Sun Buys Another MH REIT for $1.7B

A Sun Communities manufactured home unit. The REIT’s portfolio runs to 231 properties across 30 states.

SOUTHFIELD, MI—Sun Communities Inc. said Tuesday that it would acquire fellow manufactured housing REIT Carefree Communities Inc. from Centerbridge Capital Partners for $1.68 billion in cash and stock. The deal, one of two M&A transactions within the commercial real estate sector to be announced on Tuesday, will make Southfield, MI-based SUI the premier publicly traded REIT in the manufactured housing and RV community space, enlarging its portfolio by more than 40%. In connection with the acquisition, SUI said late Tuesday afternoon that it would issue four million shares of common stock to partly fund the Carefree deal. SUI’s chairman and CEO, Gary Shiffman, says the the acquisition of Carefree Communities “further solidifies our position as a best-in-class manufactured housing and RV community owner and operator and enables us to drive shareholder value going forward. Similar to our 2014 acquisition of the American Land Lease portfolio, this accretive transaction enhances our geographic diversity, deepens our presence in key coastal markets and boosts our age-restricted sites to 33% of our portfolio.” Carefree’s MH and RV communities will be operated by SUI’s management team under the Sun Communities brand. Carefree’s team, led by co-founders David Napp and Colleen Edwards, will remain in place during the interim period. Citigroup acted as financial advisor to SUI, and Jaffe, Raitt, Heuer & Weiss, P.C. acted as legal advisor. For Carefree, Goldman Sachs acted as financial advisor and Simpson Thacher & Bartlett LLP acted as legal advisor. The sale is expected to close by July 9. As of this past Dec. 31, SUI owned and operated a portfolio of 231 properties located in 30 states, comprising 69,682 developed manufactured home sites, 9,559 annual RV sites and 9,371 transient RV sites, and approximately 7,181 additional manufactured home sites suitable for development. Carefree’s portfolio is concentrated in California, Florida and the Canadian province of Ontario, and spans 103 MH and RV communities, comprising 9,829 manufactured home sites and 17,725 RV sites as well as over 2,900 additional developable MH and RV sites. Earlier on Tuesday, Birmingham, AL-based Medical Properties Trust said that it had agreed to merge Capella Health Holdings, MPT’s investment in the operations of Capella Healthcare Inc., with RegionalCare Hospital Partners, which is managed by affiliates of Apollo Global Management. The merger is expected to generate approximately $550 million in net proceeds to MPT for debt repayment, and will create one of the largest healthcare operating companies in the US.