CNL Lifestyle Properties Turns Fun into Income for Shareholders

When most investors think of REITs and the properties they own, they envision office buildings, shopping malls, hotels or large industrial facilities. REITs tend to own the places where people live, work and shop. For those investors looking at CNL Lifestyle Properties, they should add the word play to that list and would be better off envisioning what they did on their summer vacation.

Byron Carlock, president and chief executive officer of CNL Lifestyle Properties, sat down with at REITWeek 2011: NAREIT's Investor Forum to discuss the unique assets his company owns and how the current economic climate favors entertainment-themed assets. CNL Lifestyle Properties is a public, non-listed REIT that owns ski resorts, golf clubs, theme parks and additional lifestyle-oriented assets.

"Fortunately during the recession we saw strong visitation at these properties but had reduced per-cap spending," he said. "So, net-net we made it through the recession without a single tenant bankruptcy and most of our tenants continued paying us rent, but weren't making as much money above their rent."

Carlock said when it comes to expanding the company's portfolio they focus on acquisitions, looking for properties that will provide the best income for its investors. Carlock said there are opportunities out there, and he said that is in part because his company's market speaks to the demographics of this country.

"We play on the lifestyle activities of people outside their vocations," Carlock said. "There is a very valid position in our economy for these types of properties, and we have wrapped them in a lease structure to operators so that we can provide income to our investors."

The latest addition to the company's portfolio has been senior living assets, which comprises 14 percent of the company's portfolio by asset value.

Carlock said looking at demographic trends there are two lifestyle-themed areas where the company does not have a presence currently where he sees great opportunity.

"One is outdoor living, campgrounds, hunting and fishing. The second would be spa, fitness and wellness," Carlock said. "Both are very important in terms of what we see happening demographically, but not real big industries and still quite fragmented. As those consolidate around operators that have the credit to sign one of our leases, we might consider those as well."

Carlock said the fund closed to new subscriptions April 9, and the company has a new fund (CNL Properties Trust) in registration that will also focus on demographically oriented real estate such as more health care, lodging and additional lifestyle properties.