b'run parks that have made investments in in- paid in the COVID years. Investors that want frastructure.Awell-run,well-managed,to be in the space for a while and family well-built RV park is always going to havebuyers are encouraged by the fact that this good value.industry always does pretty well, even in an Jesse Pine, a broker at NAI Outdooreconomic downturn. I primarily list KOAs HospitalityBrokers,alsoremainsopti- for sale and I have seen an upsurge in in-mistic about the strength of demand for pri- terested buyers wanting the support and vate parks.marketing power of a franchise. With the in-The transaction vol- dependent parks I sell, I have seen a lot ume has decreased com- more park owners and potential buyers ask-paredtoeightor12ing about what associations they can join. months ago, and that isWhat groups are there to support them in mostly due to higher in- their endeavors? terest rates making pur- Inflation, meanwhile, is driving up the chasing an RV park morecost of both operating a park and making expensiveandlendersimprovements. Jesse Pine beingmorecautiousinInflation is dramatically higher than it writing new loans, he said, adding, If rateswas pre-COVID, Omstrom said. Whether settle and come down 100 basis points, Iits labor, materials, moving dirtevery-would expect the volume to resume back tothing is significantly higher. where it was. Generally, the high-interestReal estate experts and investors expect the upward trend in developments and park salesAs a result, he said, inflation could slow rates are raising cap rates marginally, whichto continue onward despite economic concerns. Photo: Shutterstock the pace of new park development and park is decreasing the overall value of properties.expansions. Also, 2021 was a banner year for mostas a quality investment choice to add togrounds plan to continue to do so, includingSay you took on $1 million in debt in owners and in 2022 parks were down 5- theirportfolio.AslongasthenumbersAthena Real Estate of Orlando, Fla., whichMarch of 2020 with an interest rate of 3.5%. 10% in gross income commonly across themake sense, and both buyers and sellershasgrownitsApplebrookbrandofRVToday, that rate is 7.5%, Omstrom noted. country, coupled with higher expenses likehave some common ground on pricing,parks and resorts from a single park, Cy- Your borrowing costs have more than dou-rising utility, labor and construction costs,then transactions will keep on a steady pacepress Campground in Winter Haven, Fla. 15bled. So, what you can do depends on how so the result was lower than expected netthis year. Large parks with a mix of short-years ago to 13 RV parks and resorts incheap the park was to begin with. If youre income.and long-term guests near major metros orfour states, including RV resorts in New Or- going to improve the park with all concrete Overall, though, there are as many RVclose to a major tourism draw will continueleans,La.,AtlanticCity,N.J.,andLakeroads, its going to be expensive. Youd bet-park buyers as ever, Pine continued, andto be most sought after to a broad buyerGeorge, N.Y.ter be in a market where you can get very they are often first-time buyers coming frompool. Its definitely a different market, saidgood rates (for your RV sites and rental ac-other real estate asset types who are seek- For their part, companies that have beenRichard J. OBrien, CEO of Athena Real Es- commodations). ing higher yields and are looking at RV parkslooking to invest in RV parks and camp- tate. But he said his company plans to con- Despite these rising development costs, tinue to acquire RV parkssome private park operators are moving and expand its footprintahead with their plans for both new camp-across the country. Wegrounds and expansions of existing parks, buy across the countryincludingBillings,Mont.-basedKamp-solongasaparkhasgrounds of America Inc. (KOA). multiple demand driversDespite inflation and external factors and 200 sites or greater.causing increases in development and con-We are also looking to bestruction costs, were continuing to see a creativeinpartneringhigh level of investment in both existing and with park developers andRichard J. OBrien new campgrounds, said Chris Scheer, park owners in the Western part of the U.S.KOAs chief financial officer. Throughout Higher interest rates and inflation are2022, five new KOA con-making park buyers more selective, how- struction contracts were ever.signed. In total, there are Before you could borrow money at 4%now 29 campgrounds in and now its 8%. That makes it harder todevelopment,including buy, said James Omstrom of Open Roadthree that are corporately ResortsinHeath,Texas.Thatdoesntowned. On existing KOA mean you cant find good properties. But iflocations, KOAs Camp-we make an offer, we have to be cognizantground Design Services of what (costs) were taking on.completeddesignsforChris ScheerDespite these hurdles, families and small3,504 new and redesigned sites. This in-investors continue to be very interested includes 2,248 RV sites, 435 with KOA Patios purchasingcampgrounds,accordingtoand 359 various accommodations and tent Cathy Reinard, an associate broker withsites. Both established campground owners DWC Properties in Brockport, N.Y.and new entrants into the market are still Iamseeingthataseeingthevalueofinvestingincamp-family buyer or a smallgrounds. investor seems to be will- Inflation does not seem to be hurting ing to pay more moneyconsumer interest in camping, either. KOAs overall for a park than theJanuary camping survey found that 48% of larger capital groups arecampers felt that camping offers a more at this time, she said. Icost-friendly way to travel. believeitisbecauseaFour in ten also shared that, even if the familybuyerisinthiseconomy worsens, they will continue to business for the long haulCathy Reinard camp while taking fewer vacations of other or at least a longer period of time than a lottypes, Sheer said. Impressively, 24% of of the capital investment groups. They feelcampers plan to camp more if the economy they can refinance the park later when ratescontinues to lag. drop so they are willing to pay more moneyOverall, KOAs more than 500 camp-in general for the park as long as they cangrounds experienced a slight decrease in get it financed.the number of camper nights compared to The current interest rate environmentthe extremely busy 2021, which was offset has created a lot of buyers with a strongby an increase in the per camper night down payment, Reinard added. Buyersrate charged to campers caused by high in-who take a look at SBA and USDA loans forflation. the longer amortization have faith in them- At KOA, Sheer said, we anticipate a selves. They are less nervous about wherelevel of camping this year that is on par the economy is going. Many of these in- with 2022, a year in which overall regis-vestor groups are looking to flip out in fourtrationrevenuesweremorethan30% or five years and dont feel that they havehigher than KOAs pre-pandemic record the room to pay the crazy prices that wereset in 2019. WCM28 April 2023 Woodalls Campground Magazine'