Archive for May 12th, 2013

the 20 Year Itch!

Sunday, May 12th, 2013

Blog # 241 Copyright 2013 14 April, posted 12 May 2013

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

The 20 Year Itch!

How the (then) ‘mobile home park’ business model ‘established its pre – REIT groove’ in 1993; coasted along for two decades as the unique ‘manufactured home community’ income – producing property type; and now, seeks to ‘get its groove back’, as the enhanced public image, land lease lifestyle community real estate asset class – right up there among conventional apartment communities and other forms of multifamily commercial real estate.

Believe it or not, there was once a time, during the 1980s, when (then) mobile home park owners/operators had NO national networking and deal – making meetings, NO dedicated print media of any sort, NO operating performance statistical benchmark reports, and NO professional property management training and certification programs! All that changed pretty quickly though, as the 1990s began, and Wall Street ‘discovered’ mobile home parks cum manufactured home communities, as a highly desirable investment vehicle (excusing the pun, of course).*1

This epiphany had everything to do with the soon debut of manufactured home community real estate investment trusts or REITs, in 1994 & 1995 – though Wall Street, to this day, continues to appear uncomfortable referring to the realty asset class as anything but ‘manufactured housing REITs’ – a misleading nod towards the home fabricating segment of the manufactured housing industry. And WS still has difficulty understanding why income – producing properties, per se, are not ‘growth stocks’ of the sort they prefer to hawk.

In any event, enroute to effecting the above – referenced Initial Public Offerings or IPOs of stock, the REIT – destined firms agreed there was a need for better National Advocacy, in behalf of the asset class, than was available at the time via the sole national body representing HUD – Code manufactured housing. So, on 31 August 2013, 19 owners/operators of this unique property type, met for a strategic planning meeting in Indianapolis, IN. And one might accurately say, from that point forward, ‘the rest is history’, as the following Research & Resources matured along with the constantly consolidating realty asset class:

• The annual ALLEN REPORT while debuting during 1989, ‘hit its’ stride’ by 1994 & 1995, annually polling 500+/- property portfolio owners/operators for their Operating Expense Ratio (‘OER’) data, which along with the newly published Official Industry Standard Chart of Accounts, ‘put manufactured home community profitability performance ‘on the map’ where public (stockholder) interest in the asset class was concerned. That same year, J. Wiley & Sons’, Development, Marketing & Operation of Manufactured Home Communities debuted and sold out within six months of publication. And for the first time in 20 years, new properties were being developed, and existing ones were in high demand. This too short renascence, however, would peak in 1998, and then continually decline during the next 15 years.

• The monthly Allen Letter, since renamed the Allen Letter professional journal, while first published in 1991, distinguished itself as the sole trade media print publication to focus on the information and HOW TO needs of manufactured home community owners/operators nationwide. It served as the communication dispersion and camaraderie glue that ‘got the word out to owners/operators’ and united their thinking relative to industry issues and much more.

• Then there’s the International Networking Roundtable. Meeting for the first time, during the Spring of 1992; a year later, the second annual roundtable event spawned the aforementioned Indianapolis strategic planning meeting. Speaking of which, that ad hoc group of 19 owners/operators met a few more times, as an Industry Steering Committee or ISC, during 1993 and 1994, before being invited by the Manufactured Housing Institute, to merge and create a National Communities Council. Thus, on 1 January 1996, the NCC began its’ work in Arlington, VA., eventually becoming a division within MHI. And the annual Networking Roundtable continues to convene, with the 22nd one scheduled for 18 – 20 September at the Hilton/Chicago Indian Lakes Resort in Bloomingdale, IL. Phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 for an ‘invite’ to attend – if you’re a LLLCommunity owner/operator.

• During the next decade, several exciting and needed (at the time) manufactured home community – related innovations were created, to initially wax, but eventually wane, e.g. a national Recognition of Excellence Award program, and Community Attributes System or CAS. Why? Maybe right program(s) at wrong time(s) or vice a versa; maybe the NCC, having one leaderless year and no fewer than six salaried executive vice presidents heading the program during its’ 17 year history has yet to find long term traction; and yet again, maybe something else….

Be all that as it may be, what’s going on today? Well, that’s difficult to pin down without naming names, even picking at old scabs. But here’s what we do have in play. Still the above – referenced annual (24 years) ALLEN REPORT, a.k.a. ‘Who’s Who Among Land Lease Lifestyle Community Portfolio Owners/operators Throughout North America!’, by which we ‘keep score’ as to who owns and or fee manages the most rental homesites & RV sites, in North America. It’s how we know ELS, Inc., the Chicago – based mega – REIT, is the largest public owner of LLLCommunities in the entire world. And how RHP Properties recently, by acquiring ‘the remainder of the old ARC (former REIT) property portfolio’, has become the largest privately – owned operator of LLLCommunities in the entire world.

J. Wiley & Sons’ first text has been joined by a second: How to Find, Buy, Manage & Sell a Manufactured Home Community (Remains the only case bound text on this subject), and sixth edition of Land Lease Community Management, the instructional basis of the Manufactured Housing Manager®, or MHM®, professional property management training and certification program. While all three books are available via amazon.com, new, unused copies are available directly from the publisher via (317) 346-7156. And frankly; during the past three years, three additional paperback texts have been added to the number of trade references available to LLLCommunity owners/operators nationwide.

Furthermore, the Allen Letter professional journal, continues to be published monthly, along with the higher – priced, limited distribution business newsletter, the Allen CONFIDENTIAL! And the information – conveying nature of these two publications is eclipsed only by the education (22 sessions), interpersonal networking, and deal – making opportunities offered by the aforementioned annual Networking Roundtable effected every Fall.

So, what’s wrong with this status quo? Why a ‘20 year itch’ to take national advocacy and these asset class sophistications up another notch? More than one reason actually.

First and foremost. Though MHI’s NCC division has been in business for 17 years now, its’ number of direct dues – paying members continues to languish around the 100 mark. And if MHI’s proposed bylaw changes, distributed during the institute’s annual Legislative Conference during February 2013, are implemented as presented, the council could lose (‘NCC’) name identity, in lieu of ‘LLLCommunity members simply being members of MHI’. And, ask yourself, ‘What tangible council accomplishments can one identify as having been effected during the past two, make that several, years?’ Answer?

And right up there near the top (reason), is – or was, a unique, once in a lifetime or career opportunity for MHI ‘to bring everything extraneous to NCC, ‘in house’, so to speak; OR, risk the probable creation of a new and separate national, not for profit entity, to continue statistical Research and ongoing Resource servicing, in behalf of the LLLCommunity asset class, that’s evolved as ‘a profit center business model’ during the past 33+ years.

A succinct way to put this whole matter, described in the previous dozen plus paragraphs, in Summary, is to recall 1) we didn’t have any of these niceties during the 1980s; 2) they (Advocacy, Research, Resources) budded nicely during the ‘Go Go’ REIT years of the 1990s – until we lost our access to chattel financing at the turn of the century; and now that we’re a decade into the New Millennium, 3) we have/had this rare opportunity to (either) unite and blossom as a bona fide real estate asset class within the auspices of MHI/NCC – if we can get our act together, stop the territorial bickering, and stop trying to recreate the wheel that’s brought us this far together already! OR, as was articulated in the previous paragraph; what other alternative is there, ‘if not within the MHI/NCC structure’, 4) create an altogether new, realty – based, national trade entity along the lines of the National Apartment Association, Building Owners & Managers Association, Community Associations Institute, even a subset of the National Association of Realtors.

What’s it going to take – in either case, to succeed? LEADERSHIP. Leadership CAPABLE of looking beyond ‘the way we’ve always done things’ (at least for the past 17 years), to see the upsides of having land lease lifestyle community owners/operators selecting and working toward their own destiny within and alongside, but not ‘behind’, the HUD – Code manufactured housing industry. Leadership EXPERIENCED at taking on assignments and actually ‘getting the job done’! Leadership MOTIVATED to do what’s Best for the entire realty asset class, and not just one group, or another, of owners/operators, maybe based on property and or portfolio size! Do we have such LEADERS available today?

Frankly, I have NO interest in debating this matter with anyone, especially individuals who don’t have ‘skin in the game’ as LLLCommunity owners/operators. Certain former PMs and would be journalist gadflies need not respond. And Yes, if you are a LLLCommunity owner/operator, I’d like very much to hear and read your opinions and suggestions relative to these timely and historic matters. WHY? Read the next paragraph carefully. Then reach out to me via GFA c/o Box # 47024, Indianapolis, IN. 46247 or gfa7156@aol.com, or the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

I’m not going anywhere soon! I’m healthy – following heart surgery and loss of 30 pounds. I’m happy. And I’ve recommitted myself to serving the 1) statistical Research & 2) ongoing Resource servicing, of all my land lease lifestyle community owner/operators peers throughout the U.S. and Canada! And even though I’ve been unsuccessful ‘selling off’ GFA Management, Inc., dba PMN Publishing business interests’, so I could retire, I have no immediate plans to found a new, national, not for profit trade body to supplement national Advocacy efforts of MHI’s NCC – even though that might yet prove to be the best route to take, for LLLCommunity owners/operators ‘Large & Small’. Are we clear so far? If so, Good. If not; I really don’t know how to make those points any clearer. Continuing. There has not been an open meeting of all NCC members since the ‘October 2012 ambush of two direct, dues – paying MHI members’, in San Antonio, TX.; and the next NCC meeting isn’t scheduled until MHI’s annual gathering in La Jolla this Fall (2013), and that’s still five months away. Perhaps a better way to address this ’20 year itch’, within the NCC, relating to asset class Advocacy, Research, & Resources, would be to effect a change in leadership, instead of announcing plans to waste time and resources duplicating what’s already in place, relative to Research & Resources, and working well for LLLCommunity owners/operators Large & Small, nationwide…. What do you think?

*****

George Allen, CPM & MHM
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide

End Notes.

1. And how did the segue from mobile home park to manufactured home community come about? Simple. When textbook publisher was preparing to bring the first published work, about this unique, income – producing property type, to market (prior to 1994), it was dismayed to learn there were no fewer than three monikers afoot, around the U.S., describing this business model. So, following surveys via the now defunct Manufactured Home Merchandiser magazine, the MHIndustry, pretty much as a whole, ‘voted’ to move away from trailer court and mobile home park, to manufactured home community – though a few individuals held out for the hybrid term – manufactured housing community. And, for the next 20 or so years, ‘the rest is history’.