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Saturday, Sep 30, 2023

Mobile Homes Draw Investors, Development Plans

The humble RV park is getting its time in the sun in Orange County.

A collection of mobile home sites located on nearly 50 acres of land along the Pacific Coast Highway in Huntington Beach recently traded hands for more than $200 million, according to property records. It’s one of the area’s top real estate deals of the year, and one of several sizeable RV and mobile home sites in OC to have traded hands of late.

While plans for that Surf City site—once eyed for redevelopment by its prior owners—haven’t been disclosed by its new out-of-town owners, other recently-sold properties in Costa Mesa, Santa Ana and Anaheim appear likely sources of new homes going forward.

Here’s an overview of some notable transactions in the sector.

ARES Action

The recently completed portfolio sale including two notable mobile home parks, an RV park and vacant land, and marks one of the largest real estate deals in Huntington Beach in several years.

Irvine-based Advanced Real Estate Services Inc., also known as ARES, sold the Surf City portfolio through a venture it ran along with Mills Land & Water, a group of families that have owned the site since 1901.

Mills once owned over 250 acres in the area, including a significant portion of the beach as well as the land under the current ARES power plant near Newland Street and Pacific Coast Highway.

The recent deal is said to mark the last of their holdings in the area.

The sellers declined to provide details on the buyer or price of the deal; property records indicate the new owner is an affiliate of Hometown America, a Chicago-based operator of manufactured housing communities.

It paid $194.8 million for the two mobile parks, records indicate. The remaining three parcels push the total investment price past the $200 million mark.

There were no outside brokers involved in the deal, according to ARES, an owner of apartments and other property types; it and affiliates of Newport Beach’s John Saunders have been among the area’s more active investors in the mobile home sector over the past decade or so.

Development Plans?

Advanced officials said they partnered with Mills in 2013 to add value to the parks by improving the operations, upgrading the facilities and made plans to redevelop the vacant parcels, according to Principal Paul Julian.

“We were successful in accomplishing the upgrades, raising the value, and had a plan for development. Before the development plans came to fruition, however, we were approached with an offer to sell the properties,” President Rick Julian said in a statement.

“The families decided it was best for all involved to exchange into apartments and realize the equity appreciation and create a new depreciable basis.”

Prior development proposals included plans to build a 48-unit condominium project on a vacant 3.30-acre site on Newland Street. The buyer has yet to disclose any new plans for its new sites, the largest of which is on a ground lease.

“They may end up moving forward with those plans, or with different plans,” said Julian.

The largest portion of the sale is for a 34.8-acre site that includes 350 mobile home spaces. Records indicate it traded for $174.8 million, and about $5 million per acre.

The park is located at 21851 Newland Street and called Huntington By the Sea Mobile Estates.

The smaller Cabrillo Mobile Home Park spans 10.8 acres at 21752 Pacific Coast Highway and includes 48 parcels. It sold for $20 million, or $1.9 million per acre, CoStar Group Inc. records indicate.

The remaining assets include a 91-space RV park and two vacant parcels totaling about six acres.

The new owner manages approximately 66 manufactured housing communities in 12 states.

Crow Duo

Affiliates of Dallas-based Crow Holdings, a large private real estate owner and investor with a manufactured housing division, in September snapped up a pair of sites for about $30 million, records indicate.

In Costa Mesa, it paid about $19.4 million for the Trade Winds Mobile Home Park. The 58-unit site is near the intersection of Harbor Blvd. and Victoria Ave. A family trust sold the property for about $335,000 per unit.

In Santa Ana, it paid an additional $11.6 million for the 77-site Taggin’ Wagon Mobile Home Park, located on a nearly 5-acre site along 1st Street, close to the Willowick Golf Course.

It traded for about $150,000 per site. The park was fully occupied at time of sale and the cap rate was reported at 3.9%, CoStar records indicate.

Plans for both new additions to Crow Holdings haven’t been disclosed.

Disney Area Plans

A year ago, an affiliate of Boca Raton’s Encore Capital Management paid $26 million for a site north of the Santa Ana (5) Freeway in Anaheim, about a mile from Disneyland.

At the time of the deal, the buyer indicated plans for a townhome site on the 200 W. Midway Ave. property, although it didn’t yet have entitlements.

City records indicate that last month the owner filed conceptual development plans for a 156-unit townhome project at the site.

Apartment Tear for ARES

It didn’t take Advanced Real Estate Services long to find new places to put the proceeds from its mobile home park sale in Huntington Beach.

ARES said it bought three apartment projects since September with these funds, as well as an additional $150 million raised as part of a private capital fund that wrapped in October.

Most recently, Advanced paid $58 million for a 215-unit apartment property called The James in Riverside, which works out to about $270,000 per unit.

It also bought two additional projects, including another Riverside project, The 3900 Apartment Homes, totaling 120 units and a 346-unit newly built community in Chino Hills called The Crossing in Chino Hills.

Officials with ARES said they plan to continue their acquisition swing, and expect to close on an Orange County apartment project by the end of the month.

“Between these two funds, we had around $250 million to $275 million to place which, with leverage, will lead to north of $750 million in acquisitions throughout Southern California,” said Principal Paul Julian.

The company specializes in Orange County, Los Angeles and the Inland Empire, with just under 10,000 units under management with a market value topping $3 billion.

Julian noted while there has been some impact on pricing as a result of lower inventory in the wake of COVID, these Southern California markets have been more insulated than other metro areas.

“Interest rates are at historic lows and there is strong demand for apartments in Southern California as investors choose suburban properties over more dense urban areas,” said Julian.

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