A little perspective for what it’s worth from someone who has lived exclusively in the Outdoor Hospitality asset class for over a quarter century (and counting!)
Regarding the flood of investors seeking to acquire Outdoor Hospitality assets, the pandemic has absolutely been fuel for the fire, but the fire has been burning long before COVID. The RV Park/Campground/Glamping asset class has been red hot for many years, and only getting more active. With that, the number of investors competing for desirable acquisitions has put significant downward compression on cap rates, as an increasing number of investors compete for increasingly thin inventory. The most significant opportunities are off-market, which is what we specialize in. We have sold over $300,000,000 in this asset class over the past several years, including over $31M under contract in 2021 thus far.
The overwhelming majority of these sales have been, and are currently, off-market deals because first and primarily, our sellers do not want their properties to be publicized and picked over by buyers who may not be capable, and/or not familiar with the Outdoor Hospitality asset class. They want to work with buyers who understand the nuances of their business, and who have the financial ability to close a transaction. On the buyer’s side, off-market deals are always desirable precisely because the deals have not been broadcast to the masses, therefore the competition may not be as widespread, and they can most often acquire desirable properties at a realistic valuation. All too often, brokers may establish an unrealistic expectation of the valuation. This in turn results in a property going to market through various marketing channels, whereby the name and address of the property is made known. This can in some cases result in staff and guests being made aware of the owner’s desire to sell, which can affect the prospective seller in a negative way. By working off-market deals, we are able to facilitate a ‘quiet’ transaction.
When a broker establishes an unrealistic expectation on the go-to-market sales price, we have seen parks receive very high offers, very quickly, only to have the seller receive an 11th-hour re-trade from the prospective buyer whose strategy may have been precisely that: Wait until there is ‘deal fatigue’ on behalf of the seller, and approach the seller with a lower price than was initially stipulated in the initial LOI (Letter Of Intent). From our perspective, there’s a better way: Work with ‘real’ sellers on a realistic valuation, present it to ‘real’ buyers we have vetted, arrive at a transaction amount sensible to all sides, and close the deals.
There are, absolutely, significant off-market opportunities to be acquired and repositioned to capture the massive consumer spending in the Outdoor Hospitality space, and this is the time to do it.
We act as part of your Success Team, whether you are a buyer or seller. This means that we avoid commoditization, and personalize our services as a ‘matchmaker’ of sorts by understanding our clients’ objectives and attempting to align willing sellers with capable buyers. This is why it is uncommon to find listings on our site except in rare instances, because the nature of our model is to confidentially represent all our clients. Lastly, because time is an asset that cannot be duplicated, we choose to work with sellers who are ready to sell, and buyers who are ready and able to buy. ‘Testing the waters’ is understandable of course, but our model is focused on delivering results.
Please know that this is not an attempt to discredit other brokers’ approach, or to claim ours is a better approach. Far from it. There are many brokerages who are much bigger than we are, whose methods differ from ours. Every seller contemplating their exit has to arrive at which approach works best for them, and that’s the beauty of many brokerages serving this space offering different models in their sales approach. We believe any seller contemplating a potential sale should, and must, interview several brokers and find the best match for their specific objectives. Selling your park is a significant financial, and very likely an emotional, consideration. Make sure you do your due diligence and find the right fit for you!