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A 2021 Delaware statutory trust of nine manufactured-housing communities, now in the final, fully-priced step of returning your capital — plus deferred preferred and a 10.5% IRR top-up. Here is exactly where it stands, and precisely why the closing has taken longer than any of us wanted.
MHC Affordable Housing DST ("DST III") was organized as a Delaware statutory trust to acquire nine "mom-and-pop" manufactured-housing communities, lease them to a Master Tenant under an absolute-net master lease, and grow value through higher occupancy, rent optimization, and the addition of park-owned homes.
The DST III PPM includes a Call Agreement: the Initial Beneficiary, MHC Capital DST, LLC, has the right (not the obligation) to acquire investor interests during the window beginning on the 3rd anniversary and ending on the 5th anniversary of the first investment, at an Exercise Price set so that each investor receives a 10.5% internal rate of return on the capital they invested. The 2026 sale into DST IV is that call right being exercised — the contractual exit the offering was built around.
The Trust owns the land and improvements. MHC Affordable Housing ML, LLC (the Master Tenant) leases every community under an absolute-net ground lease and runs the business plan. MHC Capital DST, LLC is the Initial Beneficiary and holds the call option to acquire investor interests.
Sponsored by MHC Capital II, LLC (Kwame J. Granderson). The offering was placed through managing broker-dealer S2K Financial LLC. Communities were acquired from MHC affiliates — originally bought 2014–2018 at an average 9.8% cap.
Buy stabilized "3-Star" (Class B/C) communities below appraised value, hold under a fixed-rent master lease for predictable income, lift occupancy from 66%, and exit into a successor DST — returning capital plus a preferred return and IRR top-up.
A Midwest-concentrated portfolio: five communities in Michigan, three in Ohio, and one in Pennsylvania. Aggregate physical occupancy at acquisition was 66.0% — the deliberate upside the business plan was built to capture. Filter by state below.
Reported as 10 properties comprising 9 communities (Gun River East and West are adjacent parcels operated as one community). Per-community purchase-price allocations are drawn directly from the DST III PPM and total $59,500,000; the Trust acquired the Properties on or about November 1, 2021. Portfolio totals: 500 acres · 1,702 sites · 66.0% occupancy (as of November 1, 2021).
The 2026 sale price is the product of five years of disciplined operating work. We grew revenue, captured utility cost recovery, infilled vacant lots with park-owned homes, and ran an extensive infrastructure program — more than $4.6M of capital reinvested from 2021 through 2026 — lifting net operating income to roughly $4.0M, which at prevailing manufactured-housing cap rates supports the independent Colliers appraisal of $90M.
Average site rent was driven to roughly $495/month (with further increases implemented in May 2026), water-and-sewer and other utility income was recovered, and vacant lots were infilled with park-owned homes that add both rent and saleable home value. Together these lifted trailing revenue to $7.06M and NOI to roughly $4.0M.
None of that revenue holds without the assets behind it. Across the full hold — December 2021 through June 2026 — we reinvested $4,608,432 of capital across water & sewer systems, roads and pavement, electrical infrastructure, tree and grounds work, and home rehabilitation — about 63% in water & sewer, much of it to satisfy state environmental orders and repair storm damage. The full year-by-year summary is below.
Three themes run through the spending. A water & sewer overhaul — wells, the WWTP, water mains, isolation valves and sewer lines — was the largest and most persistent driver, concentrated at Arbor Village and Rustic Pines. Regulatory compliance recurs throughout, with Michigan EGLE and Ohio EPA violations prompting water, road and electrical repairs and several civil penalties. And storm & tornado damage drove much of the tree work, especially in 2022 and 2026. One-time assets include standby generators at Four Seasons (2024) and Rustic Pines (2025) and full road repaving at Brady Hills (2023–2024).
| Category | 2021 | 2022 | 2023 | 2024 | 2025 | 2026* | Total |
|---|---|---|---|---|---|---|---|
| Water & Sewer (1802) | $29,232 | $732,859 | $429,868 | $685,042 | $755,865 | $249,178 | $2,882,044 |
| Trees (1804) | $54,513 | $192,159 | $37,515 | $64,047 | $37,980 | $64,350 | $450,564 |
| Electric (1806) | $11,285 | $231,116 | $85,120 | $70,383 | $41,221 | $9,007 | $448,132 |
| Roads (1803) | — | $184,763 | $96,674 | $97,789 | $3,831 | $50,970 | $434,027 |
| Cap. Improvements – General (1801) | $1,080 | $69,928 | $60,411 | $206,994 | $13,801 | $25,200 | $377,414 |
| Auto / Vehicles (1805) | — | $9,238 | $180 | $635 | $400 | $5,800 | $16,253 |
| Total | $96,110 | $1,420,063 | $709,768 | $1,124,890 | $853,098 | $404,505 | $4,608,434 |
The dominant category every year — wells, WWTP, water mains, isolation valves and sewer lines, much of it tied to state orders. Peaks: 2022 ($733K, Arbor Village well & service) and 2024 ($685K, incl. a ~$107K Four Seasons sewer connection).
Hazard, dead-tree and storm/tornado removals across the portfolio. Peak year 2022 ($192K, incl. 42 trees at Rustic Pines); 2026 dominated by Gun River West tornado cleanup (~$46.9K).
Pedestal replacements, pole and meter-base work, street lighting and service-wire repairs. Peak 2022 ($231K, Four Seasons); a new-pedestal program at Arbor Village in 2023.
Pothole and asphalt repair (much for state violations) plus full road repaving at Brady Hills in 2023–2024 (~$189K combined, Smith Paving).
Home demolitions, de-trashing and clean-up, plus one-time assets. Peak 2024 ($207K, incl. a Four Seasons standby generator and a home-demolition program).
A small account for park trucks and equipment — a used pickup at Brady Hills (2022) and minor repairs, tires and a battery.
The 2025–2026 portion of this program — $1,257,602, the work funded through the Master-Tenant bridge — is detailed line-by-line in Chapter 05 · Distributions.
Amounts are gross capitalized spending (general-ledger debits) from capital-improvement accounts 1801–1806 across all ten properties, reconciling to $4,608,432 in the source ledger and Excel workbook (2,020 line items). Credits over the period (insurance recoveries, adjustments) were ~$59,900, so net capitalized activity was ~$4,548,500. December only is captured for 2021; 2026 is year-to-date through June 23, 2026. Source: MHC Affordable Housing DST 3 — Capital Expenditures Report, 2021–2026, prepared June 23, 2026.
DST III is being acquired by its successor, MHC Affordable Housing DST IV, at a total purchase price of $90,020,000 — independently appraised at $90M by Colliers and peer-reviewed by JP Morgan's internal appraisal department.
The DST III assets carry just $30.5M of existing Key Bank debt against a $90M independent Colliers appraisal — value established before the rent increases implemented in May 2026. This is a delay in mechanics, not a question of value.
As the exit transaction was assembled, monthly preferred distributions were temporarily suspended in March 2025. We did not leave that gap open: in October 2025 we issued a catch-up that brought preferred payments current, and continued paying the preferred return through January 2026.
Monthly preferred distributions were paused as the multi-lender sale structure was negotiated.
A Q4 2025 catch-up restored the preferred return and payments continued through January 2026.
Working with our managing broker-dealer and capital-markets partner S2K Financial LLC, we arranged a bridge loan to the Master Tenant. That capital did two things at once: it funded additional improvement work across the communities — a $1.26M capital program detailed below — and it allowed us to pay the preferred return through January while the larger sale closed.
Two themes run through the spending. Regulatory compliance — a large share of the work was prompted by violations and notices from the Michigan Department of Environment, Great Lakes & Energy (EGLE) and the Ohio EPA, covering water-system isolation, road repairs, electrical fixes and several civil penalties. And storm & tornado damage, which drove most of the tree-removal spending, particularly at Gun River West and Watson.
| Category | 2025 | 2026 YTD | Total |
|---|---|---|---|
| Water & Sewer (1802) | $755,865 | $249,178 | $1,005,043 |
| Trees (1804) | $37,980 | $64,350 | $102,330 |
| Roads (1803) | $3,831 | $50,970 | $54,801 |
| Electric (1806) | $41,221 | $9,007 | $50,228 |
| Capital Improvements – General (1801) | $13,801 | $25,200 | $39,001 |
| Auto / Vehicles (1805) | $400 | $5,800 | $6,200 |
| Total | $853,098 | $404,505 | $1,257,603 |
Concentrated at Arbor Village (~$391K) and Rustic Pines (~$290K): water-line leak and isolation-valve projects, sewer-main video inspection and rehabilitation, WWTP compliance, a generator installation, and EGLE / Ohio EPA penalties tied to state regulatory orders.
Almost entirely storm- and tornado-driven hazard and emergency removals — led by tornado cleanup at Gun River West (~$46.9K) and Watson, with removals at Parkway, Rustic Pines, Brady Hills and Four Seasons.
Pothole and asphalt repair completed to clear state violations — major 2026 asphalt at New Village (~$28K), a cul-de-sac repair at Rustic Pines, and sealcoating at Arbor Village.
Pedestal, street-light and service-wire repairs across parks — Arbor Village (~$23K), Four Seasons pedestals, a new Watson pedestal, and a 2026 street-light fix to clear a state violation.
Home demolitions, shed/debris removal and clean-up dumpsters (Arbor Village, New Village, Brady Hills). Net of ~$25.4K insurance recoveries, net capitalized cost was ~$13,600.
A small account, entirely at Four Seasons, for the park truck — tires, supplies, a battery and a dump-truck repair.
Amounts are gross capitalized spending (general-ledger debits) from capital-improvement accounts 1801–1806 across all ten properties, reconciling to $1,257,602 in the source ledger and accompanying Excel workbook. Total credits over the period (insurance recoveries and adjustments) were ~$47,900, so net capitalized activity was ~$1,209,700. 2026 is year-to-date through June 23, 2026. This 2025–2026 work is the most recent slice of a $4.6M full-hold capital program (2021–2026) — see Chapter 03 · Value Creation. Source: MHC Affordable Housing DST 3 — Capital Expenditures Report, prepared June 23, 2026.
Investors asked for more detail on why the sale still hasn't closed. Here it is, plainly. The senior loan is ready — JP Morgan has completed underwriting, appraisals, survey and title, and is in a position to fund. The gating item is the bridge loan that pays off the remaining equity in Stage 2, and the reason is structural.
JP Morgan, as the senior lender, holds the real estate itself as collateral for its $44M loan. That collateral is already pledged — we cannot also give the real estate to the bridge lender. So the bridge has to be secured a different way.
Instead of real estate, the bridge must be secured by a pledge of equity interests. A bridge facility secured by an equity pledge rather than a mortgage is a genuinely more complex, harder-to-document structure — and getting it right for investors is what has taken the additional time.
In one sentence: the real estate is spoken for as JP Morgan's collateral, so the bridge that cashes out your equity has to be backed by a pledge of equity interests instead — a more difficult financing to put in place, which is the source of the delay.
We are not asking you to simply wait. Because the bridge structure has taken longer than anticipated, we are acting to keep you whole in the meantime.
Sent together with this update, we are issuing another catch-up distribution covering Q1 (February and March) — in the same manner as the Q4 2025 catch-up — so your preferred return stays current while we finish the bridge structure. All accrued and unpaid distributions through the closing date will be paid at closing.
Each investor will receive an updated statement reflecting your updated distributions — showing the Q1 catch-up and your running preferred return. At closing this is followed by a per-investor worksheet: original principal, deferred preferred, and the top-up to a 10.5% IRR.
MHC Affordable Housing DST organized in Delaware; $32.9M equity raise placed through S2K Financial.
Nine communities (1,702 sites) acquired from MHC affiliates at a 4.98% cap; Key Bank senior financing in place; monthly preferred distributions begin.
Master Tenant executes the business plan — occupancy growth, rent optimization and park-owned-home infill across the portfolio.
Monthly preferred paused as the DST III → DST IV sale structure is negotiated across multiple lenders.
S2K arranges a bridge to the Master Tenant funding community work and a catch-up that restores preferred payments through January 2026.
$90.02M sale to DST IV; JP Morgan ready to fund $44M senior loan; equity payoff to follow via bridge financing.
Equity-pledge bridge still being finalized; a Q1 catch-up is issued contemporaneously and every investor receives an updated statement.
Original principal + deferred preferred + top-up to a 10.5% IRR, with all accrued distributions paid through the closing date.