As Families Flock To RV Parks, Institutional Real-Estate Investors See Their Next Big Score

In January, a new Florida vacation destination began offering fruity cocktails, a pool with a 147-foot water slide, and the kind of boozy, relaxed lifestyle that's helped draw visitors from all corners of the nation to similar locations. But it's not a trendy beach resort or luxury hotel.

It's the latest iteration of Camp Margaritaville, a chain of four RV parks developed by the entertainer Jimmy Buffett for the mobile set, including his "Parrothead" followers, a boomer-rich crowd seeking the good life that he's been singing about since the mid-1970s. WiFi, fire pits, and a nine-hole putting course round out the offerings of the new campground in Auburndale, about an hour's drive from Orlando's theme parks.

The cult figure's vision was made possible with backing from an unusual source: Wall Street investors and bankers better known for their financing of towering office buildings, apartment complexes, hotels, and warehouses.

Camp Margaritaville was constructed with a $37 million loan from ACORE Capital, the company founded in 2015 by former executives of Starwood Property Trust, the largest commercial real-estate investment trust in the nation. The financing from ACORE, whose other recent closings include a $265 million mortgage for a sprawling north San Diego beach resort and hotel, is the latest example of how sophisticated investors are planting their flags in the corners of US real estate heretofore dismissed as small potatoes, or just too risky, for their capital.

"There's been a shift in who the investors are" in campgrounds and RV parks, said Norm Sangalang, a senior vice president in the CBRE capital-markets group overseeing manufactured housing communities, which, per industry norms, include mobile-home and RV parks. "Originally it was the owner or family business that built the park, usually with one or three locations. Now it's being handed over to the investment groups."

The stars seem aligned for their success.

First off, RV campgrounds with the right amenities are increasingly being sought by people who've found themselves untethered because of retirement, the "Great Resignation," or jobs that allow work-from-home arrangements.

The trend is also driven by demographics. Cash-strapped or just curious boomers are increasingly searching for more affordable vacations for their leisure years, and through their numbers, they've made themselves invaluable to local communities. Outdoorsy millennials who've started families are also adding to the demand as they gravitate to the freedom that campgrounds can provide. 

Veteran operators and analysts told Insider that campground investors were indeed multiplying. They believe investments racked up so far are probably just the tip of the iceberg for big investors, based on inroads they've already made in mobile-home parks and because they need to amass huge holdings to achieve better economies of scale.

Investors such as Invitation Homes, Tricon Residential, and Pretium Partners have done just that with single-family rental properties, an asset class that was once thought to be a short-term profit center for Wall Street firms buying homes at depressed prices after the financial crisis, rather than a mature, sustainable business.

"We're used to slow growth, but it's got to the point where, after the pandemic, there are so many more eyeballs on this space," Jim Westover, who was the vice president of product development and sales at Yogi Bear's Jellystone Park, the campground franchising chain founded in 1969, told Insider early last year.

Read the full article from Business Insider here.