b'Investment Groups, Lured by the Magic of the Outdoors, Expand Reach in RV Parks, Campgrounds Marketplace nBY JEFF CRIDER tionwide RV resorts and campgrounds Rising consumer interest in campingover the past three years, of which four has paved the way for record RV sales andresorts are under development, Kruelle dramatically increased demand for camp- said. He said Blue Water has a $400 mil-sites across the country.lion development pipeline, including new Its a trend that was underway beforeground-up development and expansion the pandemic and only intensified as fearsprojects. of the coronavirus prompted ever increas- Lastyear,TurnstoneGroup,which ing numbers of consumers to not only em- made its first RV park investment in 2015, brace camping and RVing as the safestannounced a joint venture with Blue Vista vacation option, but to consider the meritsCapital Management of Chicago to pursue of working from the road in the safety andup to $200 million worth of new acquisi-comfort of their RV.tions and development opportunities in the As a result, the demand for campsitesRV park and outdoor hospitality arena. has never been greater, and its led institu- In April, Boston-based Rockpoint, one tional investors, private equity firms andof North Americas largest real estate in-individual investors to see the private parkvestmentfunds,announcedastrategic business as one of the most potentially lu- partnershipwithMargaritavilleEnter-crative investment opportunities availableprisesLLC,whichlaunchedtheCamp in commercial real estate.Margaritaville brand of luxury RV resort There is so much demand for RV sites.Park developments are springing up across the country as many investment groups aredestinations last year. Theres a huge gap relative to supply, saidfocusing on the outdoor hospitality industry. Photo: Shutterstock The infusion of investor capital and in-Carl Kruelle, chief investment officer forcreasing profit opportunities in the outdoor Blue Water Development Corp. in Oceansecond largest owner of vacation commu- miliar with running a private park can eas- hospitality industry have also enabled pre-City, Md., which specializes in investment,nities in the United Kingdom.ily find third party management companiesviously small players to build significant developmentandman- Many other REITs, institutional investorssuch as Blue Water, Advanced Outdoorportfolios. Examples include Athena Real agement, including insti- and private equity firms that previously fo- Solutions or Horizon Outdoor HospitalityEstate of Orlando, Fla., which has grown tutional management ofcused on other types of commercial realto do it. its Applebrook brand of RV parks and re-RVresortsandcamp- estate, such as apartments, self-storageFor the first 10 years of the companyssorts from a single park, Cypress Camp-grounds, hotels, marinasunits and hotels, are diversifying their port- history, most of our clients were individual,ground in Winter Haven, Fla. 14 years ago and attractions. folios to include campgrounds, RV parksmom and pop owners of single assetsto 12 RV parks and resorts in four states, Butrecorddemandand resorts.that had run the propertyincluding RV resorts in New Orleans, La., for RV sites is also lead-Suddenly, the private capital investorfor a decade or two andAtlantic City, N.J. and Lake George, N.Y. ing other real estate in- who may have been buying or fixing upwerereadytotakeaMeanwhile, the number of private equity Carl Kruelle vestment trusts (REITs)self-storage units or hotels started seeingback seat but werent yetgroups targeting the private park sector aswellasotherpublicandprivatein- an opportunity (in the private park sec- ready to sell, said Hori- continues to grow. vestors to collectively channel billions oftor), said Bob Kaplan, of NAI Outdoorzons CEO Scott Foos.Last year, Han Capital established a dollars into not only the construction ofHospitalityBrokersinIn those cases, henew division focusing on campgrounds new campgrounds, RV parks and resortsBasalt, Colo.continued, wed operateand manufactured housing communities, across the country, but the acquisition, ex- Oneofthemostthe properties for themand recently announced its acquisition of pansionandimprovementofexistingsalient examples of thisScott Foos to increase value throughGlenwood Canyon Resort in Glenwood, parks, many of which were built close to acapital shift involves Thebest practices and put them in a better po- Colo. half century ago, when the modern RV in- Jenkins Organization ofsition to receive top dollar when the timeIn January, Halmos Capital Partners dustry was in its infancy.Houston,Texas.Previ- to sell came. Over the last five years or so,announcedtheformationofCedarline Ive never seen such a flood of REITs,ously a powerhouse inweve seen a shift in inquiries, where al- Outdoor, an investment group focused on private equity and high net worth individu- theself-storagebusi- most exclusively, our clients are profes- strategic acquisitions in the RV park sector, alscomingintotheoutdoorhospitalityBob Kaplan ness, the company hassional money groups who have a seriousstarting with the acquisition of two parks space, said Randy Hendrickson, CEO ofspentthepastfiveyearstargetingtheintention of making bigger plays in thein the White Mountains of northern New Westlake Village, Calif.- campgroundbusiness,acquiringJelly- space. These groups do not want to oper- Hampshire. based United Park Bro- stone Park locations in several states inate the locations themselves and are usedThe camping consumers are benefiting kers.addition to launching its own network ofto partnering with experienced profession- from increased investments as park oper-Longtime REITs suchRV resorts, which it is marketing under theals to maximize the value of their asset andators invest not only in new campsites, but asChicago-basedEq- Great Escapes RV Resorts brand.reduce their liabilities in the space. inniceramenities,includingupgraded uity LifeStyle PropertiesThe stepped-up pace of public and pri- Hendrickson said investors have alsowater and power connections and state of Inc.(ELS)andSouth- vate investment in RV parks and resortsexpanded the types of parks they are tar- the art Wi-Fi. field,Mich.-basedSunwas underway before the pandemic, Ka- geting for acquisition.We want to make our properties the Communities Inc. (Sun)plan asserted, adding that volume of in- Whereas a few years ago, he said,best they can be, said Richard J. OBrien, Randy Hendrickson havebeenparticularlyvestment in the private park business onlythe criteria may have been 200-plus sitesCEOofAthenaReal aggressive with their acquisitions, expand- intensified with media publicity highlightingin the Sunbelt, investors now recognizeEstate & Applebrook RV ing their respective footprints, while im- record RV sales and rocketing demand forthat perhaps 70-site parks with additionalParks,adding,Were proving and, in some cases, adding morecampsites across the country. acreage are the best methodology for get- finding opportunities to RV sites where they can. ELS and SunTheseinvestorswerelookingforting a foothold (in the market), in essence,improvetheproperties have also been expanding joint ventureshigher yields, he said. They were lookinggetting locations now, and extracting in- thatwepurchase,and with other companies targeting the privatefor another category (of investment) to putternal value later through expansion orthatmakesforhappy park business.their money to work.repositioning.campers. There is strong ELS owns 446 properties, 216 of whichKaplan added that many institutionalMany companies that own and operatedemand for high-quality it classifies as RV resorts, while Sun ownsand private investors who previously putprivate parks have access to more invest- Richard J. OBrien RV parks. 477 properties, including 160 RV resortstheir money in hotels, self-storage, apart- ment capital than theyve ever had before,Of course, the more investors improve and 33 resorts with both RV and manufac- ments and other sectors of commercialwhich enables them to not only build newthe existing inventory of campgrounds and tured housing sites, according to docu- real estate have found a new opportunityparks from the ground up, but to step upRV parks, the more likely they will be able mentsonfilewiththeSecuritiesandwith private parks. their acquisitions of private parks and in- to retain todays camping consumer. Exchange Commission (SEC).RV parks are heavily mom and popvest in needed improvements or expan- While RV park buyers have faced bid-Sun has also recently acquired some of(owned and operated), he said. But (in- sions that the previous owners were eitherding wars in recent years, as well as as-the biggest companies in the RV resortstitutionalinvestorsandprivateequityunable to do owing to a lack of capital.tronomicallyhighpricesforbuilding business, including Milford, Ohio-basedgroups) have more capital and can addCompanies like Blue Water originallymaterials and supplies, complicated by Leisure Systems Inc. (LSI), now knownmore amenities. If youve been a hotel op- made investments using founders capital. supply chain issues, park operators tell as Camp Jellystone, which franchises 75erator, then certainly you can figure outWe now have an expanded investorWoodalls Campground Magazine that ris-Yogi Bears Jellystone Park Camp-Resorthow to run an RV park. In my eyes, abase comprising high net worth and insti- ing interest rates will soon have a moder-locations across the U.S. and Canada. Inhighly transient park is like a hotel withouttutional investment, Kruelle said.ating effect, not only on RV park prices, but November, Sun also announced its $1.3walls.That capital has enabled Blue Water toon the costs of improving and expanding billion acquisition of Park Holidays UK, theFor their part, investors who arent fa- quadruple its portfolio holdings to 34 na- their parks. WCM12 September 2022 Woodalls Campground Magazine'