US REIT to buy Park Holidays for £950m

Insight Comment
It seems investors can’t get enough of holiday parks. Bourne Leisure, Roompot, Away Resorts and European Camping Group have all recently been bought, highlighting the appetite for the sector. It’s not all just Covid-related either as it’s an area that has been growing over the past few years with buyers also attracted by the possibility of mass consolidation.

Park Holidays has become the latest holiday park operator to be snapped up after US-based REIT Sun Communities agreed to buy it for £950 million

The purchase price is almost treble the £362 million that current owner Intermediate Capital Group paid back in 2016.

According to Sky News, Sun Communities beat off rival bids from pension fund the Universities Superannuation Scheme and Starwood Capital.

The bidding war for Park Holidays reflects the interest in companies catering to the staycation market, especially those with an open-air element.

Park Holidays has 40 owned and operated sites and an additional two managed ones. The majority of these are located in seaside locations in the south of England.

Why The Attraction?

Park Holidays primarily rents sites for owner-occupied holiday homes on annual contracts. The regular income combined with the growth in domestic holidays has made the industry attractive to private equity as well as institutional investors.

According to research by New Street Consulting Group revenue at the UK’s Top 25 holiday parks has increased by 65% in the past five years. Investors have also spotted that the market is highly fragmented and potentially ripe for consolidation.

Not only has Covid foreced people to holiday closer to home but it has also put a renewed focus on fresh air and the outdoors, something that holiday park operators can boast.

In recent years Blackstone has acquired Bourne Leisure and last month French firm PAI Partners completed a deal to buy European Camping Group.

What They Said

Gary Shiffman, Sun Communities chairman and CEO: “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. 

“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.”