IMBC panel: the marketplace for marinasPosted on
The 2008 marina market is a good news/bad news story. “Marina operating income held up in 2008,” said Jed Harris, a principal in Marina Sales LLC, of Portland, Maine. “Most people were off just 5 to 10 percent, if they didn’t have a boat sales component.”
Harris was part of a panel discussion Monday at the International Marina and Boatyard Conference in Fort Lauderdale.
If a marina relied heavily on boat sales revenue, then 2008 was probably a struggle, he said. Harris forecasts a tougher year ahead for all marinas, as the aftershocks from the quake on Wall Street rumble through Main Street.
“It’s going to have an effect,” he said.
Sales of marinas are difficult, but not impossible, others on the panel said. The gap between what sellers hope to get for their marinas and what buyers expect to pay is still large, said broker Karen Calvacca, of Waterfront Investment Properties, Newburyport, Mass.
The capitalization rate — a figure used to estimate the value of income-producing property by dividing net operating income into sales price — is probably 8 to 10 now instead of 5 to 6, which is what it was a couple years ago, Calvacca said. That means lower sales prices now.
“No more valuations through the roof,” she said.
Owners probably will have to help finance marina sales (owner financing), spend nine months or more negotiating, and carefully document revenue streams. “Financials are going to drive the sale,” said Marc Anton, another principal in Marina Sales LLC.
Most national lenders have gotten out of the business of financing marina sales, so owners must beat the bushes for financing, probably from a local lender.
“The money is out there, but it’s like finding a needle in a haystack,” said Andrew Cantor, president of NorthPoint Marina Finance Corp., of Alpharetta, Ga.
Polly Fuqua, president of Eye on the Market LLC in Knoxville, Tenn., helped an owner find a buyer and lender for the sale of Elm Hill Marina in Nashville, Tenn., recently for $11.25 million, but she said it was a unique property: 170 acres, 668 slips, a 21-year lease with the Army Corps of Engineers, permits to build 300 more slips, numerous revenue streams, and a long waiting list for slips.
“The basic cash flow is the way you’re going to get your loan,” she said.
— Jim Flannery