Marinas come in every size and shape! But you knew that. One marina may provide every service imaginable from a self-service boatyard, to high-end weddings; while another may simply provide wet slips on a quiet but picturesque creek.
We start with a broad range
You wouldn’t expect that those two properties mentioned above would have the same value based on square footage or the number of boat slips. No, the valuation process is certainly more complicated than that. But there are a range of values in the marina world that serve as a starting point to valuation. From that starting point, we must evaluate your marina, and how it stacks up against comparable properties that are currently offered and those that have recently sold.
Not Just Real Estate...
Another concept that makes marinas unique from other commercial real estate is that we can’t simply apply real estate valuation concepts without diving deeply into the details of the business operations. I’ll elaborate on this topic in a later installment of my Marina Valuation series.
Who are today's buyers?
In pre-recessionary times, marina selling prices were driven more by emotion and speculative risk, which often resulted in a price that far exceeded what the operations of the marina could justify. These purchases relied on the expected future use of the underlying property or the sale of slips and/or racks utilizing the dockominium concept.
Hard economic times are cyclical, but the most recent recessionary cycle is still quite fresh in our memories. Buyers are once again willing to explore investment, but we find them to be risk sensitive and pragmatic. As such, buyers have turned to placing more value on the existing business and the cash flow being generated by that business, and less value on future use or speculation.
As a marina owner, you have a very valuable asset. The combination of exclusive real estate with an operating business is extremely attractive to sophisticated investors. Given this dynamic combination, we see a range of values for marina properties from seven to eleven times the net cash flows from the properties. These values are quite the envy of the small business brokerage world.
Still, that is a very large range of value – and the lower end is not a rule of law! Over the next few articles, we will explore the range and help you understand where your marina fits along that spectrum of value.