Trio of Banks Originates $352M Loan to Refi Brookfield Mobile Home Portfolio

Brookfield had recently refinanced 124 mobile home communities and 771 RV sites last month in a separate $2.2 billion CMBS deal.

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Brookfield Asset Management has managed to recapitalize a second sizable bundle of manufactured housing communities a little over a month after securing $2.2 billion in debt to finance a separate collection of mobile home parks and RV sites, according to ratings agency analysis of the deal.

Morgan Stanley, Bank of America and Barclays this time came together to originate a $352 million commercial mortgage-backed securities (CMBS) loan secured by Brookfield’s fee-simple interest in 39 mobile home communities, with 7,417 pads, spread across eight states, according to data from Fitch Ratings.

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Brookfield acquired 27 of the 39 mobile home parks — comprising nearly 4,100 pads — in this single-borrower CMBS financing (MHC Trust 2021-MHC2) last month as part of a deal with Elkhart, Ind.-based Heritage Financial Group, while the remaining 12 communities, comprising more than 3,300 pads, are a piece of the larger 135-property portfolio that the firm acquired from NorthStar Realty Finance Corp. and RHP Properties in March 2017. RHP partnered with Brookfield following that 2017 transaction to retain a 5 percent ownership interest in the 135 parks and manage day-to-day operations at the properties.

Brookfield and RHP refinanced 124 of the 135 parks from the NorthStar deal in that $2.2 billion CMBS financing early last month. Morgan Stanley also participated in that deal, originating a quarter of the loan total, or roughly $551.3 million.

About $116.6 million of this fresh CMBS loan recapitalizes the one dozen leftover NorthStar assets and helped fund Brookfields $144.6 million acquisition of the 27 properties from Heritage. The two-year, interest-only and floating-rate loan, which includes three one-year extension options, also covered $7.6 million in prepayment penalties and $7.7 million in closing costs. Brookfield and RHP also captured about $75.5 million in equity in the deal, per Fitch. 

The 39-property portfolio in this deal was appraised at just over $452 million, which, with the loan amount, indicates a loan-to-value ratio of about 78 percent. 

Nearly 68 percent of the portfolio’s in-place net operating income is carried by the 10 largest properties in the collection, which also represent more than 46 percent of its 7,417 mobile home pads. Portside at the Beaches in Jacksonville Beach, Fla. is the largest property in the portfolio, accounting for 12.6 percent of all the pads, per Fitch. 

Most of the properties are in Indiana (17) and Illinois (7), but the three Florida properties in the portfolio are the largest, on average, and are the most valuable. 

Through the pandemic, collections at the NorthStar properties were robust; the dozen communities averaged anywhere from 94 percent to 98 percent collections between April 2020 and March 2021. And prior to Brookfield’s acquisition of the 27 Heritage properties, they showcased strong average collections in January 2021 (92.7 percent), which grew each month until they were sold — in February (93.9 percent) and March (95.4 percent). As of last month, the average home ownership among residents within the entire portfolio was 91.4 percent, and the residents at the 39 properties have resided in their homes for 15 years, on average, which is above the 14-year sector average, per Fitch.