MHAction feels that Real Estate Investment Trusts (REITs) are a problematic ownership and business model when it comes to manufactured housing communities. REITs often need to deliver high returns to their investors in order to be competitive. The need to generate short-term profit can come into conflict with the maintenance needs of the underlying properties undermining them both as a good long-term housing option and stable long-term real estate investments.
An example of the REIT ownership model can be found in Equity Life Style Properties, Inc. (ELS). ELS is the nation’s largest corporate owner of manufactured home communities. ELS operates over 380 communities in 32 states and personally relates to over 141,000 manufactured home owners and renters. Many of the communities that ELS owns and operates are ‘age qualified’ communities marketed towards people who are 55 years of age or older.
From a profit making perspective, ELS, on the surface, is a very successful company. ELS has delivered strong returns for its shareholders for a number of years. The company is also continuing to grow through purchases of additional communities in a number of states.
However, given that ELS is structured as a Real Estate Investment Trust, MHAction has heard from thousands from homeowners across the country about issues that clearly result from its corporate structure. MHAction found that this business model is literally robbing the retirement savings of a generation of modest income Americans.
The personal stories that are contained in this report are not the grumblings of a very limited number of homeowners from a select number of states. Rather, the stories that follow are indicative of a larger collection of hundreds of stories and surveys that have been compiled over this past year.
Some glimmers of hope have occurred with ELS that involve the development of long term leases that include reasonable rent and capital improvement agreements. Yet, those few examples give homeowners little hope that ELS is truly driving towards solutions for homeowners.