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Sun Communities Buying Mfg Housing, RV Portfolio for $1.7 Billion

Manufactured Housing and RV Community Owner Will Become Dominant Player At Closing
March 24, 2016
Southfield, MI-based Sun Communities Inc., one of the world’s largest owners of manufactured housing communities and RV sites, has agreed to buy Carefree Communities Inc. for about $1.68 billion from an affiliate of private equity firm Centerbridge Capital Partners II LP.

Sun Communities, a publicly traded REIT, will acquire Carefree’s 103-community portfolio of senior manufactured housing communities and destination RV resorts mostly located in California, Florida, and Ontario, Canada. The portfolio includes a total of 9,829 manufactured home sites and 17,725 RV sites, along with land for development of another 2,900 sites.

Sun's existing owned-and-operated portfolio includes 231 properties in 30 states comprising 69,682 developed manufactured home sites, 9,559 annual RV sites, 9,371 transient RV sites and approximately 7,181 sites suitable for development.

The company will assume $1 billion in debt at closing in acquiring all of the issued and outstanding shares of common stock of Carefree. The deal is expected to close July 9.

Like other housing, higher yields and low borrowing costs are luring investors into manufactured home communities, fueling double-digit increases in transaction activity and a 33% increase in pricing between mid-2014 and mid-2015, according to a Marcus & Millichap Manufactured Housing report for second-half 2015.

Many existing manufactured home community owners are enlarging their portfolios, while other buyers, attracted by higher cap rates, are trading out other property types to enter the space. The expanded pool of investors has created competition for the limited supply of quality assets for sale.

Goldman, Sachs & Co. acted as financial advisor to Carefree Communities and Simpson Thacher & Bartlett LLP acted as legal advisor. Citigroup acted as financial advisor to Sun Communities and Jaffe, Raitt, Heuer & Weiss, Professional Corp. acted as legal advisor.
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