Singapore’s sovereign wealth fund has finalized a deal to acquire a stake in a manufactured housing business backed by private equity real estate firm Stockbridge Capital Group, the firms said Monday.
GIC and another unnamed Asian institutional investor teamed up to buy a 71 percent interest in YES! Communities from five of the company’s shareholders, sources with knowledge of the deal told PERE. Those shareholders sold their interests in both the Stockbridge fund that invested in YES! and their co-investments in one of YES!’s three manufactured housing portfolios.
San Francisco-based Stockbridge created YES! using capital from its 2007-vintage fund, Stockbridge Real Estate Fund III, PERE previously reported. Major investors in the $1 billion opportunistic fund included New York State Common Retirement Fund, which allocated $400 million, and Pennsylvania Public School Employees’ Retirement System and the Teacher Retirement System of Texas, which each invested $180 million, according to PERE research.
Stockbridge and its existing investors, along with members of YES!’s management team, will retain a 29 percent stake. A spokesperson for YES! declined to comment on the terms of the agreement, but PERE understands that the deal values Yes at more than $2 billion.
Under the transaction, YES!’s three manufactured housing portfolios will be consolidated into a single entity, where Yes Communities, LLC, a newly formed real estate investment trust, will be principal owner and sole general partner.
Denver-based YES! currently owns or operates 178 communities across 17 states, according to Monday’s statement.
“YES! has been a highly successful investment for Stockbridge,” Terry Fancher, Stockbridge’s executive managing director, said in Monday’s statement. “We continue to see tremendous potential in the manufactured housing sector generally, and in YES! particularly. This transaction permits certain of our investors to monetize their investment, while allowing others to invest in YES!’s future alongside GIC and another major global partner.”
There is often limited new supply in manufactured housing compared with other single family and multifamily properties because local governments view the communities as less desirable, leading investors to buy existing communities rather than build them. For manufactured housing community owners, costs can be low since residents typically live in the same community for long periods of time, and some communities have renters pay for upkeep of their homes.
GIC has been investing in various niche and more institutionalized real estate sectors through portfolio-level acquisitions across the world. In January, the sovereign wealth fund partnered with the Canada Pension Plan Investment Board to buy a US student housing portfolio for $1.4 billion. GIC also has a sizable US industrial real estate portfolio after its 2014 purchase of Blackstone’s IndCor Properties for $8.1 billion.
“The manufactured housing sector is a unique and highly attractive niche in the US residential market, which GIC has been exploring for some time,” Adam Gallistel, GIC’s Americas head, said in Monday’s statement. “Given the relative lack of consolidation, it is very difficult to enter this sector in scale. We view YES! as an exceptional opportunity to do just that. With a very capable management team and strong institutional sponsorship, YES! shares our values and our dedication to seeking opportunities to further expand the company’s successful business model.”
Stockbridge has about $10 billion in assets under management, and GIC has over $100 billion, according to Monday’s statement.