Sun Communities Inc. expects above-average returns on its investment in the 10 RV parks it purchased earlier from Morgan RV Resorts as Sun evolves into a year-round operator of these lucrative properties.
Gary A. Shiffman, chairman and CEO of Southfield, Mich.-based Sun, updated the company’s progress on refurbishing the 10 former Morgan properties in the Northeast and Midwest during an investors’ conference callon Thursday (July 25) following release of its second-quarter results.
“Approximately 60% of the capital expenditures planned for the repositioning of the 10 ‘Morgan’ RV properties on the Eastern Seaboard have been completed. We are beginning to experience both positive feedback and results from residents who have begun to return to the communities since the opening of the season in June,” Shiffman stated.
In fact, the response by returning and new visitors has been “extremely positive,” Shiffman told investors, as the company updates the under-performing properties.
From a revenue perspective, the acquisitions make running RV parks a year-round business and removes the seasonality of the “snowbird” business predominately in Texas and Florida, which had boosted revenues during the first and fourth quarters but depressed them during the second and third, Shiffman said.
Besides updating virtually all of the 10 RV parks acquired from Morgan, Sun has installed new management at many of the parks, launched a new website which features a complete online reservation service, deployed a Facebook page for each park and relocated its call center from Florida to Southfield to guarantee that no call goes unanswered, he added.
He projects the return from the 10 parks will boost Sun revenues 7% to 9% over the next several years.
In addition to the Morgan parks, Sun bought two RV communities – one in New York and one in New Jersey – during the second quarter for $28.9 million, increasing the year-to-date total to 12 properties acquired for $140.9 million. One of the parks is located in Cape May Court House, N.J. and comprises 528 sites. The park in New York comprises 299 sites.
“The two recreational vehicle communities acquired during the second quarter fit well in the geographic footprint we have been establishing in the northeastern seaboard. We continue to remain actively engaged in reviewing acquisition opportunities of both manufactured housing and recreational vehicle communities,” said Shiffman.