LA County MHP Investors
Description – The LA County MHP property was a 500+ space mobile home park. The asset was owned by 11 partners with a variety of goals and interests. Out of the 11 partners, 9 wanted to sell their interests and 2 partners wanted to retain ownership in the asset. Those 2 partners wanted to purchase additional interests from the selling partners as well.
The Remaining Partner’s goals:
- Replace selling partners with a new partner with the same business philosophies and management style
- Establish new long-term debt for the property
- Improve management at the park
- Find a partner to collaborate and invest together with into the future for new assets
- Create durable income, cash flow plan
There were several steps to this fractional interest purchase:
- Step 1: Rutherford and the remaining partner worked on a voting structure that was sustainable for collaborative future decision-making
- Step 2: Rutherford purchased < 50% fractional interest of the property from the selling partners
- Step 3: Rutherford and the remaining partner placed new, long-term debt on the property
- FStep 4: The selling partner is responsible for property management of the property and Rutherford is involved in asset management/li>
| BEFORE | AFTER | |
|---|---|---|
| Number of Partners: | 11 | 2 (One original Partner, one new Partner) |
| Ownership Structure: | Partnership | Partnership |
| Purchase (100% or Fractional) | 1 Partner wanted to hold interest long-term; 10 Partners wanted to sell | Purchased Fractional Interest < 50% from selling partners; Remaining Partner purchased the balance of selling partner interests |
| Management | 3rd Party Management | In-house management |
| Operating Efficiency: | $200,000 delinquencies | Management eliminated on-going delinquency |
| Issues | Different goals between the partners | Business philosophies and ownership horizon align between partners |