The Atlanta Journal-Constitution
Mobile homes become billion-dollar business
Private-equity firms are investing heavily while rent goes up.
It’s not SMYRNA, TENN. — fancy. But in the exurbs of Nashville stands part of a billion-dollar real estate empire.
The Florence Commons community consists of about 300 mobile homes of varying vintages, mostly single-wide, many valued at less than $30,000 apiece, set 20 feet apart from one another. The occupants of some will tell you: The floors buckle. The ceilings crack. The doors don’t shut right. Their homes are sinking.
“OK — it’s a trailer park, not a fancy gated community,” said Jessica Boudreaux, 33, who lives there with her two daughters. “If people could, they’d live somewhere else.”
Yet Florence Commons, along with more than 200 other mobile home parks around the U.S., has produced hefty returns for Stock- bridge Capital, a $13 billion private-equity firm, and its major investors.
Their mobile home park company has produced tens of millions for investors in recent years and saw a return on investment of more than 30 percent between late 2016 and the end of 2017, according to documents.
Those ample returns arise in part from their willingness to boost the rents of the mobile home residents. As one investors report on the company put it approvingly: The “senior management team has a demonstrated track record of increasing home rental rates.”
It has received $1.3 billion in financing through govern- ment-sponsored lender Fannie Mae, which says mobile homes are “inherently affordable.” The money helped them buy existing mobile-home parks.
As large financial firms buy more and more U.S. homes, both conventional and mobile, the question of whether such investments benefit tenants or merely exploit them is a matter of dispute.
“They prey on people who can’t afford land, people who can’t move,” said David Barrett, 62, an exca- vation equipment operator who lives in Florence Commons. “They’re taking advantage of — I wouldn’t say poor people — but working peo- ple. Where do you think their profits come from?”
Yes Communities, the investors’ company that owns Flor- ence Commons, says it is help- ing to meet the nation’s need for affordable housing.
Much of the investors’ revenue comes from residents who, while they often own their homes, must pay rent for the home lot. At Florence Commons, rent has risen by four percent a year or more, residents said — and most have little choice but to pay up.
The residents at Florence Commons must pay in other ways, too. Rent checks that are six days late incur a 10 percent fee and a threat of quick eviction. If residents fail to cut the grass, the park managers threaten them with fees of $100 or more, resi- dents said.
The median income for families that live in mobile homes is about $30,000 a year. Adult residents of mobile homes also have lower levels of for- mal education, according to surveys.
“The owners just seem to want to get every dime from us,” Boudreaux said.
Officials with Stockbridge Capital, a firm led by Terry Fancher and Sol Raso that focuses on real estate invest- ments, released a statement: “Stockbridge is proud of its association with YES Communities, which has met the affordable housing needs of its residents nationwide for the past 11 years.”
Vanessa Jasinski, vice president of marketing for Yes Communities said that the rents at Florence Commons have risen at four percent a year on average over the last six years - slightly higher than the average mobile home lot rate in the area last year, according to figures from Datacomp, an industry analyst.
Jasinski also said that the rules — and fees — for lawn and parking violations are intended to create pleasant surroundings. No park residents were required to pay for grass-cutting last year, she said.
As for the damage caused by mobile homes settling, she said that “it is not uncommon for manufactured homes to settle and experience issues like these.”
Over the past three years, some of the biggest private-equity firms — Carlyle Group, Apollo Global Management and TPG Capital — have taken stakes in mobile home parks, according to a forthcoming report by the nonprofit groups Private Equity Stakeholder Project, MHAction and Americans for Financial Reform. The mobile home parks owned by private-equity firms have more than 100,000 home sites, according to the report.
“The firms made these investments seeking to double or triple their money in the space of a few years,” said Jim Baker, director of the Private Equity Stakeholder Project, an organization that has been critical of the private-equity industry. “That doesn’t lead to affordable housing.”