Canadian Apartment Properties REIT (CAPREIT) has bought a portfolio of12 manufactured home parks from Toronto-based Killam Properties Inc. – with a total of 2,032 pads – for $72.3 million, or an average of $35,000 per mobile home pad.
CAPREIT,known as an owner of large apartment blocks, has been quietly buying up mobile home parks across the country since 1997: they now make up more than 10 per cent of the REIT’s portfolio. Its latest acquisition includes manufactured home parks in Ontario, Alberta and one in British Columbia.
“The world is searching for yields,” said Walter Schultz, of TD Commercial, who specializes in mobile home park financing from his Vancouver office. Schultz notes that a typical mobile home park, also known as a manufactured home park, can deliver capitalization rates in the 6 per cent to 8 per cent range. This is about the twice the return on a rental apartment building in Metro Vancouver, and compares to 10-year Canadian government bonds that offer a 1.6 per cent yield, he said.
Thomas Shwartz, CAPREIT president and CEO said manufactured home parks provide “secure and stable long-term cash flows, high occupancies, steady increases in average monthly rents, and significantly lower capital and maintenance costs [when compared to apartment buildings.]”
For a full report on the manufactured home park industry in Western Canada, see the July issue of Western Investor.
