Before the pandemic, only a handful of professional investment companies were building marina portfolios, and the asset class was largely overlooked. Several dozen companies backed by institutional capital are quickly acquiring marinas nationwide. From 2015 to 2019, successful investment strategies were proven by today's leading owners, including Safe Harbor, Suntex, and Southern Marinas. As a result, a wave of investment interest quickly evolved, attracting new capital nationally and internationally.
Marinas provide investors with diversification, tax advantages, and higher yields than core commercial real estate (e.g., multifamily, retail, office). COVID, as well as the hyper-consolidation by institutions, was the impetus for this shift. The heightened interest by households moving to new areas, changing careers with "work-from-home," and new lifestyle trends expanded this market (these buyers play a more significant role in transactions under $5M).
At the beginning of the pandemic, there was uncertainty about the future of boating and marinas – yet boating became one of the only safe activities for families and friends to enjoy amidst the lockdowns. Transactions stalled, and some fell apart, but it quickly became apparent that demand for new and used boats exceeded supply (like the auto industry), and these boats were making their way to marinas. The marina industry then went on a "bull run" after realizing record-setting numbers for first-time boaters, new boat sales in 2020 and 2021, transaction volume, and exceptional turnout at the country's largest boat shows.
With more boats on the water and more time for owners to use those boats, the marina’s bottom lines subsequently increased because of lower vacancies, higher rental rates, and increased boat repair demand. Boat clubs and boat repair operations also flourished; many clubs stopped taking new memberships because their inventory could not efficiently serve the membership.
Every marina's location, size, amenity package, and boater profile are unique. When you couple the high barrier to entry for new marinas and the limited existing supply, those with narrow buying strategies will have a more challenging time acquiring deals than those with flexible criteria.
Types and sized of marinas vary substantially. Tier I marinas, for example, are valued well into the eight-figure range, offering hundreds of storage options (slips, racks, land) and several amenities. On the other end of the spectrum, you will find smaller marinas that only offer 30-50 slips and one or two amenities. In addition, there are many variations of marina, boatyard, shipyard, and combined asset classes (e.g., marinas with RV parks, hotels, or apartments). Bottom line: every marina is unique, impacting the risk profile, price point, and underlying property fundamentals.
It is always tough to predict what's next, especially when you reflect on the industry outlook in February 2020. On a macro level, we can expect interest rates to continue rising through 2022 and likely in Q1 2023 as the Fed fights inflation. Marina financing is already a challenge for banks, but as rates continue to increase, purchasing power will dwindle and cash flow will erode. Ultimately prices will have to adjust to market conditions as we face a widening “bid-ask” spread. We believe there will be continued interest in marinas and are optimistic about the current fundamentals at this point in time, but investors will continue to exercise caution as they evaluate each deal and debt market pressures.
May 10, 2023
Omaha is most notably known for hosting Berkshire Hathaway's headquarters, but to one's surprise, in CNBC's Top Business States Ranking, Nebraska was #7. The low cost of business and centralized location in the midwest has attracted many new companies and commercial development. As a result, the metro continues to see job growth, with unemployment down 2.7% year over year.
May 10, 2023
Greater Boston is home to over 118 colleges and 346,000 students, making it the city with the fourth-highest concentration of colleges in the United States. Universities, healthcare, and finance drive the metro's economy, but additional housing is desperately needed. The metro is undersupplied by 77,000 units, leading investors to redevelop office space, factory buildings, and more into residential space.
May 10, 2023
The multifamily market's current rhetoric is a swirling cycle of good, bad, and ugly. There still is a housing shortage, rents are declining, capital has dried up, and the Federal Reserve is still raising rates. As an investor, how do you navigate these circumstances? The team at Rockval spoke with Bobby Larsen, Principal of Vanamor Investments, to get his insight on the current market conditions. Larsen has over 16 years of multifamily experience, initially starting his career at PIMCO and eventually moving to MG Properties Group. As the Director of Acquisitions at MG Properties, Larsen helped grow their portfolio from $500 to $4.5 billion AUM during his seven-year tenure.