Under hedge fund ownership, Michigan mobile home parks' rents spike while maintenance lags
Sudden rent increases. Maintenance jobs ignored. And eviction notices that catch tenants by surprise.
People living in mobile home parks across Michigan say those issues have become commonplace since a secretive hedge fund bought up their parks.
Rose White is a reporter with MLive who's been investigating the tenants concerns. She spoke with Michigan Radio Morning Edition host Doug Tribou.
Doug Tribou: You spoke to a lot of residents of these mobile home parks. What are some of their main complaints?
Rose White: One of the main ones is big rent increases. Some of them are seeing their rents go up $130 at a time. And a lot of homeowners own the home, but they don't own the land. So, a rent increase of $130 is often a third [of their previous rent] or it can be a big jump for some of these people.
If they want to move, they're going to have to try to figure out how to move their trailer as well. So a rent increase can kind of spell disaster for some of these people who might be retired, or living on Social Security, or just really vulnerable people.
"[T]he rent is going up, but the maintenance is going down. Torn-up roads, giant potholes in one park. Some of the residents described discolored water."Rose White, MLive reporter
People have described how the rent is going up, but the maintenance is going down. Torn-up roads, giant potholes in one park. Some of the residents described discolored water and a lot of the residents there are just buying bottled water instead of using their tap water.
In another [park] that has struggled with flooding in the past, they said that some of their sewage issues have just gotten worse and a lot of the homes there are abandoned and vacant. So things are just kind of falling apart under this new ownership group.
DT: One resident who lives in Baltimore Terrace in Hastings, Michigan, told you, "These new people that own the park are like a shadow." And your report found that the group now controlling all these parks is a $1-billion, New York-based hedge fund called Alden Global Capital. Why is it so hard to trace these properties back to Alden Capital?
RW: It's kind of a winding trail. Each of these mobile home parks in Michigan — there's about 17 that we know of that are owned by this ownership group — they're all under a different [limited liability company] name, so it's not under one name.
I went back through each park's property records and found out which LLC owned it and then went to the state licensing database and just looked at the LLC. Through that I could see that it traced back to an investment firm called Smith Management, owned by the co-founder of Alden Capital. Each of the LLCs lists the same address is Smith Management. So these sort of "two plus twos equal four" traces back to this giant hedge fund that's based in New York.
Alden Capital is often called a "vulture capitalist." That's a term to describe an investor who buys up distressed companies and makes a profit by aggressively cutting costs or selling the business for parts eventually. One of the things that Alden Capital is most well known for is buying Tribune Media and buying up a bunch of local newspapers. They've gutted staff at newspapers across the country.
"Alden Capital is often called a 'vulture capitalist' ... an investor who buys up distressed companies and makes a profit by aggressively cutting costs or selling the business for parts."Rose White, MLive reporter
DT: This is a dramatic change for the residents of the parks. In a lot of cases, they had a more direct connection to the people that they were paying their rent to and there was often more flexibility. The people running the park knew that they'd be good for it midway through the month and it went on like that. And then all of a sudden there's more of a hard-and-fast approach. Is that right?
RW: Yeah, that is right. The man you mentioned earlier, who described the new owners as "a shadow," he was the former park manager. And so he described: previously, whenever there was a new ownership that came in, a representative of the ownership group would come around and talk to each of the residents. And he hasn't seen that with this ownership group. And a lot of the people are just sort of getting notices put on their door. The communication with park management has kind of started to break down.
DT: Has Alden said anything publicly about the complaints about its mobile home LLC's and the way they're running things?
RW: They did not respond to any of my requests for comment.
DT: Have there been any moves by the Michigan Legislature to try to regulate rents or evictions or any of these policies and practices at the mobile home parks?
RW: Legislation was introduced last year to update Michigan's mobile home park law. So that would kind of clamp down on some of these practices that we're seeing. But those bills ended up dying in session last year.
It's possible they could be introduced again or a new version of them could be introduced again, because I think nobody in the legislature wants to see these kinds of things happening.
"A hedge fund bought Michigan mobile home parks. Things fell apart." By Rose White for MLive.
Editor's notes: Some quotes in this article have been edited for length and clarity. You can listen to the full interview near the top of this page.