Single Family Manufactured
Home Communities

Build-For Rent Investment Opportunity

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Overview

  • ERC Communities (“ERC” or the “Company”) is a real estate developer and owner-operator of Build-For-Rent (“BFR”) Single Family Manufactured Home Rental Communities (“MHR”)
    • Targeting high-growth markets in Florida and the southeast U.S.
    • Strategy initially focused on Central Florida, with expansion to additional Florida markets near-term
  • ERC’s MHR strategy centers around the sourcing and development of land, all horizontal construction, and the procurement and installation of manufactured homes in planned communities
    • Strategy capitalizes on the strengthening and ongoing demand for single-family rentals
    • Materially lower development and home construction costs results in lower rental costs, providing a more affordable option for families as rents continue to rise nationally
    • Attractive return on cost, value appreciation potential and an accelerated development cycle offer compelling opportunity for strong risk-adjusted returns

Compelling Market Opportunity

ERC is uniquely positioned to capitalize on single family rental market dynamics

Manufactured Home Rental Communities provide:

  • An affordable alternative for families as SFR rents continue to rise nationally
  • A scalable development strategy across high-growth U.S. markets
  • The opportunity for attractive risk- adjusted returns given lower costs, a shortened development cycle and ongoing rental growth
  • A unique approach toward BFR in light of the growing “institutionalization” of and capital focus in the SFR sector
  • Market dynamics have created a unique and compelling opportunity to grow the ERC build-for-rent platform
    • Housing affordability remains an ongoing issue throughout the U.S.
    • Families across the age spectrum are seeking rental homes in lieu of (i) traditional home-purchases and (ii) apartment living due to affordability considerations and lifestyle choices
    • Strong and consistent residential demand in heavy in-migration states like Florida, North and South Carolina, Georgia and other southeast states continues to further diminish rental affordability, in particular for younger families
    • Single-family rental sector investment continues to grow rapidly and has become increasingly institutional, with major investment firms and public REITs investing substantial capital into and owning sizable portfolios nationally
  • ERC’s MHR platform offers families substantial rent savings for similar sized individual homes, offering an attractive and achievable home alternative within the SFR market

A Unique Strategy

  • ERC’s unique strategy focuses on Manufactured Home Rental Communities, addressing major market demand and driving the opportunity for rapid and efficient scaling
    • Faster speed to development completion and stabilization / rent realization
    • Attractive cost of entry point
    • Rental levels that better meet substantial demand
    • More dense developments with higher unit counts / parcel
    • 100% financing of homes offered from home manufacturers
  • ERC will initially build MHR communities that comprise up to 150 homes each
    • – Over time ERC will seek to increase the size of the communities to enhance development and operational efficiencies
  • Greater portfolio scale should enhance ultimate exit opportunities to larger institutional investors and national rental operators who seek to acquire rental homes in scale

Investment Opportunity

  • Take advantage of continued strong demand for single-family rental homes in a cost-effective and time-efficient strategy that offers attractive risk-adjusted returns
  • $25mm - $50mm target initial equity investment
  • Capital deployment over 2021 and 2022
  • Near-term $9.5 million total investment into existing ERC Florida project, “Zephyrhills”, a 60-unit permit-ready community, ready for immediate construction and manufactured home placement (currently owned by ERC)
  • Potential to structure either a programmatic joint venture or entity-level investment (the “JV”)
  • Flexibility to optimize structure to meet the objectives of ERC and the Investor
  • ERC will co-invest 5-10% of the equity in the JV based upon the overall target equity investment
  • Investor will participate in “major decisions” of the JV, including all new projects pursued

ERC is seeking a strategic investor (the “Investor”) to accelerate its growth and capitalize its near and longterm development pipeline

ERC is currently capitalizing a development in one of its targeted markets, Tampa, Florida and owns land for an immediate follow-up development, also in the Tampa market

Target Markets

Initial target markets will be across the Sunbelt region, with a near-term “actionable” pipeline across key Florida markets
ERC seeks to quickly scale its MHR unique strategy to take advantage of outsized demand for affordable residential rental homes
  • ERC will initially focus on key high- growth markets throughout Florida
    • Primarily Central Gulf Coast and Orlando metro markets, as well as the Tallahassee / Panhandle and Jacksonville areas
  • ERC’s target markets will also include additional “in-migration” states in the Sunbelt region
    • Focus on major metro areas including but not limited to North Carolina, South Carolina, Tennessee and Kentucky
    • Balancing various sourcing channels and an opportunistic approach across multiple markets
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Investment Rationale

  • Opportunity to invest in highly targeted MHR strategy to capitalize on outsized demand in target markets
  • Ability to participate in upside of ERC’s growth as it scales its platform
  • Unique strategy focused on manufactured homes provides faster, cost effective and scalable development strategy relative to “traditional” single family residential development
    • Speed to develop reduced to 6 – 8 months from 12 – 14 months
    • Cost of entry estimated to be 30%+ lower
    • Greater density through higher unit counts on smaller parcels
  • Robust and growing buyer market for single family homes offering multiple ultimate exit strategies and potential for premium pricing
    • Single community or portfolio sales
  • Compelling risk-adjusted returns on newly developed homes
    • Targeted IRRs of 20%+
  • ERC remains open to a longer-term hold strategy in order to achieve attractive cash on cash returns post development but will be opportunistic in terms of monetization strategy