Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Andrew McCullough – Green Street Advisors.
Andrew McCullough – Green Street Advisors
On the new Fannie debt, especially the rate lock stuff, the rate is noticeably higher than what the apartment REIT’s have recently been paying. Maybe 100-125 basis points higher. Why do you think that is?
Michael Berman
Well we locked our rates, most of it back in May in the spring. Treasuries were higher. We also paid 50-60 basis points in order to get a one-year forward rate lock. Today’s spreads for manufactured housing is call it 2-2.25 over the ten year. I don’t think that is too far away from where the apartment deals are going. It is also hard to know exactly what the comparisons are. You need to know where the properties are located and what the underwriting is with respect to individual assets.
Andrew McCullough – Green Street Advisors
Where are those four properties located?
Michael Berman
One was in Florida and three were in California.
Thomas Heneghan
Appreciate, we decided to lock rate last year because if you remember we started to get some uncomfortable feeling as to how committed Fannie and Freddie would be to the manufactured housing industry. In essence we ended up doing an offering in light of that. There were decisions that were made at the time based on what we saw happening.
Andrew McCullough – Green Street Advisors
On your rental program, can you tell us how much that has expanded in the last quarter and how much you think that is going to expand in 2010 to maintain occupancy?
Thomas Heneghan
It hasn’t really expanded much in the last quarter. For the year I think we have done 300-325 net rentals. For next year we are forecasting a similar change.
Andrew McCullough – Green Street Advisors
Are you seeing any opportunities on the acquisition front that look attractive and what kind of cap rates are you seeing out there?
Thomas Heneghan
I would say we are seeing significantly more what I would call distressed asset opportunities. Most of it is on the family side. It is distressed as it relates to occupancy, market and in some cases even debt. Good located properties, however, especially age restricted properties we are not seeing any distress. In fact the pricing for that stuff is still pretty strong. If you can get financing through Fannie Mae again that also is a buffer under the pricing.
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