The residential park sector has moved onto the radar of institutional investors, with rental increases and potential for expansion drawing buyer interest.
This was evident with the $21.2 million capital raising by Ingenia Communities Group to institutional and high net worth investors.
Group chief executive Simon Owen said the proceeds of the raising would be used to partially fund the acquisition of five manufactured home estates at present under due diligence, expanding Ingenia's MHE portfolio to more than 1000 home sites.
"Increasing our exposure to the manufactured home estates sector, through immediately accretive opportunities in identified market clusters with forecast unlevered internal rates of return of greater than 15 per cent, is a key focus of Ingenia's growth," Mr Owen said.
Another deal in the expanding area was the sale of the Oaklands Village MHE in Wollongong to Alecon for $13.4 million.
It will be added to Alecon's Residential Parks Trust established with Gateway Lifestyle Residential Parks (GLRP). The deal was negotiated by Andrew Jackson of CBRE Hotels in Sydney.
The director of GLRP, Trent Ottawa, said Oaklands' park would continue to operate with no significant changes to day-to-day operations. Mr Jackson said the MHE sector had expanded rapidly during the past few years.
"What was traditionally the domain of 'mums and dads' is now on the radar of institutional investors, with several larger players actively scouring the space for quality assets," Mr Jackson said.
He said a new wave of both institutional investors and cashed-up private investors were entering this sector of the market. "The depth to the market is evident by the firm yields being paid for quality parks, with upside potential such as revenue uplift through rental increases or further expansion potential."
MHEs are an accepted form of housing in the US, Europe and Canada, where the industry has been corporatised. It is a relatively recent phenomenon in Australia, housing about 2 per cent of the population.
For investors, one of the drawcards is the security of the income streams that MHEs and mixed-use caravan parks offer, said specialist adviser Stuart Strong of Herron Todd White.
"In a risk-averse environment, investors were recognising the security of income streams that these assets provide and their resilience to fluctuating economic environments," Mr Strong said.
Mr Jackson said the demand for MHEs had also led to increased investor interest in traditional caravan parks, which generally offer large landholdings and a strong underlying holding income, with the ability to explore alternate uses such as the viability of conversion to a permanent residential village.