The financing has a weighted average of 7.62% and an average maturity of 7.3 years. About $500 million of stabilized manufactured home communities will be purchased at about an 8% cap rate, with the balance of the acquisition of consisting of $35 million of communities under development and $35 million of assets.

Bank One will provide the initial financing.

Ultimately, Chateau intends to replace the Bank One loan with a combination of long-term, unsecured debt, disposition of assets, and or equity issuances.

Chateau reiterated its commitment to a strong balance sheet and intends to achieve a debt to market capitalization ratio in the low 40% range within a short period after the closing.

UBS Warburg Inc. maintains its ''buy'' rating on Chateau following the announcement, with a $34 per share target price.

''In our opinion, Chateau did pay-up a bit to get this portfolio, as recently the company has been acquiring assets in the mid 8% cap rate range for communities,'' according to UBS Warburg. ''That being said, given that not many institutional grade communities have been changing hands, and the overall size of the portfolio that is being acquired, we think a modest premium should be expected.''

UBS Warburg goes on to say that it appears the purchase will be a good fit with Chateau's existing communities.

''Overall we view this transaction as a positive as this will make Chateau by far the largest owner of manufactured housing communities with a portfolio of over 70,000 existing home sites.''