© 2019 Fannie Mae. Trademarks of Fannie Mae. 1 of 6

Multifamily Market Commentary – August 2019

Investor Interest in Manufactured Housing Communities Remains Strong

The ongoing increase in multifamily asking rents over the past several years has prompted many renters to seek lower cost 

housing alternatives, including renting factory-built homes located in a Manufactured Housing Community (MHC). 

Although most MHCs rent sites to owners of manufactured homes so they can access electricity and other utilities, there are 

a number of these communities that also rent out manufactured housing units themselves. The combination of renewed 

renter and homeowner interest in MHCs has not been lost on some real estate investors. As a result, 2018 MHC volumes 

were higher than they’ve been at any point since the end of the Great Recession in June 2009.

Transaction Volume Continues to Rise

Although not a comprehensive source of data for MHC property sales, Real Capital Analytics (RCA) provides a window into 

the MHC sector. As shown in the chart below, last year was another strong year for MHC. Transactions involving MHC 

properties totaled an estimated $9.3 billion in calendar year 2018, compared to an estimated $9.1 billion in 2017. RCA 

recorded just under $3.0 billion in transactions in the first half of 2019. Transaction volume may rise in the second half of 

2019 as there is speculation that some owners of smaller MHCs will take advantage of ongoing investor interest and sell 

their properties to help fund retirement plans.

Phoenix Dominates Sales

The Phoenix metro area dominated transactions over the 

past 24 months with about $500 million in sales. This is 

largely due to the one-time sale of the Tricon Capital Group 

MHC portfolio of 14 properties for an estimated $172 million 

in June 2018 to Blackstone Real Estate Income Trust, Inc.

(BREIT), an institutional investor.

Sarasota Also Active

Sarasota, which is a much smaller metro than Phoenix, 

appears to have had a lot of sales over the past two years. 

However, this is due to just a couple large transactions. In 

2018, Cove Communities purchased the 968-unit Camelot 

Lakes and Camelot East MHC from the Ivy Foundation for 

$165 million. In 2017, Northwestern Mutual purchased the 

645 Gardens of Parrish from an individual owner, Edward 

Mihevic, Jr. 

Growing Investment in Manufactured Housing Community Asset Class

0 100 200 300 400 500

Phoenix

LA Metro

Detroit

Sarasota

Miami/So Fla

Tampa

Houston

Indianapolis

Atlanta

Las Vegas

Volume ($millions)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

200720082009201020112012201320142015201620172018

1H

2019

Volume ($billions)

MHC Transaction Volume (2007 – 1H2019)

Source: Real Capital Analytics www.rcanalytics.com

Note: Transaction volume includes both sales of existing and the appraised value of refinanced MHC properties.

Source: Real Capital Analytics www.rcanalytics.com

MHC Sales Volume -- Select Metros Past 24 Months

(July 31, 2017 – June 30, 2019)
© 2019 Fannie Mae. Trademarks of Fannie Mae. 2 of 6

MHC Investing Goes Beyond REITs

While publicly listed REITs have remained active in the MHC 

sector, private entities had the highest share of investment in 

MHCs through mid-2019. Private investors, which include 

privately-owned companies and real estate developers, 

represented just over 70 percent of MHC purchase volume 

through the end of June 2019, followed by public REITs with 

just under 20 percent. Institutional investors – which include 

insurance companies, equity funds, and sovereign wealth 

funds – came in third with just under 10 percent of purchase 

volume.

Drop Off in Global Investors

Global investment in U.S. MHC appears to have decreased in 

2018 and going into 2019. However, the decline is likely not 

as dramatic as it appears. Global investment was particularly 

strong in 2017 primarily due to a single large portfolio 

transaction in which the Government of Singapore 

Investment Corporation (GIC), the sovereign wealth fund of 

Singapore and its affiliates, invested almost $1.5 billion to 

gain a majority interest in 178 MHC properties sold by Yes! 

Communities. Over the past five years, Canada remained the 

top global investor in MHC, investing about $2.2 billion to 

obtain just over 155 properties.

A Variety of Top MHC Investors

The top buyers have been evenly dispersed recently with regard to acquisition volume. TPG Capital, an institutional equity 

fund based in Fort Worth, was the top MHC investor over the past 24 months, investing almost $390 million on about 78 

MHC properties. The second most active buyer was Yes! Communities, a non-publicly traded REIT located in Denver,

investing just under $480 million on 30 properties. Rounding out the top three investors was publicly listed REIT Sun 

Communities Inc., one of the largest owner-operators of MHC properties, which invested almost $368 million on just 15 

properties. Sun Communities bought larger communities in higher cost areas which was reflected in its average price per 

MHC of $25 million, compared to TPG Capital’s average price of just $5 million. 

One relatively new company that has been very active over the past two years is Meritus Communities. Founded just six 

years ago, it has acquired over 50 properties and over 20,000 sites. While many are in Michigan, Meritus has been acquiring 

properties in other states, including Texas, Alabama, Ohio, and Indiana.

Buyer Investor Type Investor Location Acquisition ($ M)

1 TPG Capital Institutional Equity Fund Fort Worth, TX $387 

2 Yes! Communities (NT REIT) Private REIT Denver, CO 376

3 Sun Communities Inc Publicly Listed REIT Southfield, MI 368

4 RHP Properties Private Developer/Owner Farmington, MI 334

5 Equity Lifestyle Props Publicly Listed REIT Chicago, IL 299

6 BREIT Private REIT New York, NY 233

7 Cove Communities Private Developer/Owner Phoenix, AZ 180

8 Meritus Communities Private Developer/Owner Farmington, MI 173

9 Carlyle Group Institutional Private Equity Washington, DC 173

10 Northwestern Mutual Institutional Milwaukee, WI 144

MHC Buyer Composition 

(2014 – 1H2019)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018 2019

YTD

Cross-Border Institutional REIT/Listed

Private Other

Source: Real Capital Analytics www.rcanalytics.com

Top 10 MHC Buyers (Past 24 Months)

Source: Real Capital Analytics www.rcanalytics.com 
© 2019 Fannie Mae. Trademarks of Fannie Mae. 3 of 6

Few New MHC Properties Being Built

MHC properties are aging, with 68 percent of the stock having been built prior to 1980, according to MHC data vendor 

Datacomp/JLT. In fact, currently fewer than 10 new MHC properties appear to be under construction. The vast majority are 

in rural areas. 

MHC Cap Rates Remain Low

With ongoing interest from a wide variety of investors, and few 

new communities being built, capitalization rates for 

institutional-quality MHCs have declined significantly in recent 

years. As of second quarter 2019, RCA estimates that MHC cap 

rates are 5.7 percent, slightly lower than the 5.8 percent cap rate 

a year ago in second quarter 2018. 

There is quite a bit of variation in cap rates, however. Smaller 

MHCs tend to have much higher cap rates. For instance, the 71-

unit Shady Oaks Mobile Home Park near Portland, ME, was 

underwritten with a 6.9 percent cap rate, according to RCA. 

Nevertheless, on average, cap rates have declined considerably 

since the recent peak of 7.5 percent for MHCs recorded in third 

quarter 2011.

Average Sales Price per Unit Continues to 

Increase

The average price per MHC site was about $60,000 as of second 

quarter 2019, according to RCA. While this is about 50 percent 

higher than the estimated $40,000 per site recorded as of fourth 

quarter 2007, it remains a fraction of the $157,000 average sales 

price per unit recorded for multifamily properties.

Locations of MHC Under Construction as of August 14, 2019

Source: CoStar Group, Inc., excludes one new MHC in Alaska

Manufactured Housing Community Average 

Cap Rate vs. Multifamily Average Cap Rate

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

MHC Cap Rate

Multifamily Cap Rate

Source: Real Capital Analytics www.rcanalytics.com

Quarterly based on trailing 12 month average. Includes property 

or portfolio sales $2.5 million or greater
© 2019 Fannie Mae. Trademarks of Fannie Mae. 4 of 6

MHC Rents Are Generally More Affordable than Multifamily Rents

Despite the lack of new supply, rentals in MHC properties are generally less expensive than apartments. The average MHC 

rent nationwide has been about half that of a multifamily unit over the past decade. According to recent data from 

Datacomp/JLT, the average rent for a pre-owned manufactured home in the Fort Wayne metro area was just $583, 

approximately three-quarters of the average rent for a multifamily unit. However, the savings are even higher for an MHC 

located in a major metropolitan area. For instance, the average rent for an MHC unit in the Los Angeles metro is $1,373, just 

61 percent of the metro’s average estimated rent for an apartment. Nationwide, the asking rents on all manufactured housing 

rentals, including those on individual plots of land, remain at about half of multifamily rents, making them often a more 

affordable option for many renters.

Fannie Mae Finances MHC

Fannie Mae’s Multifamily business provides financing options for MHCs where the borrower owns the MHC property along 

with the associated common amenities and infrastructure and leases the individual pad sites to the owners of the 

manufactured homes. Multifamily lends on the income generated from the pad rents. Tenants typically own their 

manufactured homes. However, up to 25 percent of homes may be rentals provided by the MHC owner. Fannie Mae’s MHC 

financing activity is excluded from the Federal Housing Finance Agency (FHFA)-imposed multifamily annual maximum 

cap on lending volume for the GSEs. In 2018, Fannie Mae financed $2.9 billion in MHCs, which represented an increase of 

56 percent from the $1.9 billion in multifamily MHC loans financed in 2017. 

Metro Area Rental in MHC Multifamily Rents Ratio of MHC Rent to Multifamily Rent

Los Angeles, CA $1,373 $2,249 61%

Chicago, IL $979 $1,504 65%

Cleveland, OH $704 $919 77%

Fort Wayne, IN $583 $755 77%

St. Louis, MO $729 $905 81%

Dallas, TX $1,018 $1,104 86%

Average Rents for a Rental Home – MHC vs Multifamily Select Metros

Source: Datacomp/JLT for MHC rents based on listings July 10, 2019 in MHC. RealPage for multifamily asking market rents. 

Geographic boundaries for metro areas may vary somewhat between Datacomp and RealPage.

Average Multifamily Asking Rents vs. Manufactured Housing Rents 

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Manufactured Home Rents Multifamily Rents

Source: Fannie Mae tabulations of American Community Survey Data.

Note: Based on gross rents and includes utilities; rents based on all manufactured housing rentals including those outside of manufactured housing communities.
© 2019 Fannie Mae. Trademarks of Fannie Mae. 5 of 6

Duty to Serve Encourages Tenant Site Lease 

Protections

In many states, MHC residents do not have the same tenant 

protections afforded to tenants living in other multifamily properties. 

There is no national standard, and in fact no state or local jurisdiction 

currently requires all of the tenant protections mandated by FHFA 

under the Duty to Serve (DTS) program for tenants in MHC.

Fannie Mae offers pricing discounts for borrowers who institute 

these Tenant Site Lease Protections on at least 25 percent of pad sites 

and higher discounts for protections on at least 5o percent of sites. 

In 2019, Fannie Mae financed Harmony Pointe MHC through a $4.75 

million loan closed through Berkadia Commercial Mortgage LLC. 

Harmony Pointe is an age-restricted MHC in West Carrollton, OH

with 124 pads and one apartment. The borrower worked with tenants 

to convert leases on at least 50 percent of the sites. Residents signed 

an addendum to their lease that included the DTS requirements for 

site lease protections. This transaction was notable because Ohio is a 

state with very few MHC tenant protections.

Fannie Mae’s MHC Portfolio Continues to Perform Well

As of second quarter 2019, Fannie Mae had just over 1,000 loans on MHCs with a total unpaid principal balance (UPB) of

over $11 billion. The loans were performing well with no serious delinquencies, as of second quarter 2019. While the average 

UPB was $10.9 million, approximately half of the loans had an original unpaid balance of $6 million or less at origination, 

indicating most transactions involved smaller properties. 

Continued Investor Interest Expected for MHC

According to third-party MHC data vendor Datacomp/JLT, there are about 38,000 existing MHC properties and only a 

handful of new communities are being built or expanded. With rents for manufactured homes typically more affordable than 

those for traditional multifamily units, there is no shortage of demand by a wide variety of renters, whether they are lower 

income households or retirees living on fixed incomes. An expectation of strong demand for affordable rental housing, 

continuing low interest rates, and a dearth of new supply supports continued strong fundamentals in the MHC sector. As a 

result, investor interest is expected to remain strong in this segment of the multifamily market over the next 18 months at 

least.

Total

UPB* 

($B)

Loan 

Count

Average 

UPB* ($M)

Weighted 

Average 

OLTV**

Share 

Fixed 

Rate

Share Full 

InterestOnly

Share Partial 

Interest – Only 1

Share 

Small 

Balance2

Share 

Lender 

Recourse

3

Serious 

Delinquency 

Rate

4

$11.7 1,076 $10.9 67% 87% 13% 57% 50% 100% 0.0%

Duty to Serve Tenant Site Lease Protections

❖ One-year renewable term for the pad site 

lease.

❖ 30-day written notice of rent increases.

❖ 5-day grace period for late rent payments.

❖ Rights of the tenant of a site lease to:

• Sell their home without having to move it out of 

the MHC;

• Sublease the manufactured home or assign the 

site lease to a buyer, provided the buyer meets 

the minimum MHC rules and regulations and 

credit quality for financing;

• Post “for sale” signs on the manufactured 

home, provided the signage complies with the 

MHC rules and regulations;

• Sell the manufactured home in place within 45 

days after eviction; and

• Receive at least a 60-day notice of any planned 

sale or closure of the MHC.

Select Credit Characteristics of Fannie Mae MHC Book of Business

Source: Fannie Mae Q2 2019 10Q Credit Supplement

*UPB : Unpaid Principal Balance

** Weighted Average Origination Loan to Value Ratio

1

Includes any loan that was underwritten with an interest-only term less than the term of the loan, regardless of whether it is currently in its interest-only period.

2

In Q1 2019, the DUS program updated the definition of small multifamily loans to any loan with an original unpaid balance of up to $6 million nationwide. The updated definition 

has been applied to all loans in the current multifamily guaranty book of business, including loans that were acquired under the previous small loan definition.

3

Represents the percentage of loans with lender risk-sharing agreements in place, measured by unpaid principal balance.

4

Multifamily loans are classified as seriously delinquent when payment is 60 days or more past due.
© 2019 Fannie Mae. Trademarks of Fannie Mae. 6 of 6

Tatyana (Tanya) Zahalak

Senior Economist

Multifamily Economics and Market Research

August 2019

Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Multifamily Economics and Market Research 

Group (MRG) included in these materials should not be construed as indicating Fannie Mae's business prospects or 

expected results, are based on a number of assumptions, and are subject to change without notice. How this information 

affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, analyses, estimates, forecasts 

and other views on information it considers reliable, it does not guarantee that the information provided in these 

materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information 

underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other 

views published by the MRG represent the views of that group as of the date indicated and do not necessarily represent 

the views of Fannie Mae or its management.