Brookfield Sells $1.6B Of Manufactured Home Portfolio As Investor Interest Booms

Brookfield sold nearly 80 manufactured home properties to multiple buyers for $1.6B, seemingly indicating it could be exiting the portfolio of 160 manufactured home parks it started buying in 2017.

The Canadian investment giant sold about half the properties and is in discussions to dispose of another 80 comparable properties as prices per unit have grown this year, CoStar reported, citing a person familiar with the situation. 

One of the buyers is RHP Properties, the Farmington Hills, Michigan-based company that is the third-largest owner of manufactured home sites in the country.

Brookfield declined to comment, and RHP didn't respond to CoStar’s requests for information, but Freddie Mac loan documents show the deal could be one of the largest manufactured home portfolios purchased this year. Although the purchase price wasn't disclosed, the total loan value was about $273M.

The sale comes as private equity investment has flooded into the manufactured home sector and boosted rents, leading some legislators to consider limiting rent increases for the homes, which have long been a source of market-rate affordable housing. 

Rents on pad sites for mobile homes are growing at a rate of 6.2%, according to the most recent estimate from the Manufactured Housing Institute, a national trade group. But some manufactured housing communities, like one in Buena Vista Township, New Jersey, have experienced 40% lot rent increases over four years, state Assemblyman Dan Hutchison told Bisnow. 

Meanwhile, investors are paying twice as much for manufactured homes as they did last year, with the price per unit shooting from $64K in the fourth quarter of 2023 to $138K this quarter, according to CoStar data. 

Yet transaction volume this year totals about $2.4B, which is comparable to last year but down from 2021’s $9.9B. 

Transactions stalled because it was difficult to secure financing over the past two years as capitalization rates and borrowing costs both increased, Derek Harris, founder and principal of Harri5 Manufactured Housing & Commercial Brokerage, told CoStar.

But rent growth could spur more investment activity in the sector going forward. 

“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.”