This campground made $836k of net profit last year, and we're buying it next month for $8.6m. Here's how the deal breaks down and how we'll triple the value:
- 116 acres, 85 RV sites, 9 cabins, 8 glamping sites, 11 tent sites and 1 "Great Lodge" with a pool that rents for $600/night
- 89% overall occupancy. The best sites have a 3 month waitlist
- 2 pools, lakes, water slides, jumping pillows, shaded $100k kids playground, 8 pool tables, game room, etc.
- 32% expense ratio
- Tent sites are $49/night, glamping teepees and covered wagons are $119/night, RV pads are $89/night and cabins are $270/night.
I spent a whole day there on Friday and what I am MOST bullish on is the 547 acre mountain biking/trail system/amphitheater going in next door.
Our campground will be the ONLY lodging attached to these 23 miles of running, walking and biking trails.
Our campground will connect directly to this new, state of the art trail system (called 1North), and sits at one of the highest elevation points in the state.
Greater Shreveport has 320k people and connects to the Gulf of Mexico via the Red River.
Our park is 5 miles from Caddo Lake, one of the largest natural freshwater lakes in the US, a world class fishing destination.
The current owner has INSANE attention to detail and pride of ownership. Have you ever seen a campground bathroom with luxury, sensor-activated toilets?
How do we plan to increase the value of the park?
1. Pad site and cabin expansion.
2. Rent increases.
3. Utility reimbursements.
4. More marketing.
5. More marketplaces.
6. New occupancy demand, thanks to the bike park.
3 month waitlist = expansion opportunity.
We'll add 75 more RV sites and 20 more cabins.
We'll list everything on more marketplaces than just Campspot.
We'll use paid ads.
We'll add a massive sign to the highway where it sits. Right now there's a tiny sign that's basically invisible.
There are ~65 unused acres, and it's some of the most scenic, elevated acreage in LA. Tons of low hanging fruit.
These changes will more than double the gross income.
Expensive ratio will jump year 1 and slowly drop back down to current levels as we scale.
This has ben our proven playbook.
The brass tacks:
We're raising $6.5m in equity and borrowing $6.5m in 7.75% debt with a 9% ceiling and 5% floor.
Current DSCR is 1.57x
Year 3 DSCR is 2.76x
This will cover more than enough of our expansion plans so no additional raises will be needed.
Investors get a 10% preferred return, 60% of profit until 15% IRR and then 50% after 15%.
Targeted IRR is 25.66%.
Year 1 bonus depreciation is estimated to be 50%, which goes to investors first.
We aim to return most or all of investor's principal via refinance within 3 years, but keep their equity in place for further returns.
This will be our 22nd park.
Links to see the deck and webinar are in the first comment below.
