Cedarhurst & Walston MHP

Salisbury, MD | Off-Market Acquisition | Oct 2017

Overview

Cedarhurst & Walston MHPs are all ages, affordable communities totaling 180 spaces along Maryland’s Eastern Shore. Both communities were acquired from long-time, legacy owners who developed the properties decades earlier and had kept lot rents at $250 for years, despite the fact that market rates were north of $400.

About the Project

Cedarhurst & Walston MHP were acquired through a pocket listing with a local broker. We’d been in contact with the owners for years but the family wanted to sell the asset via broker, so we nagged (politely) the broker for many months prior to the asset being listed to ensure we would be the preferred buyer.

The Challenge

Over time, the owners had become tired. When Sunrise took over management, abandoned homes were scattered throughout the community and the underground infrastructure was a mess. Both well and septic systems had deferred maintenance. Worse yet, abandoned homes attracted unruly residents and crime to the neighborhood. The poorly managed assets were also in need of general cleanup.

What We Did

Sunrise negotiated a combined $2.6mm purchase price for the properties. Upon acquisition, Sunrise replaced on-site management, pumped septic tanks, demolished unsalvageable abandoned homes, renovated salvageable park-owned-homes, and power washed units. Once aesthetics improved, Sunrise set about recapturing the loss-to-lease.

The Outcome

Sunrise grew the NOI substantially, ultimately increasing lot rents to just beneath the market rate. In June 2019, Sunrise executed a cash-out refinance on the property, and returned all investor capital within two years. Investors now have an infinite cash-on-cash return while retaining equity in an asset that appraised for more than $6mm. Within two years, Sunrise created over $3.5mm in sweat equity on an original investment of $1.1mm. By 2022, the real estate was worth well over $10mm, more than quadruple the value at acquisition.