Premier Marinas for sale

[dom]

I suspect that marinas are not the money making machines we tend to think they are.

I recently did the same calculations for port Solent: 300 berths x £5,000 average mooring fee = £1,500,000. A back of the envelope estimation of costs came out as £1,100,000, equating to a gross profit of £400,000. A lowish 4.5% yield would suggest a purchase price of c.£9m, which is not a lot.

So yes, in the absence of lucrative shoreside property potential I can't see why it would be worth the hassle. Might as well just invest in Nestle or Unilever and enjoy greater returns for doing no work at all!

 

[Steve Clayton]

I don't believe any existing marina operator is in a position to spend or raise the sort of money mentioned by the ST. (definitely not Castle Marinas!). Most have their own existing long term debts to worry about, and those that don't simply aren't big enough.

So the sale will either be to another financial gambler, or the estate broken up by selling the marinas individually. Then the existing operators will be able to cherry pick if they want them or not.

Afternoon Nick, best to you and Karen at this festive time of year.
Do a check on all the Castle Marinas companies - there are about 6 of them; and I'm not referring to the individual coastal/inland marinas:
and there is this guy
http://cedarinvest.co.uk/index.aspx?id=6

 

[Angele]

I suspect that marinas are not the money making machines we tend to think they are.

Perhaps not all are money making machines. But, since the costs of running them cannot vary massively (for a given size), and yet the fees are very much based on the desirability of the location (and hence willingness of people to pay higher fees), rather than directly reflecting operating costs, then some of them must make a fair old surplus. I'm thinking of the marinas on the Hamble, for example.

But, you then need to deploy that surplus to repay those who funded the purchase, assuming it wasn't handed over to you for free, whether they be lenders or shareholders (or, more likely, both).

 

[Angele]

I recently did the same calculations for port Solent: 300 berths x £5,000 average mooring fee = £1,500,000. A back of the envelope estimation of costs came out as £1,100,000, equating to a gross profit of £400,000. A lowish 4.5% yield would suggest a purchase price of c.£9m, which is not a lot.

Have you allowed for voids in that £5,000 average fee?

That is the thing that destroys the economics of hotels in more marginal areas. Sure, you can fill anything in the height of Summer, but not in the low season. Ok, perhaps less of an issue in a marina if most people are on annual contracts, but there must inevitably be a number of berths sat empty at times.

And do your costings include periodic replacement of pontoons, piles, dredging, etc?

 

[dom]

Have you allowed for voids in that £5,000 average fee?

And do your costings include periodic replacement of pontoons, piles, dredging, etc?

Nope for voids and nope for capex! Including those I got 3 x zip-all! :nonchalance:

 

[maxi77]

Perhaps not all are money making machines. But, since the costs of running them cannot vary massively (for a given size), and yet the fees are very much based on the desirability of the location (and hence willingness of people to pay higher fees), rather than directly reflecting operating costs, then some of them must make a fair old surplus. I'm thinking of the marinas on the Hamble, for example.

But, you then need to deploy that surplus to repay those who funded the purchase, assuming it wasn't handed over to you for free, whether they be lenders or shareholders (or, more likely, both).

Any commercial organisation including marinas must generate an income for the owners proportionate to the capital value of the company. Thus berth prices reflect the value of the land they occupy. If they fail to generate adequate income they will become takeover targets because the value of the company calculated by the share price will be less than the asset value

 

[Angele]

Any commercial organisation including marinas must generate an income for the owners proportionate to the capital value of the company. Thus berth prices reflect the value of the land they occupy. If they fail to generate adequate income they will become takeover targets because the value of the company calculated by the share price will be less than the asset value

Not all businesses are publicly quoted, and hence potential takeover targets, in the manner you describe. Premier Marinas are a case in point. But yes, it is clearly the expectation of shareholders that the management will make a return appropriate for the business value. That may or may not be the same as the value of the land occupied. It may be less than the (alternative use) land value, which explains why many hotels are closing to be converted into flats, or petrol stations into housing developments.

 

[savageseadog]

Perhaps not all are money making machines. But, since the costs of running them cannot vary massively (for a given size),..................

Can't say I agree with that comment. Costs will be much higher for marinas that have locks or require regular dredging.

Part of the issue with costly marinas is the tendering process that forces operators to put unrealistically high offers for the leases. It's done on the basis of jacking up prices that will eventually (hopefully) make the operation profitable. I know councils, harbour authorities, Crown Estate etc have to get the best possible price but it does result in our hobby being an expensive one.

 

[Angele]

Can't say I agree with that comment. Costs will be much higher for marinas that have locks or require regular dredging.

A very sweeping generalisation of mine, but I would have thought that a marina with a lock is unlikely to require dredging and I can't, off the top of my head, think of any marina in my neck of the woods without a lock that doesn't require dredging occasionally. So I'm presuming that the budgets for most marinas would include the cost of either lock maintenance or dredging (but, typically, not both).

 

[Steve Clayton]

A very sweeping generalisation of mine, but I would have thought that a marina with a lock is unlikely to require dredging and I can't, off the top of my head, think of any marina in my neck of the woods without a lock that doesn't require dredging occasionally. So I'm presuming that the budgets for most marinas would include the cost of either lock maintenance or dredging (but, typically, not both).

Nail on the head!
You are describing Birdham Pool to a tee! The channel access, due to lack of dredging, is abysmal

 

[Seajet]

Chichester Marina requires dredging now & again, but nothing like as often as somewhere like say Cobbs Quay.

Running a marina as a stand alone source of income has proven a dodgy idea even in non-recession times, though I suspect the consensus is it's possible to make a healthy - unspectacular - profit if well run.

Places like Port Solent, Brighton et al make their megabucks from A, residential property around, B, the marina being an attractive place to have a shop / eaterie / attraction of some kind so the rent on those ?

They talk of filling in Port Solent for more houses, which would be the ultimate quick-buck-seeking vandalism I'd expect from an accountant, completely ignoring the fact the place won't attract punters, and won't have the steady revenue from boat owners, if they do fill it in...

What we need now is someone like Percy Gick, as if there could ever be another one like him...

for those who don't know his story, extremely illustrious Naval Officer, torpedoed the Bismarck from his Swordfish biplane, went on to command the carrier Bulwark after the war and towed a blazing oil tanker with the carrier getting tha largest salvage award on record ( shared among crew ) many other things too, retired from the navy and built Emsworth Marina largely with his own hands...

I expect if he applied to Premier today they'd say he had no accountancy experience !

 

[dom]

A very sweeping generalisation of mine, but I would have thought that a marina with a lock is unlikely to require dredging...

It would seem that Premier agree, which is why I can't enter/exit Port Solent within 1.5 hours of spring tides!

 

[Angele]

It would seem that Premier agree, which is why I can't enter/exit Port Solent within 1.5 hours of spring tides!

[Pedant mode] Dom, to you and also to Steve Clayton, I said that a marina with a lock is unlikely to require dredging. I didn't say anything about the approach channel [/Pedant mode]

 

[dom]

I didn't say anything about the approach channel

Looks like my next thread will be entitled, "How to practice spinnaker handling in the marina whilst waiting for the lock"

...and the one after that, "Do I need to inform my insurance company?"

 

[Steve Clayton]

It would seem that Premier agree, which is why I can't enter/exit Port Solent within 1.5 hours of spring tides!

We can get into Port Solent (2.1 m depth) on Springs; at low water; occasionally touch bottom but it's mud

 

[dom]

We can get into Port Solent (2.1 m depth) on Springs; at low water; occasionally touch bottom but it's mud

Mine is 2.4m, but agree about the mud. I'm happy to edge in with about 1.4m over LAT keeping right up against the Sunsail boats ...it's such a pain being stuck in the channel like a knob if the tide is falling

 

[savageseadog]

Quite a few NW marinas have locks or gates and dredging issues

 

[Seajet]

Quite a few people with marina berths still have sensible lift or twin keeled boats as no matter what you pay, even if they do dredge the approach like they promised they would, Neptune has a special sense of humour for people who think £ means immunity...