor
- Are you OK with being tracked at work?
- Another 1.5 million Americans filed for unemployment benefits last week
- Nike joins the companies making Juneteenth an annual paid holiday
- Walmart ends practice of locking up black hair care products sold at its stores
- Volkswagen made a racist ad. Here’s why no one got fired
- PlayStation 5: All the exclusive games that were just announced
- A buzzy social club for women is now in turmoil
- Right-wing media says Antifa militants have seized part of Seattle. Local authorities say otherwise
- CLARK, NEW JERSEY – APRIL 27: Clark resident Jen Valencia shops for a customer as she supplements her income working for Instacart at Acme Market on April 27, 2020 in Clark, New Jersey. Instacart has experienced a massive surge in customer demand and employment recently due to lockdowns and other restrictions caused by COVID-19.
- Instacart now valued at nearly $14 billion after ‘unprecedented surge’ in demand
- Japan fast retailing
- Japan’s richest person: The US is broken
- SAN DIEGO, CA, November 18, 2015: Crossfit Inc. CEO Greg Glassman speaks on supporting Senate Bill SB203 at Fathom Crossfit in Barrio Logan on Wednesday in San Diego, California.
- CrossFit founder: I don’t mourn George Floyd
- MARKETS
- DIVERSITY
- transsexual life munroe bergdorf orig_00003103.jpg
- L’Oreal dropped her for commenting on racism. Now it wants her back
- Ben & Jerry’s statement on white supremacy is amazing
- Reddit’s board replaced Alexis Ohanian with Michael Seibel
- Black Lives Matter makes its mark on map apps
- Hear stunning question investor asked this black entrepreneur
- AIRBNB
- CEO, Co-Founder – Airbnb Brian Chesky attends The Cannes Lions 2016 on June 20, 2016 in Cannes, France.
- Airbnb CEO: ‘We could have done so much more’ on race
- People are booking summer trips on Airbnb again
- Pandemic may force Airbnb hosts to sell properties
- Airbnb is laying off 25% of its employees
- Airbnb rolls out new cleaning and vacancy rules
Headlines from right-of-center Fox Business
- PERSONAL FINANCE
- US household net worth falls by trillions of dollars in historic decline
- New data gives a glimpse into the early effects of the pandemic on American households.
- US economy won’t get back to ‘normal’ anytime in the near future: John Layfield
- MARKETS
- Dow tanks 1,861 points in worst session since March pandemic selloff
- Elon Musk can’t help but laugh at Tesla’s sky-high stock
- POLITICS
- Chicago mayor considers property tax hikes as residents fear mass exodus
- Mayor Lightfoot after riots: ‘I haven’t seen s–t like this before’
- ECONOMY
- Economic growth will surge to 20% in 3rd, 4th quarters, Kudlow tells Varney
- OPINION
- The USPS will not be saved with more money
- ROLL OF THE DICE
- MONEY
- Carl Icahn wants to demolish Trump’s former casino but timing is unclear
- TO HISTORY’S SCRAP HEAP
- NFL
- Panthers’ statue scrapped for fear of protests will never return
- ‘ONLY CHANCE TO SURVIVE’
- LIFESTYLE
- Farm owner sues governor for extending coronavirus lockdown
- MUST HAVE
- RETAIL
- Under Armour’s new Sportsmask reportedly sold out in less than an hour
- HAIL MARY
- NFL
- NFL commits $250M to combat systemic racism, injustice
- TAKE A SEAT!
- TRAVEL
- New Jersey shore town makes a big step towards normal after coronavirus
- ‘CALL 911’
- LAW ENFORCEMENT
- Seattle PD warns business owners of extortion in ‘autonomous zone’
- THE BIG EMPTY
- REAL ESTATE
- NYC’s new lease signings nosedive as residents clear out
- MONEY WHERE YOUR MOUTH IS
- LAW ENFORCEMENT
- How US police spending compares to public school spending
- 401(K) WITHDRAWALS?
- PERSONAL FINANCE
- Americans’ biggest misconceptions about the CARES Act
- DAYLIGHT ROBBERY?
- TESLA
- Tesla reportedly canceling solar roof orders for some paid customers
- BOTS CHOPPED
- Twitter purges 32,000 fake accounts with ties to China, Russia Turkey,
- ‘IMMINENT HAZARD’ TO HEALTH?
- SPORTS
- Speedway that defied Governor cancels races after temporary restraining order
- LONELY AT THE TOP
- MONEY
- Are you in the top 1%? Here’s how much money you need to earn in US
- DRIBBLING TO COURT?
- SPORTS
- NBA rookie accused of collecting luxury items in exchange for college selection
- HEALTH
- Doc who treated ex-senator’s cancer takes unorthodox approach to virus
- LIFESTYLE
- Popular country act changes name as nationwide protests spark deep reflection
- TIKTOK
- TikTok parent ByteDance has tripled its U.S. employees in past year
- LIFESTYLE
- Lawmakers back new helicopter safety regulations after Kobe Bryant crash
- MEDIA
- George Floyd protests lead A&E to cancel ‘Live PD’ after 4 seasons
- Google to ban certain housing ads based on age, gender
- TECHNOLOGY
- Microsoft joins Amazon, IBM in halting police use of facial recognition technology
- LIFESTYLE
- Taco Bell, KFC owner sues GrubHub over canceled delivery deal: Report
- MARKETS
- US economy won’t get back to ‘normal’ anytime in the near future: John Layfield
- FORD
- Ford Foundation borrows $1B to help small charities weather coronavirus slump
- POLITICS
- Biden calls on Facebook to fact-check political ads
- LIFESTYLE
- First experimental COVID-19 vaccine in US to launch study next month
- TRAVEL
- 45% of Americans plan to buy travel insurance for future trips: Survey
- UNITED AIRLINES
- United Airlines to require passengers to take health self-assessment before boarding
- LIFESTYLE
- Garth Brooks to host concert event at 300 drive-in theaters in North America
- LIFESTYLE
- Anytime Fitness company apologizes for ‘I can’t breathe’ workout
- POLITICS
- Trump to resume in-person fundraisers at big-dollar dinner in Dallas
- Bill Gates-backed coronavirus home testing program back online after FDA suspension
- MONEY
- Bill Gates-backed coronavirus home testing program back online after FDA suspension
- FOOD & DRINKS
- Outback Steakhouse same-store sales recovering as dining rooms partially reopen
- SPORTS
- NASCAR reportedly removing language about national anthem, flag demeanor from handouts
9 Market Indicator Closing Summaries – Yahoo Finance Closing Tickers on MHProNews…
Featured Focus –
Where Business, Politics and Investing Can Meet
When you do the math on the purchase of The Carlyle Groups (CG) on a per site basis, it is entirely possible that the firm could have developed brand new communities, with all new inventory, for less.
Investors would argue – with data to back it up – that when they buy an existing community, they are routinely already cash flowing. They aren’t just buying a property. They are buying a revenue stream.
While true, that ignores the point that new multifamily developments are being added by the thousands of units every year. By contrast, very few new manufactured home communities are being developed. There are genuine concerns that the manufactured home community market could overhead and then destabilize, a point that even Impact Community’s Frank Rolfe raised, though he dismissed that concern.
When viewed through the lens – an important lens – of residents, ponder the following.
Or consider what the Manufactured Housing Institute’s former president had to say.
More specifically, Bob Van Cleef has had this to say.
Van Cleef’s full commentary is at this link. But let’s draw in this pull quote for now.
With those background points, let’s look at what Carlyle’s press release stated said via Connect Media.
Carlyle Claims Four Mobile Home Parks in Mesa for $230M
June 8, 2020
Washington, D.C.-based The Carlyle Group acquired four Mesa mobile home parks for $230 million. The properties were built mainly in the 1960s and 1970s, and encompass more than 1,583 mobile and manufactured home lots spread across the four parks on 187 acres.
Carlyle’s portfolio includes a handful of other mobile home parks in metro Phoenix, as well as dozens of others across the U.S.
Delaware CPI LLC, a Carlyle affiliated entity, purchased the following mobile home parks:
- Citrus Gardens at 4065 E. University Dr. for $80 million.
- El Mirage at 305 S. Val Vista Dr. for $60 million.
- Mesa Shadows at 317 S. Higley Rd. for $46 million.
- Aspenwood at 245 S. 56th St. for $44 million.
AZ Big Media added some additional insights for each property.
Aspenwood Mobile Home Park
- $44 million
- Built in 1979
- 269 stalls
- 29.56 acres.
- $163,568 per unit
Mesa Shadows Mobile Home Park
- $46 million
- Built in 1979
- 306 stalls
- 38.44 acres
- $150,326 per unit
El Mirage Mobile Home Park
- $60 million
- Built in 1971
- 433 stalls
- 54.7 acres
- $138,568 per unit
Citrus Gardens Mobile Home Park
- $80 million
- Built in 1969
- 575 stalls
- 64.24 acres
- $139,130 per unit
Here is what Berkley shared on the general issues involving the consolidation of the community sector.
Mobile Home Community Sparks Rent Control Conversation
BY PRB ON JULY 19, 2019
By Guy Rotstein
The Plaza del Rey mobile home park has historically provided cost-effective housing for the Sunnyvale retirement community. In close proximity to the newly constructed Apple and Google headquarters, the park is situated on highly sought-after real estate. Three years ago, a massive private equity firm, The Carlyle Group, purchased the lot for $151.1 million and, in its first year, raised the costs of space-rent by 7.5%. In response to the largest space-rent hike in the park’s history, residents have begun raising money to fund a campaign toward instituting rent control in the city of Sunnyvale. The struggle between The Carlyle Group and residents of Plaza del Rey raises the question of whether rent control is really the answer to Sunnyvale’s housing affordability crisis.
The Carlyle Group’s motives for raising space-rent are twofold: to encourage short term profitability and, more importantly, to raise the resale value of the lot in the future. However, residents allege that The Carlyle Group has a third and more nefarious incentive for increasing the yearly cost to occupy the park’s space. The increase in space-rent, the residents argue, is a ploy by the private equity firm to put pressure on mobile home owners to sell for cheap. This strategy is predicated on the fact that mobile home owners do not actually own the land their house is on. Essentially tenants, residents of these parks are obligated to pay a monthly fee as rent for the space that their home occupies. As the cost of living becomes increasingly more difficult to bankroll, owners are incentivized to cut their losses, sell cheap, and move elsewhere. This opens the door for firms such as The Carlyle Group to purchase their homes for below market value. After driving out all the residents, the park owners are free to bulldoze the houses, redevelop the lot for permanent homes, and sell the property at huge profits.
Somewhat ironically, many mobile home owners have a tough time relocating. The cost of disassembling, transporting, and reassembling a mobile home can cost upwards of tens of thousands of dollars which effectively dissuades many owners from moving. Because of this, mobile home owners are often precariously tied down to their property and as a result, financially trapped. This makes mobile home owners more sensitive to rent hikes when compared to the conventional apartment tenant. A rent control policy would have the effect of capping rent increases at a more sustainable level, giving struggling Plaza del Rey residents some breathing room. Due to the recent influx of tech giants such as Apple, Google, and Facebook into the Sunnyvale-Cupertino area, many consider rent control to be a rational response to rapidly increasing home values.
However, opponents to rent control claim that the policy will actually exacerbate the housing affordability crisis instead of eliminating it. Although rent control may appear enticing in the short term, critics argue that it creates long-term threats for housing markets. For example, rent ceilings can decrease a landowner’s capacity to repair or refurbish their property. By reducing the profits generated by rent, landowners have fewer resources to improve the physical condition of their property.
While this claim is valid, the risks of rent control are not as pronounced when applied to mobile home owners. Although rent ceilings may discourage landowners from repairing or refurbishing their property, the residents of Playa del Rey are technically owners of their homes and are not entitled to any maintenance by The Carlyle Group.
Still, mobile homes do not completely absolve the negative effects of rent control on the local housing market. Rent ceilings can also discourage landowners from developing new property by reducing the economic incentive to do so. And, if fewer homeowners built by developers, a housing shortage can develop, forcing people to seek residence elsewhere. In theory, rent control can actually compound the problem that it is trying to address.
The battle rages on in Plaza del Rey, pitting struggling mobile home owners against the colossal private equity firm, The Carlyle Group. Rent control would tremendously aid residents of the park in continuing to reside in the city of Sunnyvale. However, such a policy ought to be carefully implemented in order to deter its drawbacks. While well intentioned, a blanket rent control bill could have dangerous implications not only for landowners but also for the tenants and mobile homeowners it is trying to protect.”
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Consider the additional, related report insights that follow.
Manufactured Housing Industry Production Drops During COVID19 Closures
Related and Recent Reports:
“Trailer Sales” Surge, Per Mainstream Media – Takeaways for Manufactured Home Independents?
Manufactured Housing Industry Investments Connected Closing Equities Tickers
Some of these firms invest in manufactured housing, or are otherwise connected, but may do other forms of investing or business activities too.
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- NOTE: The chart below includes the Canadian stock, ECN, which purchased Triad Financial Services, a manufactured home industry lender
- NOTE: Drew changed its name and trading symbol at the end of 2016 to Lippert (LCII).
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Spring 2020…
Berkshire Hathaway is the parent company to Clayton Homes, 21st Mortgage, Vanderbilt Mortgage and other factory built housing industry suppliers.
· LCI Industries, Patrick, UFPI, and LP each are suppliers to the manufactured housing industry, among others.
· AMG, CG, and TAVFX have investments in manufactured housing related businesses. For insights from third-parties and clients about our publisher, click here.
Enjoy these ‘blast from the past’ comments.
MHProNews. MHProNews – previously a.k.a. MHMSM.com – has celebrated our tenth anniversary and is in year 11 of publishing.
Learn more about our evolutionary journey as the industry’s leading trade media, at the report linked below.
https://www.manufacturedhomepronews.com/celebrating-10-years-of-goal-and-solution-oriented-manufactured-home-industry-innovation-information-and-inspiration-for-industry-professionals/
· For expert manufactured housing business development or other professional services, click here.
· To sign up in seconds for our industry leading emailed headline news updates, click here.
Disclosure. MHProNews holds no positions in the stocks in this report.
That’s a wrap on this installment of “News Through the Lens of Manufactured Homes and Factory-Built Housing” © where “We Provide, You Decide.” © (Affordable housing, manufactured homes, stock, investing, data, metrics, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHLivingNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
http://latonykovach.com Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
AEI Flash Housing Market Indicator
