Orlando firm to purchase Magic Springs

Posted Wednesday, March 28, 2007 10:17 AM | Contributed by Jeff

Magic Springs Development Co. LLC announced Tuesday that it has signed an agreement to sell its Hot Springs amusement park to a real estate investment trust. CNL Income Properties Inc. of Orlando, Fla., will close on the purchase on or before April 30. It will then lease Magic Springs & Crystal Falls back to Magic Springs Development, which will continue to run the park. The developers will sign a 20-year lease, and no changes in management or staffing are expected.

Read more from The Arkansas Democrat Gazette.

Wednesday, March 28, 2007 3:22 PM
What's with this trend of selling the park and then leasing it back? What are the benefits?
Wednesday, March 28, 2007 5:22 PM
I'm no expert...but my guess is that this is symbiotic.

1. Real Estate Investment Trusts (REITs) are always looking for income producing properties for return on the dollar. A nice 20 year lease on an income producing amusement park seems a relative safe risk for return on investment. Especially when you own the land in a tourist area.

2. The park (management company) gets a quick infusion of cash for capital improvements at a better rate than they could get from a comercial bank.

This is WIN/WIN!

P.S. Hedge Funds are no longer the investment tool of the absurdly rich. A lot of money is tied up in private equity investment firms. A lot of public Vegas casinos for example...are starting to get bought up by private invesment groups looking for a better return on investment than thy can get playing stocks.

Wednesday, March 28, 2007 5:35 PM
Thanks for that. It was kinda obvious, huh?
Thursday, March 29, 2007 4:36 AM
I've seen this coming for a couple of years. Marriott is notorious for doing such things. They sale the hotel to a real estate company, turn around and manage the hotel. I suspect we will see Six Flags do this with some of their excess property sometime in the future.

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