From Bloomberg, June 12:
Blackstone and others pledge to improve aging boatyards amid fears that rising slip fees are pricing out the middle class.
On a rainy spring morning, Jack Brewer is watching workers prep boats for another season on Long Island Sound. In a world where yachts can stretch longer than a football field, the marina is relatively modest, handling boats that would max out at the 20-yard line. Here in the New York suburb of Mamaroneck, even the smaller craft are refined: bespoke Hinckleys, built in Maine with gleaming teak; powerboats bursting with the newest technology; and low-slung sailboats whose Italian designers relied on an older science in their pursuit of speed.
Brewer, 84, started his business in 1964, back when this property wasn’t much to speak of. “Most marinas were muddy gunk holes,” he says. “They were not a place to bring your wife and kids.” He spent his career buying similar properties, fixing them up and appealing to a more discerning, higher-paying clientele.
By the time he retired, Brewer had assembled a collection of 30 marinas along the Eastern Seaboard, including this one, his first, on Post Road, named after the mail route that’s connected New York City and Boston since colonial times. He was one of the first consolidators in this mom-and-pop industry. Some 9,000 US marinas generate a total of almost $8 billion a year, from renting slips, repairing boats or selling fuel and meals to those anchoring down for a few hours or a few nights, according to researcher IBISWorld.
Lately, some of the biggest companies on Wall Street are following in his footsteps. Their investment thesis: Most marinas don’t meet the needs of the modern boater, who’s willing to pay more for more. Many marina owners can barely afford the rising costs of insurance and labor, let alone pay for new floating docks or harbor dredging. New investors are betting they can roll up properties, make improvements and increase rent—especially because the number of marinas seems to shrink every year.
More than 30 investment firms, including publicly traded companies and family offices, are scouting for marinas, according to Andrew Cantor, a managing director at real estate company Colliers International Group Inc. Carlyle Group, Kuwait-linked Wafra and Koch Industries’ real estate arm have bought and sold marinas in recent years. (Koch Industries has since changed its name to Koch.) So has Centerbridge Partners LP, which backs Suntex Marina Investors LLC, a Dallas-based outfit that already owns about 100 marinas and is looking for more. Suntex considered an initial public offering in 2022 that would have valued it at more than $3 billion but dropped the idea because of the impact of rising interest rates on the market.
Another Dallas-based company, Safe Harbor Marinas, is the biggest of all. It had bought Brewer’s operation in 2017 and, in May, was itself acquired by a behemoth: Blackstone Inc. The firm paid $5.65 billion for Safe Harbor, the largest transaction by far in an industry where perhaps 100 properties change hands in a typical year. Blackstone got 138 marinas, including a Safe Harbor in West Palm Beach, Florida, known for hosting the kind of superyachts favored by billionaires.
Now, Blackstone plans to continue the work that Brewer started, according to people familiar with its strategy. It wants to acquire more marinas in the US and possibly in Europe, where Safe Harbor has none. And it plans to improve existing properties, widening and lengthening slips to accommodate bigger boats or adding infrastructure and amenities that their more upscale clients require. “Our customers’ needs have evolved as boats have grown in size and complexity,” Baxter Underwood, Safe Harbor’s chief executive officer, said in an email. “We must continue investing into our marinas to meet the shifting demands of the members we serve.”
The new corporate operators are changing the down-home, Jimmy Buffett vibe of many marinas. In the summer of 2014, Mike Melillo wanted to cruise from Newport to Block Island off the Rhode Island coast. He spent a day calling a marina repeatedly but failed to get an operator on the phone, so he canceled the trip and booked a tee time at a golf course instead. When the marina finally called him back, he discovered the property had been relying on two college kids as dockhands who came in late after a long night drinking.
Sensing opportunity, he founded Dockwa, a company that handles online booking and other services for more than 1,200 marinas, giving Melillo a good view of the kinds of inefficiencies that are attracting investors. One big one: the service Melillo was originally seeking, a slip for a one-day stay, as opposed to the long-term rentals that are the industry’s bread and butter. About 60% of the marinas on Dockwa keep the price of a short-term booking static from year to year instead of adjusting rates to account for rising demand, as is standard in the hotel industry. For now, even high-end marinas might charge $250 a night for a 50-foot boat, less than many hotels in fancy resort areas....
....MUCH MORE
Everyone is courting that "discerning, higher-paying clientele." And the discerning bit is optional.