A billion-dollar empire made from mobile homes

Washington Post

It’s not fancy. But in the exurbs of Nashville stands part of a billion-dollar real estate empire.

The Florence Commons community consists of about 300 mobile homes of varying vintages, mostly single-wide, many valued at less than $30,000 apiece, set 20 feet apart from one another. The occupants of some will tell you: The floors buckle. The ceilings crack. The doors don’t shut right. Their homes are sinking.

“OK — it’s a trailer park, not a fancy gated community,” said Jessica Boudreaux, 33, who lives there with her two daughters. “If people could, they’d live somewhere else.”


Yet Florence Commons, along with more than 200 other mobile home parks around the U.S., has produced hefty returns for Stockbridge Capital, a $13-billion San Francisco-based private equity firm, and its major investors.

Their mobile home park company has produced tens of millions for investors in recent years and saw a return on investment of more than 30% between late 2016 and the end of 2017, according to documents.

Those ample returns arise in part from their willingness to boost the rents of the mobile home residents. As one investors’ report on the company put it approvingly: The “senior management team has a demonstrated track record of increasing home rental rates.”

It has received $1.3 billion in financing through government-sponsored lender Fannie Mae, which says mobile homes are “inherently affordable.” The money helped them buy existing mobile home parks.

As large financial firms buy more and more U.S. homes, both conventional and mobile, the question of whether such investments benefit tenants or merely exploit them is a matter of dispute.

“They prey on people who can’t afford land, people who can’t move,” said David Barrett, 62, an excavation equipment operator who lives in Florence Commons. “They’re taking advantage of — I wouldn’t say poor people — but working people. Where do you think their profits come from?”


Yes Communities, the investors’ company that owns Florence Commons, says it is helping to meet the nation’s need for affordable housing.

Much of the investors’ revenue comes from residents who, while they often own their homes, must pay rent for the lot. At Florence Commons, rent has risen by 4% a year or more, residents said — and most have little choice but to pay up. For practical reasons, they can’t move. The dwellings are called “mobile,” but they are costly to transport and sometimes owners are contractually forbidden to move them.

The residents at Florence Commons must pay in other ways too. Rent checks that are six days late incur a 10% fee and a threat of quick eviction. If residents fail to cut the grass, the park managers threaten them with fees of $100 or more, residents said. An aggressive towing service has forced some residents to pay $200 or more to recover their cars.

The median income for families that live in mobile homes is about $30,000 a year. Adult residents of mobile homes also have lower levels of formal education, according to surveys. About two-thirds lack education beyond high school.

“The owners just seem to want to get every dime from us,” Boudreaux said.

Officials with Stockbridge Capital, a firm led by Terry Fancher and Sol Raso that focuses on real estate investments, released a statement: “Stockbridge is proud of its association with Yes Communities, which has met the affordable housing needs of its residents nationwide for the past 11 years.”

Vanessa Jasinski, vice president of marketing for Yes Communities, confirmed that the rents at Florence Commons have risen at 4% a year on average over the last six years — slightly higher than the average mobile home lot rate in the area last year, according to figures from Datacomp, an industry analyst.


Jasinski also said that the rules — and fees — for lawn and parking violations are intended to create pleasant surroundings. No park residents were required to pay for grass-cutting last year, she said. She noted that in the last five years, 46 home renters at Florence Commons have purchased homes in the community.

As for the damage caused by mobile homes settling, she said that “it is not uncommon for manufactured homes to settle and experience issues like these. This is true also of site-built homes.”

Over the last three years, some of the biggest private equity firms — Carlyle Group, Apollo Global Management and TPG Capital — have taken stakes in mobile home parks, according to a forthcoming report by the nonprofit groups Private Equity Stakeholder Project, MHAction and Americans for Financial Reform. The mobile home parks owned by private equity firms have more than 100,000 home sites, according to the report.

“The firms made these investments seeking to double or triple their money in the space of a few years,” said Jim Baker, director of the Private Equity Stakeholder Project, an organization that has been critical of the private equity industry. “That doesn’t lead to affordable housing.”

He said residents of these mobile home communities are reporting substantial rent increases, aggressive fees for small infractions and escalating evictions.


Critics of the role of large investors in mobile home parks point to the remarks of Frank Rolfe, an investor who has owned thousands of mobile home lots. Referring to the steady stream of revenue, he said that a mobile home park “is like a Waffle House where the customers are chained to their booths.”

In fact, the money that investors can see from mobile home parks is remarkably steady — and growing fast. Between 2004 and 2018, operating income from mobile home parks rose 87%, according to Green Street Advisors, the global real estate research firm, never once declining, even during the recession.

In the case of Yes Communities, government help supports the investors’ returns.

In August 2016, Fannie Mae, the government-sponsored lender, said that it was helping to finance Yes Communities. It has now helped, through two banks, to provide about $1.3 billion. Those loans enabled Yes Communities to buy up mobile home parks.

The Yes Communities loan “will preserve affordable housing in communities across the nation,” Fannie Mae said in a news release at the time.

The terms of the loan to Yes Communities, however, do not limit the rent hikes that residents face. A Fannie Mae spokesperson said rent limits are not in its purview.

“We believe the federal government should be preserving affordable housing, but as far as we can tell that’s not the case with these loans,” said Elisabeth Voight, co-director of MHAction, an organization of mobile home residents. “If it were, there would be requirements to keep the rents affordable. These loans should be helping residents buy and run their own communities, not private equity groups that earn huge profits.”


Stockbridge Capital first invested in the mobile home park operator in 2008. In August 2016, it sold 71% of Yes Communities to a fund whose investors include the government of Singapore and a pension fund for public school employees in Pennsylvania. It continues to manage the mobile home park operator.

It is generally difficult to know how much private equity firms are making, but the Pennsylvania pension fund does issue some figures. Between September 2016 and December 2017, the value of its $179-million investment rose more than 30%, according to public disclosures.

But while Yes Communities is producing ample returns for investors, some residents say the parks have suffered.

“It’s really gone downhill,” said Kris Wilkin, 47, a state corrections officer who bought a 2003 double-wide in Florence Commons seven years ago.

One year, residents said, the community swimming pool didn’t open for the summer. Residents also pointed to couches and other trash in surrounding open spaces.

Boudreaux, a medical assistant for a neurologist, agreed. She and her two daughters moved there in 2011. Florence Commons, she said, was appealing to her because it welcomes people with imperfect credit. At the sales office, where salespeople encourage customers to buy homes in the park, they tell visitors that they can buy a home even if their credit records include a bankruptcy or home foreclosure. Credit scores need be no higher than 550.


“Yes! It Feels Good to be a Homeowner!” the company brochures say. “Contact our homeownership specialist today!”

Boudreaux had come from a mobile home park in South Dakota that was family-owned. There, she said, “if there was an issue, they’d fix it.” She expected it would be the same at Florence Commons. “They said they’d work with us,” Boudreaux said.

She bought a double-wide for $34,000.

There are aspects of the park she likes — for one thing, it’s conveniently located and there are enough kids in the neighborhood that she’s rarely had to drive her children to a playdate.

But the company, she says, doesn’t respond to basic requests for maintenance — for better drainage, for streetlights, for potholes. The park managers seem unimpressed, she said, by her complaint that uneven settling of her lot has created a crack in her ceiling where the two sides of her double-wide are separating.

Meanwhile, the mobile home lot rents are rising. The loan payments on the home itself, she said, have dropped. But over the last six years, her lot rent has risen from $338 to $437, or almost 30%.

“They’re almost like slumlords,” she said. “If you point something out, they’re just like … whatever. They just want the rent.”