Park Holidays’ experienced operating team, led by CEO Jeff Sills, will continue to run day-to-day operations under Sun’s ownership. Park Holidays is the second largest owner and operator of holiday communities in the UK, with 40 owned and operated communities and an additional two managed communities. The majority of the communities are located in highly desirable, seaside locations in the South of England, within a short drive of London and other affluent Southern UK cities.
According to the release, Park Holidays represents a natural extension of Sun’s existing businesses and portfolio, complements Sun’s strategy and areas of expertise, diversifies its geographic presence and is expected to generate resilient cash flows. In addition, Park Holidays has a proven ability to source and execute both internal expansion and external growth opportunities. Park Holidays primarily rents sites for owner-occupied vacation homes on annual contracts, as well as sells vacation homes to new customers.
The acquisition, which is expected to be accretive to 2022 Core FFO per share, will represent approximately 7% of the company’s properties and 8% of its total pro forma real estate asset value.
“We are incredibly excited to expand Sun’s footprint into the UK by acquiring Park Holidays, which allows us to leverage our land lease community expertise in a growing market,” said Gary A. Shiffman, Sun Communities’ chairman and CEO. “This transaction provides Sun with immediate scale in the UK, as well as a platform for future growth in a fragmented landscape. We have completed significant strategy and research work in the UK with advisors prior to this opportunity, and feel confident that its long-term macroeconomic stability and fundamentals make the UK a very favorable destination in which to expand the Sun Communities platform internationally. Park Holidays has many parallels with Sun, such as its strong portfolio, its focus on growth and a management approach that is consistent with ours. Under the leadership of Jeff Sills and his highly experienced senior management team, who has led the company since 2006, Park Holidays has created a strong brand given the quality of its assets and stellar customer service. Its management team has a proven track record of acquiring and expanding properties, efficiently integrating them into the platform, and creating significant value in a short period of time.”
“As we performed our diligence and underwriting processes, we were thrilled to discover how similar our MH and RV business models are to Park Holidays’ operations and expect to apply our deep expertise to this new market and thereby accelerate our growth,” explained John B. McLaren, Sun Communities’ president and COO. “Overall, the holiday park sector in the UK is an overwhelmingly domestic market and very similar to both the MH and RV industries in the U.S. There are several compelling tailwinds that make us excited to enter the UK market as it has demonstrated consistent, steady growth through economic cycles and is currently benefiting from a rising interest in premium outdoor vacations and second home purchases, as well as a number of high barriers to entry given limited land availability and zoning restrictions. Over time, we intend to use this platform to continue to scale in the UK market, just as we have successfully done in the US.”
“Joining Sun is an exciting new chapter for Park Holidays as we seek to continue to execute on a well-established and proven strategy to drive organic and inorganic growth. Our companies have a lot in common as we both strive to achieve the best experience for our customers and colleagues, and we are excited by the opportunity to work and collaborate with the Sun team. Our business has delivered strong and consistent growth through economic cycles, as we have built a unique portfolio of well-located assets and a sustainable and diversified business model with industry-leading operating metrics. By joining Sun, we plan to continue to consolidate a fragmented industry and provide the Park Holidays experience to an expanding customer base,” said Jeff Sills, Park Holidays’ CEO.
The UK holiday park industry is an approximately £5 billion ($6.7 billion) market that has demonstrated resilient growth through previous economic cycles. As in the U.S., it has benefited from robust growth in demand for domestic outdoor holidays which has been further accelerated by Brexit and COVID, noted the release. According to industry sources, the UK holiday parks market is expected to see a compounded annual growth of approximately 8% from 2019 to 2021 and approximately 6% from 2021 to 2025. The UK market is highly fragmented and prime for consolidation over time, as platforms with 10 or more properties account for only about 7% of total properties. For the twelve months ended Sept. 30, 2021, Park Holidays generated £73.9 million ($99 million) in EBITDA.