On May 28, 2019, Senator Elizabeth Warren (MA-D) addressed Leon Black, Chairman of Apollo Global Management about concerns raised by consumers about purported predatory practices in the manufactured home land-lease community sector. As detail minded MHProNews and MHLivingNews readers may recall, Apollo’s Inspire Community was specifically named by Senator Warren. Inspire Communities is listed on the Manufactured Housing Institute (MHI) website as a member company.
Leon Black has since that letter from Senator Warren come under scrutiny for what the New York Post and others in media have said are clear ties to convicted sex-offender Jeffery Epstein. Authorities claim that Epstein committed suicide under mysterious circumstances while in federal custody last year. Epstein was facing new federal sex-trafficking charges, points Apollo Global Management (APO) cited in a securities filing.
While Epstein is dead, Ghislaine Maxwell is now in federal custody. Numerous high profile individuals are under the spotlight. Black is one of them.
The October 21, 2020 8K filing by Apollo with the Securities and Exchange Commission (SEC) said in part that: Mr. Black informed the Board that, “in light of continued attention, it is in the best interests of Apollo, our employees, our shareholders and our LPs for there to be an independent review. Proceeding in this manner is the best way to assure all of our stakeholders that they have all of the relevant facts, and I look forward to cooperating fully.”
Note that Apollo (APO) is one of a basket of publicly traded firms with connections to manufactured housing covered in our evening market report. Their stock snapshot at the closing bell for 11.11.2020 are shown below.
“The move [by Apollo] came about a week after Black admitted he paid Epstein millions of dollars annually for various professional services from 2012 to 2017 — even though the pervert money manager had pleaded guilty to soliciting a teenage girl for prostitution in Florida in 2008,” said the New York Post.
Fox Business said “Black owns roughly 23% of Apollo Management Group, according to a Forbes profile on the financier. He also chairs the New York Museum of Modern Art and serves as a member of the Council on Foreign Relations [CFR].” The CFR is often cited as a group where globalist-minded politicos and financiers meet to discuss issues related to matters that at times becomes public policy.
For example, it was at the CFR that former Obama-era VP Joe Biden joked about getting Ukraine to fire a prosecutor investigating Burisma, a company that his son Hunter Biden was making millions with.
Left-of-center Bloomberg described Black as one of the most feared men in private equity.
News18 said, “Black said earlier this month that he regretted payments to Epstein of between $50 million and $75 million over the last decade for what he called “professional services.” He was responding to a story in the New York Times, which revealed the payments.” That came just days before the 2020 general election, on October 30, 2020.
Additional Information, MHProNews Analysis and Commentary
Senator Warren’s May 2019 letter to Black said in part, “Twenty years ago, small, local, “mom and pop” businesses were the primary owners of MHCs.7 In recent decades, however, ownership patterns have shifted. Today, “there is a growing trend among some of the largest private equity firms and institutional investors to acquire assets in the manufactured housing sector.”8 The largest 50 MHC owners own a cumulative 680,000 home sites, which represents a “26% increase between 2016 and 2018.“9”
While some of that data from Warren could be massaged for accuracy, the general points are supported by the sources Senator Warren cited.
“Investment companies are attracted to MHCs, in large part, because MHCs are “stable source[s] of revenue, including during economic downturns.” 10 This stability stems from residents’ lack of economic mobility. Manufactured homes can be difficult to resell, and the low-income homeowners who reside in manufactured homes often do not have access to more affordable housing options. 11 As a result, investment firms can expect a consistent revenue from the manufactured home owners renting land in MHCs.
MHC residents’ lack of economic mobility also makes them vulnerable to exploitation- and investment firms often engage in predatory management practices that boost profits at the expense of manufactured home owners. Investment firms exploit residents’ “limited mobility” by “dramatically increase[ing] rents to quickly increase profits.” 12 According to a recent report in the Des Moines Register, residents in two Iowa communities learned that their lot rents would increase 69% and 58% after a private firm purchased their MHC. 13 Though investment firms claim to use rent increases to pay for maintenance and community improvements, residents report drastically different experiences. According to one California MHC resident, her community’s private equity owner [C]laims that they’ve spent over $100,000 on capital improvements in our community, and justifies rent increases because of that. But we don’t see what improvements they’ve made … What we do see is that they’ve promised their investors a return of 7-8%. The same amount our rents went up. 14“
Pivoting back to the Black-Epstein spotlight, News18 reported that “A group representing U.S. pension funds says the head of an Apollo Global Management Inc committee overseeing the investigation of CEO Leon Black’s ties to late financier and convicted sex offender Jeffrey Epstein is not independent. The group told Reuters that the chairman of the committee, Michael Ducey, was not independent because of his previous dealings with the buyout firm.”
In an indirectly related item, the Manufactured Housing Institute (MHI) said in an email dated November 9, 2020, the Arlington, VA based trade group said in part: “MHI is the national trade association that represents every segment of the factory-built housing industry in Washington. Our job is to tout manufactured housing to policymakers across the political spectrum and our effective advocacy efforts ensure that the manufactured housing industry’s policy priorities are addressed no matter which political party is in power…”
In a November 7, 2020 email, MHI said that their member Don “Westphal described the critical steps that have to be taken before approaching local governments with a zoning or land-use request. For example, he stressed the importance of conducting in-depth research, such as knowing the jurisdiction’s zoning map, ordinances and master plan and conducting a market study of the area.”
Juxtaposing Westphal and others involved with MHI can get significant fees for putting together plans and presentations that aim to convince a local board to ‘okay’ a given new manufactured home community development or green-light an expansion of an existing one. MHI member Datacomp has made it clear that more communities closing than opening.
MHI member Frank Rolfe has made the pitch that NO new communities should be developed. Who that pitch benefits and who it harms is explored in the report linked below.
One must keep in mind that Congressional Representative Maxine Waters is on record pushing for the full and proper implementation of the Manufactured Housing Improvement Act (MHIA) of 2000 (sometimes called the 2000 reform law).
Several of the problematic patterns of behavior that are often tied to MHI members can be connected with Warren Buffett’s baneful ‘Castle and Moat’ and related concepts.
Why does that matter? How do those different facts intersect?
Because what the information above and linked reflects are examples of how the market is arguably being manipulated by larger companies that often have clear ties to MHI. For instance, if the MHIA 2000 was being properly implemented, then the ‘approval’ process for new communities would be more straightforward, because it is a matter of federal law. There might be a need to comply with this or that on the local level, but the MHIA was designed in part precisely to break down the NIMBY barriers that arguably make MHI member consultants like Westphal more money.
There is a tangled web of relationships found in troubling mainstream news reports that MHProNews has been steadily unpacking in recent years that often lead to MHI involvement.
There is more to know on this related topic.
MHProNews will continue to follow developments and periodically report as warranted. Stay tuned, because there is already more known.
There is always more to read and more to come. Stay tuned with the runaway number one source for authentic “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, 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 MHProNews.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.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
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