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Mobile Home Park Updates
Information for the MHP Owner
Commentary
– December 2005
**ARC auction results
I attended this auction in person where over $215mm of properties
sold! Some properties sold expensively and some buyers got
some great bargains. Here are a few of my observations.
The event started slowly, as travel in was difficult for
most attendees. It was snowing lightly that morning and the
previous night. Many people experienced arrival delays of
1-3 hours. Despite the weather, attendance was high, with
500 people in the room, with most of these people being registered
bidders. I also learned that there were about a dozen “telephone”
bidders.
It took 5 long hours but 59 of the 71 properties were sold.
Only the first 15 were absolute sales, so ARC may elect not
to honor the sales terms of the last 44. I have learned that
ARC confirmed only 16 of these sales and is trying to negotiate
the price up much higher for the other 28. These buyers are
mad! ARC third quarter results were poor and I had thought
they would like to raise as much money as possible. If all
59 properties close, ARC should net just over $201mm. If any
of you know of specific sales from rounds 16 and up that either
have been confirmed or have been cancelled, please let me
know.
I felt the auctioneer Sheldon Good provided a pleasant environment
and conducted a good auction for the sellers. The way they
displayed on large screens the total buyer cost with each
cap rate bid made it very easy for a buyer to know exactly
what the total purchase price would be with every new bid.
However, many buyers were displeased that ARC had reduced
at the last minute the number of absolute sales from 30 to
15, but there was nothing the buyers could do about this change.
The winning cap rate bids ranged from 2.75% to 17.0%, but
it is more meaningful to look at the actual cap rate once
the commissions and the prices for the park-owned homes are
factored in. The summary spreadsheets attached have a column
labeled “actual cap rates” and these rates ranged
from 2.56% - 13.52%.
Sheldon Good had suggested that there would be buyers of
multiple properties. One attached spreadsheet shows the properties
sorted by buyer number, and although I missed about a dozen
buyer numbers, it looks as if no one buyer purchased more
than four or five properties. My analysis shows that 8 purchasers
bought more than one property. Also, most buyers appeared
to be smaller investors, rather than the larger players. United
Mobile Homes, Inc. (http://umh.com)
purchased one community in Tennessee to add to their portfolio
of about 25 communities, but I wasn’t able to identify
any other larger buyers. If any of you know of specific purchases
by any larger companies, please let me know the information
you have and I will distribute it.
For those of you who are interested, I have sorted the data
in many different ways.
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