Impatient yacht owners make for a hot new asset class
Marinas tick the ‘dependable cash flow’ box with relative ease and come with plenty of room for improvement
Where are the customers’ yachts? A new investment trend has given that old financial question new meaning. Last month, CVC agreed to sell marina group D-Marin to French private equity firm InfraVia for around €1bn. Private equity peers Stonepeak and Blackstone have done similar deals. Yacht parkings, it turns out, make good infrastructure bets.
Where infrastructure once meant assets like roads, railways, bridges and power plants, these days it is more of a state of mind. Anything that is only lightly exposed to competition, offers dependable cash flows and demands ongoing investment can qualify, from chip factories and crematoriums to chicken farms and satellite constellations.
Marinas fit the bill. For a start, they are scarce. Coastlines are finite and planning permissions hard to come by. More and bigger boats have created a chronic shortage of berths. About 6,500 new yachts are delivered annually and new marinas — which can take five to 10 years to be realised — add an average of 300 berths each, McKinsey estimates.
The “dependable cash flow” box is also ticked with relative ease. Boat owners need somewhere to keep their vessels, in good times and bad. Sometimes, bad times even help. During Covid, boating demand rose as affluent consumers sought to escape their living rooms.
On top of that, they also come with plenty of room for improvement. A private equity owner might be able to squeeze more berths in, add restaurants and lounges, introduce tiered pricing and extra perks like boat cleaning — and expand, if there is room nearby.
By amassing sites, operators can also get bargaining power on equipment such as boat hoists and fenders, and can offer subscriptions — that most beloved of private equity revenue models — that ensure sailors a berth at each marina in the network.
Sellers aren’t oblivious to this allure. Blackstone paid around 21 times Safe Harbor’s “funds from operations” — a cash flow-like metric used in real estate. That’s roughly double what Sun Communities paid for the business five years earlier. Individual marina assets are now estimated to be changing hands for around 15 per cent more than they were five years ago, according to a person familiar with industry pricing.
There are, nonetheless, plenty of potential candidates for more deals: like self-storage, camping sites and motor homes, ownership of marinas remains fragmented. Around 95 per cent of the world’s marinas remain in the hands of individuals, families or governments. As the wealthy get wealthier and yachts get bigger, marinas look like a logical twist on the infrastructure investment theme — only with much better views.