Brookfield Sells Manufactured Housing Communities for $325M

Brookfield Asset Management’s property fund manufactured a deal to offload a housing portfolio to an unnamed buyer.

Brookfield’s property fund sold 19 manufactured housing communities for $325 million, Bloomberg reported. The mobile-home parks stretch across seven states and include more than 3,100 sites. The deal works out to more than $102,000 per site; each one is rented to a mobile home owner.

The gross internal rate of return on the investment was roughly 24 percent, according to a Brookfield spokesperson. The deal allows the fund to return capital to its investors, Brookfield Real Estate managing partner Swarup Katari said.

The asset manager snapped up $2 billion worth of manufactured housing sites in 2017. Its investment swelled to $3.2 billion in 2019 and $4.2 billion in 2020. The next year it inked a $2.2 billion refinancing of more than 29,000 sites, as well as several hundred RV sites across 13 states.

The property fund started pivoting away from the sector last summer. In August, Brookfield sold 23 manufactured housing communities. Brookfield held 170 of them prior to that sale.

Commenting on the sale at the time, Katari noted the strength of the sector and noted that manufactured housing was becoming a viable alternative in the housing market. As of the spring, mobile homes — which are, infamously, not very mobile — represented 11 percent of new housing starts, according to a report from MHVillage, an online marketplace for manufactured homes.

Manufactured homes are typically assembled in a factory before they are installed on-site. While they can be cheaper or more efficient to build than traditional homes, it can be difficult to find land zoned for them. Supply chain issues can also crop up.

But the advantage of owning sites is that owners of mobile homes typically cannot afford to relocate them and so are vulnerable to rent increases. About 90 percent of mobile homes never leave their original location.

Elsewhere, Brookfield Properties and Ballast Investments recently closed a deal to buy $915 million in troubled mortgages tied to more than 2,100 apartments owned by Veritas in San Francisco. If they take control of 76 apartment buildings, they would be among the city’s biggest landlords.

— Holden Walter-Warner