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SELLER BARRED FROM USING BANKRUPTCY TO BACK OUT OF MANUFACTURED HOUSING COMMUNITY SALES CONTRACT

The 55+ senior, five star mobile home park / manufactured housing community for sale in the City of San Marcos (San Diego County) California sold on February 25, 2000 for $11,500,000. John Grant of Park Brokerage Inc. and Vince Reynolds of MHRV Advisors represented the buyer in the transaction.

The 55+, senior community was built in 1972 and 1975. The community contains 340 doublewide and triplewide spaces and is considered to be a "five star park". The community is situated at the top of a hill on 55 acres, and many of the spaces have an ocean view. The space rents are low at $330-$480 with a $380 average and subject to the City of San Marcos rent control ordinance. The sewer, water, and trash utilities are included in the rent. The community has a deluxe clubhouse with a resort style pool, spa, and garden area.

The buyer made a $2,875,000 cash down payment, and Washington Mutual provided new mobile home park financing of $8,625,000. The mobile home park cap (capitalization) rate was approximately 8.5%.

John Grant commented, "The seller did not disclose that she was in personal bankruptcy when she executed the purchase contract with the buyer. She later received a higher offer from another buyer. Her attorney tried to get her out of the purchase contract because the bankruptcy court had not approved the sale. Despite filing bankruptcy, the seller had plenty of equity in the community to pay all her debt, and the judge decided that she could not use the bankruptcy court system to get out of her purchase contract. Of course, it took two and half years of litigation to resolve that issue."

Vince Reynolds said, "Five star, 55+ Senior parks for sale just don't make it to the market in Southern California, rent control keeps space rents well below market which affects overall values, so owners have really no motivations to sell these types of parks. Any sales that make sense or take place usually are to the residents. The buyer owns another large five star community in north San Diego County and jumped at the opportunity to buy at only $33,823/site".

Vince Reynolds added, "The buyer has several upside strategies to pursue. The fair market rents for the community are approximately $500 ($380 average now), and the buyer can slug it out with the rent control board for increases. The buyer may also condo map the community and sell the home sites individually. Or the buyer can always resell the manufactured home community since they purchased it at such an attractive price.“

55+ Senior manufactured housing community for sale in San Diego County, San Marcos, CA

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