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Mobile Home Parks

ACA Capital will consider insuring mobile home park revenue bonds issued to finance the purchase of a mobile home park by a non-profit organization. The park must be one in which the homes are owner occupied. ACA Capital does not insure individual mobile homes. The factors considered by ACA Capital in underwriting this type of transaction include location, physical condition, results of a market appraisal and demand study, occupancy rates, existing and potential future competition, rental charges and expected adjustments, local rent control ordinances, tenants' support for the change in ownership, and historic and projected financial results. In addition, ACA Capital will evaluate the experience of the non-profit buyer and project manager.

Key Credit Factors

In order to make a preliminary determination of insurability, ACA Capital will review the Mobile Home Park for the following characteristics:

  1. Ownership by not-for-profit corporation with mobile home park experience
  2. Homes in the park must be owner occupied
  3. Minimum of 125 spaces
  4. Local rent control ordinances
  5. History of over 90% occupancy
  6. Local government support is viewed positively

Key Legal and Covenant Provisions

Typical security and covenant provisions for ACA Capital insured Mobile Home Park financings include the following:

  • Mortgage on all property and improvements
  • First lien on gross revenue
  • Rate covenant of a minimum of 1.35 times on senior lien bonds and a minimum of 1.00 times on all debt
  • Debt Service Reserve Fund funded at its required balance at issuance of bonds
  • Renewal and Replacement Account funded from cash flow to the amount recommended by an independent physical needs assessment report

Essential Documentation

The following information is essential for an ACA Capital review of a proposed Mobile Home Park financing:

  • Preliminary Official Statement and legal documents
  • Financing plan, including sources and uses of funds
  • Estimated debt service schedule
  • Market appraisal and demand study
  • Regulatory agreement
  • Financial statements for three preceding years
  • Projected cash flows through the term of the bonds assuming 5% vacancy
  • Environmental site assessment/ Phase I
  • Rent roll, delinquency data
  • Physical needs assessment for term of bonds