Sydney-based fund manager Tasman Capital is the latest to see the opportunity in manufactured home estates, nabbing six sites for $50 million.
A housing option for low and middle- income retirees and over-55s, manufactured home estates (MHEs) are communities of easily built homes in holiday park-style surroundings or inside converted caravan parks.
Institutional investors including listed group Ingenia Communities and the privately owned Alceon have spearheaded growth in the sector, but a new crop of smaller-scale private investors are amassing large holdings.
Tasman Capital, headed by former private equity operator Rob Nichols, this week paid more than $50 million for MHE and holiday park sites including Redbank Palms Resort in Ipswich, and The Retreat in Port Macquarie.
Mr Nichols is best known for buying the Australian-owned private equity assets of Nikko Principal Investments in 2008, and as a member of Deutsche Bank’s private equity division.
The latest purchase is not his first foray into the sector. Tasman has owned and operated an MHE known as Lakeland Park Village at Buff Point near Budgewoi on the NSW Central Coast for more than two years. Mr Nichols says more purchases are planned.
“We’re embarking on a roll-up strategy,” he told The Australian Financial Review, adding that the group will only invest in properties with more than 50 per cent of residential allotments, rather than having a higher mix of caravan sites and holiday cabins.
CBRE agent Andrew Jackson calls it an “exciting time” for the sector. “Regardless of these bigger players that are really active buying and talking about what they’re doing, there are a lot of active privates doing the same thing.”
Queensland-based group Halcyon, which offers a high-end product, is understood to be on the hunt for more sites, while former Japara chief executive Arnan Rouse quietly picked up three MHEs in Victoria in late 2013.
An ageing population and a scarcity of well-managed, attractive and affordable housing options for low-to-middle income retirees are factors that have sweetened the appeal of MHEs.
MHE operators have also quietly acknowledged that any changes to the aged pension scheme – which could see some ageing welfare recipients who own their own homes lose entitlements – will also play to the sector’s advantage. But there are signs existing caravan and holiday park owners, who are often small, family-run businesses, are less prepared to part with sites than they were 18 months ago, according to Chestertons agent Jeff Dolan.
“People who own MHEs aren’t rushing to sell them. Existing operators are again considering them to be a great investment,” he said. New entrants in the sector usually purchase caravan parks and convert the temporary sites into permanent lots which sell for between $110,000 to $450,000, with a home included. Residents also pay an annual or monthly management fee, and in some cases, can opt-in for cleaning, nursing assistance and other daily services so they can age in the same place.