Posted by Mr. C on August 09, 2003 at 16:21:33:
Due primairly to the stock market and low interest rates, MHP’s have become the poor man’s Walgreen’s.
A year ago they (Walgreen’s) were selling for about $4MM (8.5% cap). Now it’s hard to find one for less than $6MM.
I saw a Home Depot ground lease listed yesterday for $9.2MM (5.8% cap)… saw one a year ago going for $7.5MM.
How about a Taco Bell at 4.5% cap? A year ago they were an 8%.
Does any of this relate to what you asked about? Yes.
It’s a seller’s market. The buyer’s have tossed all common sense to the wind and are snapping everything up as fast as it’s listed… D/D and price be dammed. Case in point… I called on 4 MH parks in the same market, the same week. All were tied up within an hour of their listing.
So if we take a clue from all this, we would be faxing LOI’s on these parks as quick as we find them… and worry about the D/D after you’ve tied it up.
That’s what’s going on with the Walgreen’s… it’s nothing but paper (there’s no money changing hands)… and the demand is exceeding the supply. They built 200 stores last year (and sold every one of them)… and they have another 200 planned for this year… and the year after.
The down side is that when these investors get ready to cash out of these properties, they’re going to loose their shirts, unless they 1031.
Why? Because they bought into these just like they did the stock market… on the upswing.