ARA Launches National Manufactured Housing Brokerage Group

By Anuradha Kher, Online News EditorAustin, Texas–Atlanta-headquartered Apartment Realty Advisors (ARA) has launched its National Manufactured Housing Group in Austin, Texas. Andrew Shih based in Austin and Todd Fletcher based in Chicago will be part of the transaction execution team.Shih has been with ARA since 2008, and was the Texas representative for CBRE’s manufactured housing group prior to joining ARA, while Fletcher was responsible for acquisitions and dispositions of manufactured housing communities for Hometown America, the largest privately held owner and operator of manufactured housing communities in the U.S. “This is an especially interesting asset class that has been overlooked in the past but is now evolving into a more mainstream investment alternative, especially in the institutional arena,” says Jeff Pritchard, principal at ARA, who assembled and will oversee the national team.  “While the data on this asset class is limited and we can’t speak with specifics to the size of the investment market, we do know that there are more than 55,000 manufactured housing communities located across the country. In addition, the demographic profile of a typical homeowner is very positive, translating into a stable revenue stream for owners of manufactured housing,” Pritchard explains.ARA’s research indicates that 3 percent of the 55,000 communities are institutionally owned and cap rates for all manufactured housing communities can be typically 25 to 100 basis points higher than traditional apartments. Occupancies are trending upward (the national average is 87 percent) largely due to the subprime mortgage meltdown, which has positioned the manufactured housing product as a viable affordable housing solution.From an investment sales perspective, the underwriting and lending sources, which include Fannie Mae for manufactured housing, are very similar to traditional multifamily for-rent housing while the differences between the two product types are more pronounced. In the manufactured housing arena, homes are typically owned by the resident and not rented. Expense ratios are lower (average 40 percent) and turnover is typically much lower due to the expenses associated with moving the home. Further, default rates are also lower as well due to the invested equity value of the homes, according to ARA.