MDL expansion

Re: European marinas

er, yep, i wd have no trouble getting a space for 10m boat.

Not so sure about the minicab firm, i think my north african cousin only worked there for a while but went back to selling rugs onthe beach as it's even more profitable that minicabbing.
 
Re: European marinas

Sorry I meant Golfe de Saint Tropez, to compare with the Solent.

A boat park? Yes that's how I'd describe Lymington Yacht Haven too.

Have to admit I do not know how much a cab ride from Heathrow to Lymington is, but probably not that far of £140.
 
Re: European marinas

but your underlying implicaion is that the golfe de st trop somehow ought to be invariably more expensive? Your example chose one of the cheapest marinas in that area, with lymington being one the most expensive.
 
Re: James, look what you have started.

[ QUOTE ]
Simon, I put the phone number of the MD up earlier in the thread so peeps like you could get in touch and sort out whatever your bad experience was and move on.
How about the whingers shutting up or sorting their bad karma... Maybe you should try it.

[/ QUOTE ]
Sorry but you are spouting empty phrases, full of sound and fury, signifying nothing. If I had your pal's telephone number when I had the issue then I would certainly have used it. Four years later I don't want to revisit it, and I no longer have the bills anyway.

But I didn't want to have the issue in the first place, I would rather enjoy myself sailing. I resolved the immediate dinghy situation by refusing to pay and threatening to invoice them. It worked - threatening to kick them where it hurt most (the wallet).
 
Re: Doing sums

Interesting. In the end leaving aside what profit is re-invested and what is distributed, and leaving aside borrowing for a moment, it seems that this hypothetical case boils down to an £800,000 return on a £9m investment. An 8.88% annual return. Correct me if I'm am wrong (not an economist).

If the equity partners have borrowing, as presumably they normally will, interest will hopefully be at a lower interest rate than 8.88%, so that the equity income will be geared, ie. higher.

But it leaves questions - how is the £9m capital value calculated? One huge asset in most marinas will be the land. Most marinas on the south coast will have acquired the land (if they actually own it) years previously before property prices went through the roof, so the real cost of the land will be much smaller than it's theoretical market value if that has been re-assessed. So how you value the land, and the reality of how much the company paid, will massively distort the figures.

Or does this hypothetical marina rent the land? If so, on how long a lease, and how often are rents recalculated? etc.

Also, costs and income must vary a lot depending on individual cases. Is our sample marina a best case scenario, a worst case scenario, or a typical scenario? What I'm getting at is that the figures are quite easy to distort one way or the other.

Marina prices have been going up radically in recent years. Marina prices seem to have been going up much faster than expenses should have done (unless there have been massive rent reviews we don't know about). Were these places not profitable before? etc.
 
Re: Doing sums

It's possible, but then I guess the rent would come out of profits, so the £800k profit would be after paying the rent.

I guess our hypothetical marina must own the land, and the land must either have been acquired very recently (new marina), or the land has been revalued, because there is no way that a set of creaky old pontoons are worth £9m. Even when you chuck in a crane and some WWII-era sheds.
 
Vicious circle...

The land valuation issue is also a bit of a vicious circle because land on a highly profitable marina site has a massively high value because - you can use it to build a marina and charge crazy prices making a huge profit. This makes the land worth a fortune which means that the profit compared to capital value looks 'normal'.

But if you couldn't charge ridiculous prices at the marina the land would be worth a lot less.

It's a bit like shares in the stock market - the more profit shares make, the more their value goes up so that the profit compared to the market value of the shares stays more or less around the market norm.

Can an economist correct me? In what circs can the marina revalue the land on its balance sheet to bring it reflect its market value rather than original acquisition cost 20 years previously?
 
Re: Vicious circle...

They can re-value the land, but it'll go on their books as 'revaluation reserve'... so not as useful as it might seem at first glance..... an approach used by many companies with decent central London property portfolios over the last 10 years or so...
 
Re: Vicious circle...

Well it comes down to whether, when they are trying to justify their profits against their 'capital value' for public relations purposes, can their marketing departments pretend that the revaluation reserve is part of the 'capital value' or not. I've a strong suspicion that the answer will be 'yes'. ?
 
Re: Vicious circle...

Or, if I understood you correctly, the amount that the buyer paid reflects the fact that the business is extremely profitable. The value of the land that he's buying also reflects the fact that the business is extremely profitable. The new owners have had to pay a huge amount for the new business, so they need the profitability of the business to go up, not down.

Which means that the employees wil have to bleed sweat and tears?
 
Re: Vicious circle...

Not quite..... if the value of the land is sufficiently high, then financiers will look at the land and start wondering whether they'd make more money from using it for say development rather than its current use as a marina..... in which case, the marina staff get the boot!

They will look at (amongst other things) the return on capital... and if the capital values are too high relative to profit, then the ROCE doesn't look great....
 
Re: European marinas

I am not trying to distort the figures, or give anybody the wrong impression.

Just had a look at two further ports.

Monthly amount for 10m boat:
Cavalaire £585 (highest season) - Admitedly around the corner
Cogolin £460
Hamble Point £858


And I might be confused but Saint Tropez itself also seems cheaper.

I am willing to believe that I have chanced upon the cheapest marinas, so if you could point to the more expensive ones I'd be grateful.

My own experience of sailing in the area is that the marinas for an overnight stay for a 38ft yacht charged about €35 Euros in June which I believe to be cheaper than most marinas round here.

Marc.
 
Re: Vicious circle...

I guess that only works though if the land is re-develop-able.

So to take an example like Beaulieu discussed on the other thread as a particularly expensive one, you can't really imagine that the land next to it is likely to be developed.

Looking at some other marinas - somewhere like Lymington - difficult to see planning permission being granted to kick out Berthon and the Yacht Haven - it would change the character of the town too much.

Somewhere like Haslar - it's all floating on pontoons anyway, so how could they develop it (barring floating houses).

Or Brighton - it is already developed, and the marina element is an essential part of the development - and the facilities are all on the pier/floating in the harbour.

etc. etc. There are some marinas that must be vulnerable to redevelopment - like former Camper and Nicholsons - but it's nearly always the yacht storage facilities that take up the real estate. So logically, occupying pontoons should be dirt cheap, and yacht storage should be done in places which have no development potential...

Or is that wrong?
 
Re: Vicious circle...

This was one of the options that was muted for Sparks (look at that full circle!) so if the developers had got their grubby little hands on the site, what would that have done for the place as a marina? What would that do to the already overcrowded south coast?
 
Re: Vicious circle...

I guess where I was headed was this:

think of the marina as two business - a marina, and a boatyard.

A marina need have virtually no footprint on the land and can be set up with I would guess a minimum capital investment. I don't believe that pontoons are THAT expensive. Look at somewhere like Haslar - some pontoons with a few portakabin toilets and portakabin office. OK, they have the lightship as a feature, but I don't expect the market value of lightships was enormous.

If a marina like Brighton is to be redeveloped (again!) then what are they going to do with the harbour bit with pontoons floating in it? They're not going to build houses on it. They're going to make - a nice little harbour as a 'feature' of the development, to bring in extra customers, and raise the prices of houses in the development - in fact, just what they did do!

When they redeveloped Port Solent, Eastbourne - etc. - did they get rid of the marina?

So I don't believe that marinas and housing development are in competition. Rather hand in hand - the one helps the other.

Then there is the boat storage and boatyard side of it. That actually occupies land. But if the land has become so valuable for redevelopment that the storage of boats isn't attractive econpomically then the developers will tell the yachties to find somewhere else to store their yachts. Or they will organise a boat park in an undevelopable place preferably not a million miles away. But it won't stop the developers rtying to develop a nice yacht harbour in the development as an extra income stream and to increase the value of the landward side of the development.

In Beaulieu, I don't believe that the fact that the marina is there stops the owners doing developments anywhere along the river. If they wanted to, they would, and the marina would still be there, I am quite sure.

How does somewhere like St Katherine's Dock in London function? Does it have a large yacht storage area? I don't know the answer, but I'd be surprised if it did.
 
Re: Doing sums

Simon,

When the marina was purchased and it's value at that time is entirely irrelevant. It is the present value of the asset that is the matter for consideration when assessing the asset performance. The reasoning being that the investor could liquidate the marina asset and invest the same capital in any other asset type. You will have noted that I referred to the income return in my earlier post. In property ownership there is also a capital return which together with the income return represents the total return. Total property returns of late have been approaching 20%.

Marinas are typically valued on a cashflow basis with an assessment of yield using comparatives and DCF. Yes you are right that the whole sum is circular (higher profits equals higher values and therefore constant returns) but that represents the actuality of the economics as discussed above.

Yes you are right there are many variables as to trading performance and I picked a trading profit ratio of 40% as being a mid point performance of a South Coast marina. There will be better and worse marinas.

Yes you are correct that it is an 8.8% composite return and if higher debt levels were used the equity income (and business risk) would increase.

What I omitted to mention in my post this morning was that from the retained earnings there is not only capital investment to fund there is also debt repayments on term debt.

rob
 
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