Not long after the ink dried on a peanut-fueled deal in Suffolk, a group of Richmond investors closed out 2021 by adding to their assortment of real estate with a second step into the Lone Star State.
National Land Lease Capital capped a busy year with the acquisition of Island RV Resort along the Gulf Coast in Port Aransas, Texas.
It was a sister deal to go along with Tropic Island Resort, an earlier purchase it made just up the road in the same town last summer and part of the company’s full acceleration into RV parks and so-called outdoor hospitality properties.
Yogi Singh, who leads NLLC along with longtime business partners Stewart Garland and Pushkal Basavaraj, said they spent approximately $20 million combined for the two Texas sites and more than $100 million over the course of 2021 on a handful of RV parks and related development sites in several states.
“It represents the future of our company and a shift and focus on outdoor hospitality,” Singh said.
The company now owns 2,000 land lease properties — those that house small lots for seasonal leases to RVs, campers and manufactured park model vacation homes. That figure includes existing sites and those in development.
RV sites make up the bulk of a portfolio that previously was dominated by office buildings, apartments and mobile home parks. That make-up changed over the last year.
Singh said they made the call to dispose of much of their mobile home parks — a handful in the Sunbelt region — for a total of around $14 million. He said the market is getting frothy for those types of properties.
“We do see headwinds in the conventional mobile home park space. There’s an overcrowding of equity late to the game,” he said. “We decided to capitalize on the high prices being paid for those assets.”
The Texas deals also mark a shift for NLLC into farming out the management of some of its RV properties. The Island acquisitions coincided with the firm’s hiring of Blue Water Development, a Maryland-based firm that manages and develops outdoor hospitality properties.
Singh said the relationship with Blue Water is a big deal for NLLC because it signifies it has reached a certain threshold in the growth of its portfolio, including size.
“It also says something about the quality of properties we’ve put together,” Singh said, adding that outsourcing management lets them focus more on deals. The company has several pools of capital it has committed to spend mostly on RV parks, including from private equity sources and an in-house fund it has been raising.
“It allows us to focus on acquisitions, refinancing, capital formation and the opportunity to work with outside investors,” Singh said of the Blue Water arrangement. “That’s what we’re good at. We’re also good at entitling land and developing projects.”
Blue Water for now is only managing the two Texas properties, but Singh said the goal is to grow that relationship over time.
Blue Water also manages properties for Sun Outdoors, which is among the largest competitors in the RV park industry. NLLC did a deal of its own with Sun last year with the $17 million sale of the Shenandoah Acres RV and campground in Stuart’s Draft, Virginia.
Other deals for NLLC in 2021 included the purchase of the 200-acre Floyd Family Campground in Floyd, Virginia in July, and 260 acres south of Myrtle Beach in South Carolina, where it will develop up to 700 RV sites. It also added acreage adjacent to its camping resort in Smith Mountain Lake for a future expansion.
Singh, Garland and Basavaraj also used their family fund to veer into a new sort of property for them: two cold storage warehouses in Suffolk that handle mainly peanuts.
While cold storage is still on their minds, the bulk of their focus remains on outdoor hospitality.
“We would like to double the portfolio in the next 12 to 15 months through acquisition and development,” Singh said.
And like the mobile home park sector, Singh said the market for RV parks and outdoor hospitality properties also is getting heated. He also thinks NLLC got in at the right time to continue to capitalize.
“It’s certainly getting frothier. This industry is quickly institutionalizing because of the pandemic,” Singh said. “We’ve had conversations with some of the largest hospitality investors in the world, including the likes of Hilton and Starwood. So we feel good about our placement in the industry because those folks are coming to us to talk about the future of the business.”