Silvercrest Corp., which has found in mobile home park development a ready outlet for the mobile homes it makes--as well as a way to get itself out of the red ink it chalked up in the early 1980s, said it will add two more parks to its growing western empire.
The Santa Ana-based company's Santiago subsidiary will pay $3.2 million when escrows close late this month to buy a 30-acre site in Springfield, Ore., and to pick up the leasehold on an 80-acre parcel in Palm Springs that the city owns and has been trying to get developed.
The Palm Springs deal is one of the company's more ambitious projects, said Richard Simonian, Silvercrest's president. Over the next five years, the company plans to develop 585 new lots to complement 115 existing sites. He said 55 new lots will be ready in the fall for low- and middle-income residents, especially senior citizens.
Only a few years ago, Silvercrest was staggering under unprecedented red ink. Its innovative mobile homes--designed to look like conventional houses with gable roofs, wood siding and open-beam interiors--were becoming expensive, and high interest rates were stifling financing and further dampening sales.
But in January, 1986, the company acquired Santiago Corp., a Santa Ana developer of four mobile home parks, in exchange for newly issued common stock valued at about $5 million.
Silvercrest, which previously had owned only one mobile home park, almost immediately went into the black, reporting a $249,000 net income on $40.5 million in revenues for the first nine months, ended March 31, 1986. It had lost $1.9 million in the same period a year earlier. The company purchased six additional parks during its 1986 fiscal year.
"That was the beginning of a complete program the company has undertaken to immerse itself in the entire industry," Simonian said. "It's been working very well and it looks like it will continue to work well."
In the first nine months of its current fiscal year, ended March 31, Silvercrest posted a $1.64-million net income on $48.4 million in revenues. Simonian said he expects the 18-year-old company to go over $2 million in earnings by the end of its fiscal year, June 30.
Silvercrest is the only mobile home manufacturer and seller in the West that also owns or manages mobile home parks, he said. There are a few companies in the East following a similar strategy.
The strategy boosts sales of mobile homes because Silvercrest, in new parks it develops, can assign nearly all the spaces to its dealers, who sell Silvercrest homes to the park's new tenants.
In nearly full parks, such as the one in Oregon--which has only about 70 of its 254 spaces unoccupied--Silvercrest is more interested in filling the park and earning management fees than in pushing its product.
The Palm Springs and Springfield acquisitions bring to 17 the total number of mobile home parks Silvercrest owns or manages in six Western states. They also are the fifth and sixth parks the company has bought during its current fiscal year.
The Santiago subsidiary will pay $2.2 million for the Springfield parcel in a deal that also will help to clean up the books of the nation's largest savings institution, American Savings & Loan Assn., which had acquired the property through foreclosure. The S&L is financing the purchase, Simonian said.
American Savings' parent, Financial Corp. of America in Irvine, has been struggling with a number of problems, including a huge amount of foreclosed real estate, in an effort to regain its financial health.
In the $1-million deal for the Palm Springs property, Santiago negotiated with both the city and a Pacific Lighting Corp. subsidiary to acquire a 55-year lease with a 10-year option.
The city has been anxious for the park to be developed, Simonian said, so that certain senior citizens and others eligible for affordable housing can be relocated there as part of the city's redevelopment efforts.