DIFFICULT LOAN PAYOFF & PENALTY LEADS TO CREATIVE DEAL STRUCTURE

The sale of Mountain Valley Villas MHC located at 21821 Sandia Road in Apple Valley, CA (San Bernardino County) was completed on November 24, 2003 for $2,700,000. Vince Reynolds and Norman Sangalang of MHRV Advisors represented the Buyer in this transaction. MHRV Advisors also represented the Buyer in obtain the new loan of $1.85 million fixed at 6.25% for 5 years, fully amortized over 30 years.

The four star manufactured housing community consists of 105 existing spaces and the opportunity of an additional 74 spaces (179 total). The property is situated on nearly 28 acres and is serviced by city water and onsite sewage treatment plant. The park is located near both Apple Valley Middle and High Schools within the redevelopment zone of the fast growing City of Apple Valley. Amenities at this gated community include an office, clubhouse, pool, spa and green areas. Rents are at $305 with submetered or prorated utilities with no rent control in the City of Apple Valley.

Vince Reynolds commented, "The park was at 100% occupancy at time of sale with the upside potential of an additional 71 partially completed spaces - this was a very rare opportunity. The extra sites have utilities in place and will be ready to rent upon the completion of streets and connection to city services."

Norman Sangalang added, "This transaction had several moving pieces and the conditions required by the Seller and consequently the Buyer required a very creative and complex deal structure well beyond what you would typically find in a park sale. The Seller had other opportunities to purse and was attempting to sell the park a year before the note could be paid off. The park had an existing conduit loan of $1,000,000 at 8% with a heavy prepayment penalty and a rock solid prepayment lockout date that was almost a full year away. Furthermore this loan would not allow secondary financing but would allow an assumption. However, assuming the existing loan would require a down payment of close to $2 million with the same high interest rate under very restrictive terms and conditions."

Reynolds continued, "Our solution was to structure a purchase through the creation of a comprehensive lease purchase option that allowed the Seller to have the funds to pursue other opportunities almost a year before the actual close of escrow. The Buyer was able to operate and generate income from the park without waiting a year as well as the ability to obtain a much better loan at more typical 70% loan to value. The security of this lease arrangement also allowed the Buyer to use funds from a 1031 exchange for the part down payment or option consideration on the property."

Vince Reynolds and Norman Sangalang sell and finance mobile home and RV parks exclusively throughout the states of California, Arizona and Nevada and have sold or refinanced over 100 MH and RV parks over the past few years. For further information please contact Vince or Norman toll free at (866) 459-MHRV (6478) or via email at reynolds@mhrvadvisors.com or norman@mhrvadvisors.com.