Clayton Homes, the industry's largest supplier of manufactured homes, stepped away from land-lease community development, which it had been in for 25 years, when it recently sold 65 of its 66 mobile-home parks to Yes Communities, a Denver-based private equity firm that changed its name last year from BaseCamp Capital.
Since the 1970s, Maryville, Tenn.-based Clayton had been acquiring land-lease communities where it could place its mobile homes. The number of communities in its portfolio at one time reached as high as 90, according to company spokesman Chris Nicely. But over the past several years, Clayton saw the market for manufactured and modular homes shifting towards subdivision development. Clayton put its housing community division up for sale last July and completed its transaction with Yes in late January. Nicely confirms that Clayton will continue to supply product to Yes.
Clayton will now focus its attention more on developing subdivisions where it can place its upscale product, whose selling price ranges from $125,000 to $200,000 per unit. Clayton has 15 subdivisions under development in three states: Tennessee, Texas, and Arizona. Nicely points out that Clayton will now sell and ship homes exclusively to buyers who own their own lots, as opposed to a land-lease arrangement at the communities Yes acquired. Clayton will also supply this upscale product to other subdivision developers. "We're very excited about what we're doing right now," Nicely told BUILDER Online this morning.
Andrew Luter, Yes Communities' COO, did not return several calls BUILDER Online placed with his office. But Nicely says that Yes, and its predecessor BaseCamp Capital, already managed a portfolio of mobile-home parks prior to its deal with Clayton, for which Luter is quoted as saying Yes paid "more than $100 million." This included paying $10.6 million for the Clayton Estates mobile-home park in Le Vergne, Tenn., and $4.55 million for the Florence Road community in Smyrna, Tenn., according to the Nashville Business Journal. Luter is also quoted as saying that Yes intends to rename all of the communities it purchased. Nicely confirms that the 288 employees who worked at the communities Clayton sold were either hired by Yes or stayed on with Clayton.
Last week, Clayton's parent company, the Omaha, Neb.-based based investment firm Berkshire Hathaway, released its annual report for 2007, which stated that Clayton generated $3.665 billion in revenue from manufactured housing and mortgage financing, representing a 2.7 percent increase over the previous year. Clayton's earnings increased 2.5 percent to $526 million. At the end of the year Clayton was operating 14 manufacturing plants and marketed its homes through 1,687 retailers and 452 company-owned sales offices. Nicely says that Clayton's transaction with Yes doesn't materially affect its manufacturing or distribution networks, except that some plants will shift to making upscale modules.
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