Sun Communities Buying Carefree Communities for $1.7 Billion

Sun Communities, Inc. (NYSE: SUI) said March 22 that it has agreed to acquire a portfolio of interests in more than 100 manufactured housing and RV communities for approximately $1.7 billion.

Established in 1975, Sun Communities owns and operates 233 manufactured housing and recreational vehicle (RV) communities located in 29 states throughout the United States.  Sun Communities’ portfolio consists of approximately 89,400 developed sites.

Sun Communities said it had reached a deal to acquire the portfolio of Carefree Communities Inc. from an affiliate of private equity firm Centerbridge Capital Partners II LP. The terms include Sun Communities assuming Carefree Communities’ outstanding debt.  Sun Communities also said it will issue 4 million new shares, and will use part of the proceeds to fund the transaction.

Carefree Communities directly or indirectly owns 103 manufactured housing and RV communities concentrated in California and Florida.

Gary Shiffman, Sun Communities’ chairman and CEO, said the acquisition of Carefree Communities “further solidifies our position as a best-in-class manufactured housing and RV community owner and operator and enables us to drive shareholder value going forward.”

Shiffman added that the acquisition enhances its geographic diversity, deepens its presence in key coastal markets and boosts age-restricted (for those 55 years and older) sites to 33 percent of the REIT’s portfolio. Shiffman also said that the acquisition adds “highly desirable” locations in California, where the REIT is increasing its holdings to 6 percent from less than 1 percent.  The deal also broadens Sun Communities’ market share throughout Florida, where high demand continues, he said.

Ryan Burke, an analyst at Green Street Advisors, noted that the Carefree acquisition is a “unique opportunity” for Sun Communities to improve the quality and scale of its portfolio, allowing for enhanced efficiencies.

In February, Sun Communities reported that new home sales for the company are at their highest level in more than a decade, while pre-owned and broker home sales are at the highest level the company has ever achieved.