23:32 Capital has invested $91 million to buy 13 recreational vehicle (RV) resort communities with 2,840 sites in Ontario from Sun Communities, in what is the company’s biggest transaction to date.

The Toronto-based company now owns 20 properties in Ontario with more than 3,500 sites and the potential for the development of an additional 1,000 sites.

Fifteen of 23:32’s sites are seasonal RV resorts, while five are year-round manufactured housing communities.

“This transaction is a game changer for us because it provides a substantial opportunity for us to grow the business and strengthen our platform with fantastic assets and fantastic locations,” 23:32 Capital CEO Bryce Stewart told RENX.

Michigan-based Sun Communities, which announced a restructuring and cost-cutting plan last month, now has only two sites left in Canada.

The purchase is being financed through existing capital and debt financing. 

23:32’s cornerstone investor is Osmington Capital Partners, a private commercial real estate and investment company controlled by Thomson Reuters chairman David Thomson.

Resorts located near Great Lakes

The 13 RV resorts or seasonal communities acquired by 23:32 are located close to the Great Lakes, with strong exposure to Muskoka and Georgian Bay, all areas that people gravitate to for recreational activities, Stewart said. The sites are about 99 per cent occupied, with relatively long waiting lists at several of the properties, he added.

Stewart said there is the potential to expand the number of sites at some of the properties. “It’s a long and arduous process to get permission to expand, but some of the properties are already approved for expansion.”

Those expansion opportunities were untapped by Sun Communities, given the relatively small size of the portfolio as compared to its large American portfolio.

The transaction will provide affordable and attainable recreational experiences for Canadians, he said. While recreation is becoming increasingly expensive, the average seasonal fee for sites in 23:32’s portfolio is between $4,000 and $5,000, “which is very affordable relative to the alternatives. That’s the market we’re targeting.”

The traditional season for RV resorts in Ontario is May 1 to Oct. 31.

Stewart notes many people are trading in their RVs and purchasing modular cottages (also known as park models) which remain on-site during the off-season.

Low turnover on seasonal properties

“What ends up happening is that folks end up establishing a deep and meaningful connection with their neighbours,” Stewart said. “They pay their seasonal rate and return” year-after-year. As a result, the average churn (or turnover) for the portfolio 23:32 is acquiring is more than 12 years. 

Of the 2,840 sites about 2,650 are seasonal, leased by a mix of families and retirees, and only 150 are transient. “We like the stability of the cash flows that come from long-term seasonal rentals.”

It's not “folks who drive in in an RV for a weekend, party it up and then leave on Sunday night,” Stewart said, noting the industry is Increasingly moving toward seasonal, not transient residents. 

23:32’s business model is that “we own the communities, including the land, and our residents own the physical structures, be they cottages or recreational vehicles,” Stewart said. “Our residents get to enjoy pride of cottage ownership without having to endure the cost of land ownership.”

Stewart says 23:32 does not intend to raise seasonal fees substantially at the 13 newly acquired sites. “Our intention is to behave according to how the market behaves with respect to rents,” and to be within the range of this year’s industry rent increases of four to seven per cent for 2025.

The properties 23:32 has acquired from Sun are Willow Lake (near the community of Scotland), Huntsville, Cayuga, Georgian Bay (in Seguin), Turkey Point (in Normandale), Flamborough (in Millgrove), Penetanguishene (in Tiny Twp.), Stratford (in Bornholm), Arran Lake (in Allenford), Sandbanks (in Cherry Valley), Ipperwash (in Lambton Shores), Hay Bay (in Napanee) and Blue Mountains (in Clarksburg).

About 23:32 Capital

Founded in 2020 as a real estate-focused merchant bank, 23:32’s principal activity is to own, operate and develop manufactured housing communities and resorts.

“Historically there’s been a lack of institutional capital that’s been invested in what I think is a very attractive asset class,” he said.

23:32 was formed to take advantage of the fact the RV/manufactured housing business was like Ontario’s apartment business in the 1960s, which was “highly fragmented and mom and pop, not professionalized and not institutionalized.”

The goal is to “continue to participate in the consolidation of the business,” he said. “We are certainly not going to stop pursuing our growth objectives. We hope to be the largest operator in the space over time.”

Expansion to other provinces and the U.S. is possible, although 23:32 has yet to find any opportunities south of the border.

Stewart says there is a supply-demand imbalance for the industry which benefits existing resort owners.  

On the demand side, demand is growing as population growth affects the affordability of traditional recreational experiences.  

Meanwhile, on the supply side, the supply of new communities is significantly constrained as “they are not making any more lakes within driving distance of Toronto.”