Green Courte Partners and Next Realty Acquire Hartford Off-Airport Parking Facilities

CHICAGO, December 14, 2004 – Green Courte Partners, LLC and Next Realty announced today their joint venture acquisition of three off-airport parking facilities serving the Bradley International Airport in suburban Hartford, Connecticut. The $26 million acquisition was made by Hartford Parking LLC, a joint venture between affiliates of Green Courte Real Estate Partners, LLC and Next Realty.

Bradley International Airport, serving the Hartford and Springfield, Massachusetts areas, is New England’s second busiest airport and the 49th busiest airport in America. Bradley International is positioned for growth in regional and point-to-point traffic with the 2002 completion of a second terminal and 12-gate concourse. The three acquired facilities consist of 5,300 parking spaces and are operated under a long-term triple-net lease by an affiliate of Parking Company of America, a national operator of 21 off-airport parking facilities.

Commenting on the acquisition, Randy Rowe, Chairman of Green Courte Partners, LLC, stated, “The Hartford off-airport parking acquisition is consistent with our strategy of acquiring assets in niche sectors, such as parking, that have limited competition and offer steady growth potential.”

Andrew Hochberg, Managing Principal of Next Realty, added that, “The acquisition not only provides stability through its triple-net lease structure, but also provides an opportunity to participate in the continued recovery of air travel through percentage rent.”

Green Courte Partners, LLC is a Chicago-based private equity investment company targeting niche real estate sectors, including manufactured housing communities and parking assets. 

Next Realty, with offices in Chicago and Alexandria, Virginia, is a real estate investment company specializing in the acquisition of shopping centers, retail land and parking structures. Please visit the company’s website at

Green Courte Partners Acquires 638 Manufactured Housing Sites in Northeast

LAKE FOREST, Ill., August 4, 2004 – Green Courte Partners, LLC, a private real estate investment firm targeting niche sectors, announced today the acquisition of the Sky Harbor manufactured housing community in suburban Buffalo, N.Y. Sky Harbor consists of four adjoining, senior-oriented manufactured housing communities totaling 638 sites. The four communities are currently 94 percent occupied. The properties are well-located near the Buffalo Airport and major suburban thoroughfares, and have historically experienced stable occupancy and steady rent growth.

Commenting on the acquisition, Randy Rowe, Chairman of Green Courte Partners, LLC, stated, “The acquisition of Sky Harbor is consistent with our strategy of acquiring assets in joint venture with operating partners, with the goal of adding value to properties over a long-term holding period.”

The investment is being made through a joint venture with Richard J. Rennell, who sourced the transaction and who will manage the community. As part of the transaction, Mr. Rennell and Green Courte Real Estate Partners, LLC have formed a new joint venture that will seek to acquire additional properties in the Northeast. Sky Harbor represents the first acquisition for Green Courte Real Estate Partners, LLC, a $120 million equity fund that closed in March 2004.

Green Courte Partners, LLC is a Chicago-based private equity investment company targeting niche real estate sectors, including manufactured housing communities and parking assets. Green Courte combines niche investment strategies with a disciplined approach to transaction execution and asset management. The company’s goal is to generate attractive risk-adjusted returns over a longer-term holding period.

Green Courte Partners Seeks to Invest $350 Million in Niche Real Estate Sectors

LAKE FOREST, Ill., March 9, 2004 – Green Courte Partners, LLC, a private real estate investment firm targeting niche sectors, announced today the closing of its first investment fund, Green Courte Real Estate Partners, LLC. This $120 million private equity fund will employ institutional levels of leverage to invest $350 million in niche real estate strategies, initially targeting manufactured housing communities and parking assets.

Green Courte Partners was founded in 2002 by Randall K. Rowe, Chairman, who previously had senior roles at several successful real estate organizations, including: Chairman, Transwestern Investment Company; Chairman, Transwestern Commercial Services; Chairman and CEO, Hometown America; Chairman and CEO, Equity Office Properties; and Co-Chairman and CEO, Manufactured Home Communities. Mr. Rowe is a member and former Chairman of the Real Estate Roundtable and a Trustee of the Urban Land Institute.

Green Courte’s senior partner team is rounded out by James R. Goldman, Managing Director and Chief Investment Officer, Robert S. Duncan, Managing Director and Chief Financial Officer, and Kelly L. Stonebraker, Managing Director and General Counsel. Mr. Goldman was previously a real estate investment banker with PaineWebber and Alex. Brown & Sons. Mr. Duncan most recently was the CFO of InterPark and previously CFO of City Center Retail Trust. Mr. Stonebraker is Senior Counsel to Piper Rudnick LLP, and was previously a partner in the real estate practices of Piper Rudnick LLP and Rosenberg and Liebentritt, P.C.

Commenting on the new fund, Rowe said, “We believe that focused niche strategies, which include partnering with strong local operators, will generate superior risk-adjusted long-term returns.”

Green Courte Partners, LLC is a Chicago-based private equity investment company targeting niche real estate sectors. Green Courte combines niche investment strategies with a disciplined approach to transaction execution and asset management. The company’s goal is to generate attractive risk-adjusted returns over a longer-term holding period.

The Third Wave for Manufactured Housing Communities

As real estate investors, we know change is inevitable. Successful investors anticipate change and adapt accordingly, often combining disparate bits of information to identify nascent economic and social trends that may impact future results. In recent years, the manufactured housing community sector has seen more than its share of change, leading to today’s challenging investment environment. Last year, as my partners and I decided to form a new investment company that would, among other things, focus on making investments in this sector, we spent a lot of time considering the impact of the sector’s recent changes as well as our collective experience in the sector since 1989. We concluded that the manufactured housing community sector is beginning to experience its third “modern era” wave of significant capital flows.

The first wave of large-scale ownership in the sector was by real estate investment trusts, or REITs. In March 1993, Manufactured Home Communities, Inc. (“MHC”) became the first major company in the sector to go public. MHC used the umbrella-partnership REIT (“UPREIT”) structure pioneered by Taubman Centers, Inc. in November 1992, which allowed sponsors to contribute assets to the REIT on a tax-deferred basis. This structure, in large part, led to the explosive growth of the REIT market between 1992 and 1995. In addition, MHC was fully-integrated, self-administered, and self-managed, a structure required by the public markets to eliminate conflicts of interest inherent in REITs from the 1960s and 1970s, when REIT sponsors also frequently owned outside management companies.

There were two primary reasons behind MHC’s decision to go public. First, an IPO provided access to cheaper public capital for growth when limited private capital was available, giving MHC a competitive advantage and allowing it for some time after the IPO to consistently outbid its competition for assets. Second, the additional capital allowed MHC to reach “critical mass” quickly, providing operating efficiencies and reducing allocated G&A costs.

MHC’s public offering resulted in the first manufactured housing community company of significant scale that was comprised of institutional quality properties. At IPO, MHC’s portfolio had 44 communities containing 13,276 sites; today it has 144 communities containing nearly 53,000 sites. Following MHC’s IPO, other operators of similar scale also wanted access to public capital and followed suit. ROC Communities, Inc. went public in August 1993, and Chateau Properties, Inc. followed in November 1993; the two later merged. Sun Communities, Inc. went public in December 1993.

Interestingly, more than ten years later—even with the recent initial public offering of Affordable Residential Communities Inc.—there are only five public companies in the manufactured housing community sector:

  • Affordable Residential Communities Inc. (“ARC”)
    • 301 communities with 66,000 sites
  • Manufactured Home Communities, Inc.
    • 144 communities with 53,000 sites
  • Sun Communities, Inc.
    • 127 communities with 44,000 sites
  • American Land Lease, Inc.
    • 29 communities with 9,100 sites
  • United Mobile Homes, Inc.
    • 26 communities with 6,000 sites

Why? Consider the second wave of large-scale ownership, which began in 1997 with the advent of institutionally-backed private consolidators. Following a strong REIT run, institutions wanted to invest in the sector, but limited liquidity prevented institutional investment in REITs without significant stock price movements. Instead, large investors, such as Lehman Brothers, AEW, and several large pension fund investors, began to back private consolidators.

One such private consolidator was Hometown America, LLC. Hometown’s goal was to build an operating company to take advantage of the significant amount of private capital that had become available. Market conditions gave these consolidators an advantage over REITs in bidding for assets, since REITs were limited to 45-50 percent leverage. Private investors could finance deals with 65-75 percent leverage, resulting in higher equity returns without a commensurate increase in perceived risk, so higher risk-adjusted returns were available to private investors.

Hometown attracted five institutional investors who committed $150 million of equity. These investors wanted to be in the sector, but were unable to invest publicly without moving the market. By investing in Hometown, the investors were able to avoid overpaying for a public position, instead making a private investment with a higher initial return that maintained the potential for a public-market exit. In effect, these investors found a “best of all worlds” scenario. Their five-year strategy was to aggregate assets privately using high leverage but eventually to de-lever and go public. Several other private consolidators adopted the same strategy.

The public-market exit proved elusive for these investors. While the consolidators were building their operations, manufactured housing community REITs underperformed relative to their historical results and relative to REITs in other sectors. Then Conseco failed, reducing the availability of home financing for community residents. Spreads between conventional financing for site built homes and chattel financing for manufactured homes increased, reducing the cost advantage of manufactured homes. The slowing economy increased vacancy rates. Finally, operating-cost increases (real estate taxes, insurance costs, water and sewer charges, and trash collection charges) created additional challenges. Ultimately, other than ARC, the consolidators have been unsuccessful implementing their strategy to go public. As a result, some have experienced difficulty with their institutional investors, since institutions typically have five-year investment horizons and desire a public exit at that point.

In September 2002, Hometown successfully adopted a different strategy when one of its investors, the Washington State Investment Board, recognized the advantage of staying private and bought out the other four investors. Subsequently, Hometown agreed to buy ChateauCommunities, Inc. (“Chateau”) in May 2003. Hometown was successful because its private capital is priced for the long term, instead of quarter-to-quarter, and it can use higher leverage. MHC, a publicly traded REIT, had previously tried to buy Chateau but was unsuccessful; it could not afford the funds from operations (“FFO”) per share dilution that would have resulted from Chateau’s slow filling of vacancies or the cost of restructuring Chateau’s operating infrastructure.

The third wave is still coming in to focus, but it is clear it will also involve private capital, which is accessible to seasoned investment sponsors who have successful investment and operating track records. Private equity firms, such as Green Courte Partners, LLC (“GCP”), have no need for public capital. Instead, they aggregate a large amount of private capital, with no specific requirement for a public market exit strategy. Some funds, like GCP’s, have an investment horizon of at least ten years, whereas public capital generally looks at returns on a quarterly basis, and institutional capital often has a five-year time horizon. Private buyers can employ 70 percent leverage, whereas REITs are still held by the market to around 50 percent. Therefore, private buyers can be more competitive when bidding for assets.

The third wave will also involve a different type of organization. Without the need for public capital or a strategy driven by a planned public exit, there is no need to create a monolithic, self-managed, self-administered public company. Instead, private investors can utilize any structure that makes sense in the marketplace.

Savvy investors believe that while capital markets are global, real estate markets are local, so success depends on having quality partners. Implementing this philosophy, third wave companies will create a series of smaller, more nimble joint ventures with strong operators in the sector, aligning interests by creating performance-based incentive compensation structures. Third wave companies will access their partners’ unique local operating capabilities and deal pipelines and provide them streamlined access to equity capital. They will utilize a variety of structures as appropriate, structuring transactions to meet the needs of each partner and capitalizing on any structure that provides attractive risk-adjusted returns. Fully discretionary, long term capital will allow these firms to think like entrepreneurs on each transaction, structuring deals flexibly and creatively, and most importantly, maximize long-term economic value for both investors and operating partners.

About the Author: Randy Rowe is the Chairman of Green Courte Partners, LLC, a private-equity real estate investment fund focused on, among other sectors, manufactured housing communities. Rowe is the former Co-Chairman and Chief Executive Officer of Manufactured Home Communities, Inc. (1989-1995) and is co-founder and former Chairman and Chief Executive Officer of Hometown America, LLC (1997-2002). This article is based upon a presentation that Mr. Rowe made at George Allen’s International Networking Roundtable in September 2003. Contact him at 847-582-9400.