Singapore Investors Turn Sights on Yes! Communities for $2B+

yes_communities_logoMHProNews has learned from The Wall Street Journal that Singapore’s sovereign wealth fund, GIC, is in talks to acquire Denver-based YES! Communities from private-equity firm Stockbridge Capital Group for over $2 billion. Spurred by investors who are seeking to find sources of higher yield in a world of low interest rates, GIC would obtain an initial yield of just over six percent, while many top market trophy properties currently return less than five percent. YES! owns or operates 178 manufactured home communities (MHCs) in 17 states.

In recent similar transactions, as MHProNews reported here March 16, 2016, Sun Communities, Inc. acquired the 103 manufactured home and recreational vehicle sites of Carefree Communities, Inc. from Centerbridge Capital Partners for $1.68 billion, while NorthStar Realty Finance Corp. agreed to sell its 135 MHCs to a property fund managed by Brookfield Asset Management Inc. for $2.04 billion, as MHProNews reported here.

The demand for acquiring MHCs has increased as investors realize there is a limited supply—local governments are reluctant to license more MHCs because of the stigma that is still attached to MH communities, and also because they do not produce nearly as much in property tax as other types of real estate development. Additionally, costs are minimal in operating an MHC, and residents tend to stay much longer than, say, tenants in an apartment building.

Well-capitalized private-equity and publicly traded REITs are eager to acquire these properties, invest capital on cosmetic or deferred maintenance items, and realize improved performance [of] the properties typically within the first two years of ownership,” Paul Adornato, an analyst with BMO Capital Markets, said in an email.

In late 2014 GIC acquired IndCor Properties from Blackstone Group LP for $8.1 billion. IndCor is one of the largest owners of industrial space in the nation.

Similarly, the Kwee family of Singapore is helping finance luxury condominiums next to New York’s Museum of Modern Art. ##

(Image credit: YES! Communities)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

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