Billion-dollar empire made entirely of mobile-homes

Residents scrape by as parks generate profits for private-equity firms

SMYRNA, Tenn. — It’s not 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.

Yet Florence Commons, along with more than 200 other mobile home parks around the U.S., has produced hefty returns for Stockbridge Capital, a $13 billion privateequity 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 government-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.

Yes Communities, the investors’ company that owns Florence Commons, says it is helping 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 4 percent a year or more, residents said — and most have little choice but to pay up: For practical reasons, they can’t move. The dwellings are called “mobile,” but they are costly to transport and sometimes owners are contractually forbidden to move them.

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, residents said. An aggressive towing service has forced some residents to pay $200 or more to recover their cars.

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 formal education, according to surveys. About two thirds lack education beyond high school.

Officials with Stockbridge Capital, a firm led by Terry Fancher and Sol Raso that focuses on real estate investments, 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.”