Tenant Site Lease Provisions (‘TSLPs’)
Blog Posting # 615 @ 4 December 2020; Copyright 2020: Educatemhc.com
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing!’
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INTRODUCTION: What a bargain! This blog is the only weekly news outlet featuring manufactured housing and land lease community news – and it’s FREE. This week, learn about the Tenant Site Lease Provisions now required by the FHFA and two GSEs. Also learn more about Legacy Housing. And finally, a potpourri of past, present, and future news bits that should be of interest to you. To encourage us, here at EducateMHC, to continue keeping YOU informed, you should be subscribing The Allen Confidential! business newsletter. How? Simply visit www.educatemhc.com And remember, PRIME subscriber status also gets you the annual ALLEN REPORT (32nd edition will be out during January 2021), National Registry of ALL Lenders, and ten additional statistical compendiums and helpful directories.
Tenant Site Lease Provisions (‘TSLPs’)
Federal Housing Finance Agency (‘FHFA’) now requires ‘manufactured home communities’ (‘MHCs’) to have Tenant Site Lease Protections, if they’re to be categorized as mission-driven business, hence eligible for multifamily lending considerations by Fannie Mae & Freddie Mac. And what are these TSLPs?
• One-year renewable term for the site lease
• 30-day written notice of rent increases
• 5-day grace period for late rent payments
• Rights of the tenant of a site lease to sell their manufactured home without having to move it out of the MHC; sublease the manufactured home or assign the site lease to a buyer, provided buyer meets minimum MHC rules and regulations, and credit quality for financing; post ‘For Sale’ signs on the manufactured home, provided signage complies with MHC rules and regulations; sell the manufactured home in place within 45 days after eviction; and, receive at least 60 days notice of any planned sale or closure of the MHC.
MHC borrowers who implement all eight TSLPs are eligible to receive reduced interest rate spread pricing, and up to $10,000 per property in third party report cost reimbursement.
Backstory. Two Listening Sessions ago, in St. Louis, FHFA and GSE representatives were warned they’d already guaranteed mortgages on land lease communities recently acquired by new portfolio investors from outside the manufacture housing industry, and to expect abuses to homeowners/site lessees. Don’t know for sure, but appears the requirement for TSLPs is the result of that warning cum actual experience.
How Well Do You Know Legacy Housing?
This paragraph quoted from a recent Press Release issued & distributed by Legacy Housing.
“Legacy Housing Corporation builds, sells and finances manufactured homes and ‘tiny houses’ that are distributed through a network of independent (street) retailers and company-owned stores, and are sold directly to land lease communities. We are the fourth largest producer of manufactured homes in the U.S. as ranked by number of homes manufactured based on information available from the Manufactured Housing Institute (‘MHI’) and the Institute for Building Technology & Safety (‘IBTS’) for the fourth quarter of 2019. With current operations focused primarily in southern U.S., we offer our customers an array of quality homes ranging in size from approximately 390 to 2,667 square feet, consisting of one to five bedrooms, with 1 to 3 ½ bedrooms. Our homes range in price, at retail from approximately $22,000 to $140,000.” (Lightly edited for trade terminology and clarity. GFA)
Legacy Housing also touts its’ belief it’s “…one of the most vertically integrated in the manufactured housing industry, (offering) a complete solution to our customers, from manufacturing custom-made homes using quality materials and distributing those homes through our expansive network of independent retailers and company-owned distribution locations, to providing tailored financing solutions for our customers.”
Know what? They’re right about that, but ‘vertical integration’ of this sort is pretty much status quo for the manufactured housing industry these days, considering the Big 3-C firms in particular: Clayton Homes, Skyline-Champion, & Cavco Industries. To make the firm fully integrated vertically, Legacy Housing will need to develop and or acquire one or more land lease communities to complete this four part business model. And the firm, in the above-referenced Press Release indicates it has been purchasing raw land, perhaps for this purpose.
If you found this interesting, you should be reading the monthly ‘MHShipment Volume & Stock Market Report’, an addendum to The Allen Confidential newsletter! To subscribe, visit www.educatemhc.com Do So Now, as we plan format improvements in early 2021, e.g. nine public firms to be listed alphabetically within their respective ‘manufacturer’ and ‘land lease community’ classifications. And, toying with the idea of charting stock prices, with new home shipment volumes superimposed on said chart. It’s already a fascinating month-by-month statistical story; this will just make it all the more instructive, even fun, to read and track. Don’t miss out!
MUSINGS, past, present, future…
PAST. Several untimely deaths occurred during the past few weeks: Art Decio, founder & chairman of Skyline and dad to Terry; Glenn Kummer of Fleetwood renown (Read about him in the late John Crean’s autobiography, The Wheel & I), and Roger Huddleston (independent-street-MHRetailer in IL.), son of the late Warren Huddleston. Art, Glenn, Warren, and John are manufactured housing industry pioneers, and members of the RV/MH Hall of Fame.
PRESENT. Well, it’s only one month away. What? The 32nd annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Land Lease Community Portfolio Owners/Operators Throughout North America!’
This year’s report has been difficult to research (Had to chase far too many ‘players’ for their portfolio stats) but easier to compile (Thanks to EducateMHC staff putting data on spread sheets). Never ceases to amaze me how often, those who procrastinate providing key info, are often the first and most persistent in wanting access to the published data. Go figure.
FUTURE. By now you likely know the Biloxi MHShow will occur 15-18 March in Biloxi, Mississippi. And given the retirement of Dennis Hill, show management of this event, will be handled by Rick Robinson and the firm he helps lead these days, manufacturedhomes.com
Also plan to be at the RV/MH Hall of Fame, in Elkhart, IN., 13 May, for the postponed induction banquet for the Class of 2020. Phone (574) 293-2344 for details and to purchase tickets.
And you should be saving the dates 7-9 July 2021, to attend the postponed 2020 National Networking Roundtable! For more information on this event, visit www.educatemhc.com
George Allen, CPM, MHM EducateMHC