About
SSG Recreation Fund 1 (SSG RF1) will be investing in high-quality funds and/or syndications within the recreational real estate domain which is largely untouched by Wall Street and still has higher capitalization rates (cap rates) on purchase. These higher cap rates provide great upfront cash flow while also enabling significant value-add when they exit at lower cap rates due to the "Merger and Acquisition" (M&A) phenomenon.
What makes recreational real estate a perfect fit for this is that most of them are owned by private entrepreneurs (a.k.a. "Mom and Pops") who are ready to move on or even retire while occupancies are high and operations are stable. The opportunity here is that new investments can bring in capital for new revenue streams, upgrades, automation, and better marketing. The recreational RE space has not yet been absorbed in an M&A wave like multifamily, self-storage, and funeral homes have been. But that wave is now building and building fast.
SSG RF1 sits right where it needs to be to capitalize on this next wave in real estate acquisitions. We are strategically partnered with the new "middlemen" in this space that can bring together the smaller assets, merge them into portfolios, and sell them to our connections in the larger fund space. Larger funds would rather buy portfolios of assets that have already optimized their operations and cash flows and provide diversification so that risk is not in just one asset. It also helps reduce the number of checks they need to write to acquire significant value.
Additionally, SSG already has experience in this space as a general partner of the "Norris2, LLC" (Beach Island Marina and Lakeview Marina on Norris Lake in Tennessee) which is exceeding expectations. Contact Us to learn more about Norris2.
SSG is also the syndicator and general partner in the Willows at Watson offering.
CHALLENGE
Where do investors go to escape the compressed and overcrowded multi-family markets? In most cases, cap rates have compressed to below 7% and many are realizing significant financial stress due to prior loan terms in this high interest rate environment. Self-storage is also highly compressed and largely owned by bigger funds. Single-family homes are being bought up by Wall Street at an alarming rate, consuming more than 20% of all sales in 2023. Is it possible to find an asset class with the exciting appeal and potential of the "good ole days" from 25 years ago? Absolutely.
SOLUTION
Recreational real estate has been largely ignored by the larger funds and by Wall Street, but the COVID pandemic changed that; everyone needed a way to get out of town and get outdoors. Boat and RV sales exploded to record highs and many rediscovered the joy and freedom of recreational activities. Marina boat slip rentals are regularly 100% leased on an annual basis, which provides stability during off seasons and results in long waiting lists. Many marinas also have RV pads, providing families an opportunity to enjoy longer visits to the lake. Not surprisingly, many of the RV spots are also on annual leases because folks don't want to lose their spot at the lake. Add multiple revenue streams from restaurants, ship stores, short-term rental cabins and hotel rooms, pools, boat rentals, planned activities, parks, fishing, and much more, and you have an awesome investment that provides investors with handsome returns. In addition, you provide a venue that facilitates family bonding, fresh air, and exercise or entertaining activities in a peaceful setting. It's no wonder larger investment funds are starting to take notice and go after these assets.
MARKET SIZE
How big is the opportunity? Consider this:
- The marina market is over $6.7 billion annually, reflecting more than 9,600 marinas in the US with high profit margins above 18% on average.
- The average income of boaters is over $100k per year.
- An estimated 100 million Americans go boating every year.
- The RV market is huge - over 15,000 parks in the U.S.
- The RV market is nearly $7 billion annually
- 9.6 million households intend to buy an RV within 5 years
CONTACTS
OBJECTIVE
The investment thesis of SSG Recreation Fund 1 is to find recreational assets that have amazing operators with exciting return potential that can generate cash flow and value add for the investor. We curate deals that start with anticipated 20% IRRs for the investors and keep their fees as low as possible.
This offering is an open fund, up to $20 million (with an option to increase). Capital will be raised and invested into other assets and offerings. As capital is raised, SSG Rec Fund will invest in new curated offerings to provide diversification rather than dilution. The current Fund Manager (SSG Fund Management -- also owned by SSG) may close the fund at any time for any reason, but especially to provide a closure event for current investors and return their capital and gains in 5-7 years or so. At all times, our top priority is the profitability and return potential for our investors; all decisions regarding exit strategies or continuation of the deal bear this in mind.
PURPOSE
Our purpose in providing this opportunity is two-fold: First, to provide high-value investment opportunities to our investors with asymmetric risk; and Second, to provide above-average cash flow and value-add, and capitalize on the new interest by Wall Street for alternative asset class investments. This provides SSG with multiple exit strategies and opens up new options to find the best returns and terms for our investors. We always want to plan our exit even before we close on the deal so that we have a goal to strive for.
The Investment Opportunity
INVESTMENT TYPE
- Hybrid - strong cash flows and value-add
OFFERING TYPE
- 506c
- Accredited Investors Only
TERMS & FEES
- 8% Preferred return
- LP/GP Split after pref. varies by commitment level. See supporting documents (PPM, Subscription, Pitch) in the Data Room <link>
- 50,000 minimum
- See the PPM for a description of fees and expenses
TIMEFRAME
- 3-5 year hold is expected. See the PPM for options.
ANTICIPATED RETURNS
- The investment thesis targets assets that provide at least a 20% IRR to the fund.
DISTRIBUTIONS
- Distributions may begin within 3 to 6 months, depending on seasonal cycles.
- Preferred return always accrues on unreturned capital but does not compound.
- Early return of capital (ROC) is possible upon a refinance. ROC does not reduce LP's equity position.
ADDITIONAL DETAILS
- See the PPM and other legal documents for important details
- Nominal expense reimbursements apply
Why Invest With SSG
While every investor needs to do their own due diligence into their investment choices, SSG provides a great kick-start by curating the offerings it ultimately presents to our investors. The sheer volume of potential investment opportunities can leave an investor overwhelmed just sorting through the options. Wouldn't it be great if the investors already had some of the hard work done for them?
We spend a great deal of time and resources networking to find the right opportunities. We pre-vet partners and their track records, integrity, fairness in fee structures, success in asset operations, and vision to build great opportunities, as well as the return potential of their offerings.
In addition, SSG syndicates new offerings that include strong general partners and unique value. We focus on less crowded asset classes, favoring off-market purchases, and we look for ways that we can add value to an already exciting deal. Our strategy is to favor opportunities that have a lower-than-expected risk for higher-than-average returns.
In support of our investors who prefer even lower risk, we do occasionally provide cash flow-centric opportunities that are more stable but with lower return potential, such as self-storage and triple-net lease arrangements.
CALL US AT 817.720.0170
CONTACTS
How to Invest
1) Make sure you are qualifed
As this is a 506c offering, you must submit a letter of Certified Accredited Investor Status from a 3rd party. You may acquire this from your own attorney, CPA, or for free from our service provider, Parallel Markets. SSG only sees the final letter; we do not see any personal financial information.
Got Questions? Set up an appointment with Jay.
NOTE: SSG may inhibit any investor's subscription for any reason in order to meet the written, implied, or subjective intentions of the law. Please get to know your sponsor (SSG) prior to subscribing to better ensure out investments are suitable for your goals and abilities.
2) Conduct your personal due-diligence
SSG strives to provide accurate information and assumptions from our end that may be necessary for people to make a wise choice in investing with us. We encourage each investor also to seek additional advice on their own to make sure we haven't missed anything. While we have our own CPAs, Attorneys, and advisors, we/they are not substitutes for you in determining the suitability of this investment for your situation. The information SSG makes available (such as the Private Placement Memorandum, or PPM, and supporting documents) can be found in this offering's Data Room.
3) Get your questions answered
Contact us at the number or email above at any time. You must be knowledgeable and comfortable with the risk/rewards of your investing choices. Get to know this opportunity well before you decide to invest.
4) Request an Esignature (Docusign) Subscription Document
Email us at investing@southsilvergroup.com to request an electronic subscription document. In your email, let us know what type of account the funds will come from (personal or business checking, self-directed IRA or retirement account, business entity, etc.). If you are subscribing from a custodial or business entity, please also provide the contact information for the one who will be co-signing your subscription and approving the investment.
5) Fill out the subscription
Fill out the subscription form and attach any required compliance documents (as explained in the subscription document; there will be places within the document to click for uploading such)
6) Be approved by the managers
Before wiring any funds, make sure the sponsor (SSG) has approved your subscription and that you have met any compliance document requirements.
7) Wire your funds
The wire instructions are in the subscription document. Take extra care to verify the instructions and details, as there is no guarantee that misrouted funds can be returned.
8) Enjoy your investment, and keep monitoring our progress!
SSG (or possibly a partner in the offering) will send out at least quarterly updates or newletters to keep investors informed.
Always feel free to reach out if you have questions or would like to talk about other opportunities.
