Caution! Equity LifeStyle Properties Dweller-Investor-Biz-Legal Alerts

According to their website, Equity LifeStyle Properties (ELS) operates multiple manufactured home land-lease communities in Florida, including some in Polk County and the central Florida area. “Spanning 23 states, our more than 200 manufactured housing communities offer residents a desirable lifestyle in highly amenitized, friendly and social settings.” ELS’ site also says: “residents can enjoy mountain views or seaside air, desert landscapes or shady palms.” But residents often paint a different picture. ELS has been hit by multiple legal actions in about a year, with a Securities and Exchange Commission (SEC) probe announced and more legal actions apparently threatened. So, there are affordable housing seeking resident concerns, the problematic image that ELS is arguably stirring up for manufactured home operations that aren’t deemed “predatory” by their customers and residents, and concerns that ought to be considered by current or potential investors in ELS. For example, company insiders ELS President, Chief Executive Officer (CEO) and a director in the firm, Marguerite M. Nader plus ELS Chief Operating Officer (COO) Patrick Waite have both recently ‘dumped’ millions of dollars’ worth of shares of ELS stock. ELS COO Waite is on the executive committee of the board of directors for the Manufactured Housing Institute (MHI). So, ELS arguably wields an outsized influence

It should be stressed that every profession has its good, bad, and ugly. Manufactured housing is no exception. Before diving deeper into the headline issues, some disclaimers and disclosures are warranted.

The concerns raised that follow often have parallels in other parts of the U.S. economy. So, the point here is people should NOT make the proverbial mistake of tossing the baby out with the bathwater. Manufactured homes are widely seen by a range of experts and years of third-party research as being necessary and good.

Our trade publications (MHProNews/MHLivingNews) are unique in several ways among our would-be smaller rivals in the manufactured housing industry, one of those rival pubs is owned by ELS.

For example. While we are pro-manufactured housing, we are critics of problematic business practices associated with several companies and trade groups that those firms may dominate. A popular consumer advocacy platform, PissedConsumer, asked me (not a rival) to give shopping tips in two video interviews to help keep shoppers out of trouble.

Among those we are editorially critical of is Equity Lifestyle Properties (ELS) and Frank Rolfe-Dave Reynolds linked brands like Impact Communities and Mobile Home University. There is a case to be made that predatory behavior by some has harmed the image of otherwise ethical and good manufactured home firms

The late ELS Vice Chair Howard Walker publicly praised our trade publications for "thorough and unbiased reporting." Walker also said that as a publicly traded company, they believe in transparency. Let's return to that statement by ELS' Walker later.

Some years ago, as trade publishers, we began to understand the curious, contradictory, and at times apparently devious and harmful business practices of several Manufactured Housing Institute (MHI) connected companies and officials. In the wake of those discoveries, MHProNews/MHLivingNews published company specific consumer, investor, and other warnings. We have offered multiple times to give MHI and or ELS officials or their attorneys an opportunity to respond. But we don't just make wild claims. We bring the evidence and then raise the questions that the evidence should cause objective thinkers to consider. That is part of what the news media, when it operates near its ideals, is supposed to do. Who says? The American Press Institute (API), among others. We are not bomb throwers, rather, we are facts, evidence, and common-sense presenters with the public interest in mind. Howard Walker wasn't alone in his praise for our trade publications' work.

That said, let's link to a new report with analysis that has details and share some key points from it. Those with more time and interest can click below to learn more.

Before diving in, let's frame the often-puzzling issues related to affordable manufactured housing. As anyone who has done a square or rectangular puzzle knows, it is a good strategy to assemble the outside of the puzzle, the frame, and then build in. That’s a parallel to what we will do here.

In no particular order of importance are the following points about affordable housing and how manufactured housing figures into that puzzling picture.

1) There have been over 50 years of housing subsidizes in the U.S. without solving the affordable housing crisis. They haven’t solved the affordable housing crisis yet, and there is no evidence that it will ever work. Housing must be inherently affordable. More precisely, CRS Reports said: "The federal government has played a role in subsidizing housing construction and providing homeownership and rental assistance for lower-income households since the 1930s." When something doesn't work, you do not keep doing the same thing the same way and hope for different result.

2) James A. Schmitz, Jr. (1), Arilton Teixeira (2), Mark L. J. Wright (3). At the time of this presentation, Schmitz and Wright work for the Minneapolis Federal Reserve. Teixeira worked for the FUCAPE Business School. I've added the third-party credit logo for MHProNews, but otherwise the slides from the full presentation found linked here is their work. Because this trio did a good job of framing some key parts of the issues.

4) From the next slide (there are 80, linked here) "In the late 1960s, HUD introduces massive subsidies," said the trio of researchers. What they deemed 'sabotaging' tactics included zoning barriers, lower cost financing, other housing subsidies for conventional housing, etc. Let me stress, in my expert view and that of others, there is more to this than what they said, but what they said are important elements for the frame of the puzzle.

To further illustrate that Schmitz-Teixeira-Wright have an evidence based point, consider this production graphic. Note how high production was in the late 1960s going into 1972-1973 (the mobile home era, before the HUD Code that created modern manufactured housing was enacted).

5) The Manufactured Housing Improvement Act of 2000 was enacted in part precisely to provide even more consumer protections for manufactured home buyers. For details see the two reports linked below. The goal, as stated by Congress and signed into law by then-President William Jefferson "Bill" Clinton (D) was as stated below these two linked items.

> TARK-‘I’m a Teen and Know the Solution to Affordable Housing Crisis’

> HUD Admits Decades of Delay-Finally OK Multi-Family Manufactured Homes

6) Quoting from the Congress.gov website.

Findings.--Congress finds that--
``(1) manufactured housing plays a vital role in meeting
the housing needs of the Nation; and
``(2) manufactured homes provide a significant resource for
affordable home ownership and rental housing accessible to all
Americans.
``(b) Purposes.--The purposes of this title are--
``(1) to promote the quality, durability, safety, and
affordability of manufactured housing;
``(2) to promote the availability of affordable
manufactured homes and to increase homeownership for all
Americans;
``(3) to provide for the establishment of practical,
uniform, and, to the extent possible, performance-based Federal
construction standards;
``(4) to encourage innovative and cost-effective
construction techniques;
``(5) to protect manufactured homeowners from unreasonable
risk of personal injury and property damage;
``(6) to establish a balanced consensus process for the
development, revision, and interpretation of Federal
construction and safety standards for manufactured homes and
related regulations for the enforcement of such standards;
``(7) to ensure uniform and effective enforcement of
Federal construction and safety standards for manufactured
homes; and
``(8) to ensure that the public interest in, and need for,
affordable manufactured housing is duly considered in all
determinations relating to the Federal standards and their
enforcement.''.

7) As lawmakers reminded the HUD Secretary Mel Martinez (R) during the Bush-Cheney (R) Adminstration in 2003, what is commonly called "enhanced preemption" was a key element of the new legislation. Keep in mind that the Manufactured Housing Improvement Act (a.k.a. MHIA, MHIA 2000, 2000 Reform Act, 2000 Reform Law) was passed on a widely bipartisan basis by Democrats and Republicans.

That federal preemption over "local zoning requirements" is how Congress wanted to stop those who wanted to thwart more affordable manufactured housing. On paper, both major trade groups, the Manufactured Housing Association for Regulatory Reform (an independent producers' trade group) has written and spoken about "enhanced preemption" scores of times. The Manufactured Housing Institute (MHI) has also said they support this understanding of the 2000 Reform Act. But oddly, there is no mention of those words "enhanced preemption" over the course of years on the MHI website.

8) In a recent report, linked below, I shared the importance of understanding paltering, posturing, projecting, deception and misdirection. It applies to many in or out of government, but I will apply that principle to MHI and Equity LifeStyle Properties (ELS) among others points made above and in what follows.

> Deception & Misdirection-3 Tricks-Paltering, Posturing and Projecting

9) Let's recap and then press on.

a) Schmitz et al said for the Minneapolis Fed that manufactured homes are less costly than conventional site building and are faster to build too. They claim that conventional builders, through the NAHB, HUD [and local zoning, etc.] have essentially colluded to undermine manufactured housing, which were beginning to dominate conventinoal housing. They call that 'sabotaging monopoly' tactics. Others who have studied their week later agreed.

b) The MHIA of 2000 made "enhanced preemption" a provision of federal law. MHI's Lesli Gooch and Mark Weiss, J.D., for MHARR, have both said that was Congressional intent.

c) Agree or not with the wisdom of their claim, ELS' said they have been operating under a business model, per their own Investor Relations (IR) presentation, that local zoning barriers somehow benefit them. This isn't a 'conspiracy theory' or mere hypothesis. ELS has said so openly and repeatedly. ELS' new presentation, for September 2024 has the same page with apparently the same content. This obviously is the opposite of overcoming local zoning barriers. Quoting: "Growing demand coupled with almost no new supply is a strategic advantage for ELS." Then, on the right side of the ELS IR graphic below (the call out boxes and arrows are added by MHProNews) it says: "Reasons for the Supply Constraint"

• NIMBY (Not in my back yard)
• Restricted zoning and regulations.
• Federal planning vs. local planning.

d) If ELS were alone with this curious business thesis (IR thesis or philosophy), it might not be so bad for manufactured housing. But other companies, like Sun Communities (SUI) have a similar belief. See the Sun IR graphic below. Note that Sun, which like ELS is another MHI member firm and also has a MHI board seat, use much the same phrasing as ELS. "Compelling Supply-Demand Fundamentals." "Virtually no new supply [of manufactured home communities] has been added for years."

e) Then, there are the statements made by Flagship Communities (TSX: MHC.U; MHC.UN), which has as a co-founder Nathan Smith.

https://www.manufacturedhomepr...

f) There are other examples of remarks by publicly traded and other manufactured home land-lease companies involved at MHI where they say that consolidation is part of their goal. These examples are important for investors and others because it seems to be causing lower performance, not superior performance for their stock.

10) In the light of these facts, as MHProNews/MHLivingNews keep shining a light on these issues, two of ELS' top insiders have sold large blocks of stocks. Patrick Waite, COO and MHI executive committee board member, led the way. After a pause, Marguerite M. Nader the President-CEO and a Director at Equity Lifestyle Properties Dumps 33000 Shares of ELS Stock Worth Millions...

https://www.manufacturedhomepr...

Marguerite M. Nader the President-CEO and a Director at Equity Lifestyle Properties Dumps 33000 Shares of ELS Stock Worth Millions; Rosen-SEC Probe; MHI-MHN Tease; Facts-Analysis; plus MHMarkets

11) It is possible that Waite and Nader needed or wanted a few million bucks between the two of them for their own personal reasons. But there may be other reasons, which include the rising number of antitrust, SEC related, and other litigation (see the reports linked above and below). It may also be that as MHI has failed, for whatever reasons, to successfully implement the MHIA (2000 Reform Act) that the posturing and narratives around that have worn so thin that they may be worried that state or federal antitrust or other officials could finally step up, investigate, and possibly prosecute.

12) To that point, the Minneapolis Fed's Schmitz, cited above, indicated that he sees the potential that the market manipulation he alleges that NAHB-HUD have caused are being used by some in manufactured housing for their own benefit.

https://www.manufacturedhomepr...

13) Samuel Strommen for Knudson Law said the evidence indicates that several MHI member brands are involved in "felony" violations of antitrust laws in ways that clearly harms consumers.

https://www.manufacturedhomepr...

14) There are several types of monopolization. One kind is oligopoly style monopolization. With that in mind, consider the following quote from the late Sam Zell, ELS founding chairman.

15) Perhaps even more brazen are the words of MHI member Frank Rolfe who praised the monopoly power that manufactured home community operators could have.

Rolfe also ripped MHI and curiously admitted that there is no intention on the part of special interests to solve the affordable housing crisis.

https://patch.com/florida/lake...

16) There have been multiple antitrust suits filed that have named ELS and ELS owned Datacomp. While using this investment philosophy that de facto thwarts new community development, ELS is demonstrably now trailing the S&P 500 instead of leading it (see above), as their own IR pitch seems to coyly admit.

17) But this does not just harm investors. It arguably harms the U.S. economy. It harms taxpayers. It harms affordable housing seekers. Who says? Ironically, fellow ELS member at MHI, Cavco Industries, which has also faced the SEC and their own shareholders. Cavco said that the lack of affordable housing is costing the U.S. economy some $2 trillion dollars a year.

18) So, there is an evidence-based case that ELS, and potentially several other "insiders" involved at MHI, have significant exposure to antitrust, securities, and other possible legal claims. It is unclear if that is a motivation for Waite and Nader's dumping millions of dollars of their own shares in ELS. But the experience of Madoff and others reminds us that sometimes big schemes operate for years before they are finally exposed. Once exposed, the scheming operation often melts down.

Lessons of Bernie Madoff-Enron-WorldCom-2008 Housing-Financial Crisis

19) As a closing reminder, it must not be thought that just because several apparent 'bad actors' exist in manufactured housing, that should not be an ill reflection on all of the honest operations in the industry. Manufactured housing is a tremendous opportunity for renters, downsizers, first time home buyers, investors, public officials, and others. The bad apples in the barrel should not cause the good ones to get tosses.

20) I'm personally happy to be a manufactured home owner. Having owned and lived in conventional housing, including nicer site-built homes in appealing neighborhoods, there is a case to be made that manufactured housing is an amazing option. Schmitz and his colleagues have spent years explaining why they think manufactured housing is underperforming as an industry. They and others think that more manufactured homes would obviously lead to less homelessness and more disposable income for millions of Americans. But the public and industry would be better served if market manipulators were dealt with. It should be apparent that multiple antitrust suits brought against ELS and others involved at MHI is a smoke rising signal that should not be ignored by sincere and honest public officials. ##

L. A. “Tony” Kovach and his family live in a manufactured home on private property in Winter Haven, FL. He is the co-founder of ManufacturedHomeLivingNews.com and

ManufacturedHomeProNews.com, trade publications serving segments of the manufactured home industry. Having worked in several segments of the manufactured home industry for over 3 decades, Kovach is a widely acknowledged and often praised expert on manufactured housing. ###

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