Marina Dock Age, March/April 1997

Marina Owners: Face Financial Reality on Your Facility’s Worth
by Dennis P. Kissman

I recently had the opportunity to be one of three faculty members for an International Marina Institute course held in Tampa, Fla., on marina financing and appraising. The topic was presented from three points of view. First, the real estate appraiser’s perspective, which was presented by Mark Stroud of The Stroud Corp. Then there was the lender’s perspective, presented by Harry Neiman of Nations Credit Commercial Corp. And third was my mission to present a buyer’s and seller’s perspective.  

The course was well attended and represented a good cross section of interested people. We had appraisers, lenders, prospective marina buyers and marina owners in attendance. I must admit it was an education for me as well. Even though we faculty members worked with each other on a one-on-one basis on specific projects, it was very enlightening to learn the amount of reliance that each of us places on the other’s work.

The faculty’s consensus was that, although each of us approached evaluating a particular marina a little differently, the income approach is the common thread that makes or breaks a deal. This holds true whether you are a buyer, seller or an owner planning to refinance your marina.

The course format provided for some very lively discussions when we were going through the marina case study. It was interesting to see the different directions that each participant came from, depending upon his or her background.  

Since the focus was on establishing a cap rate to be applied to the net operating income of the marina, the major question centered on what cap rate to apply. In one example, I used a cap rate of 18 percent—and that got everybody’s attention. The buyers and lenders were all smiles, while the marina owners and appraisers wondered what I was smoking. Before, I had always talked in the 10 percent to 12 percent range, which in today’s market is probably where the rate should be to remain competitive with other types of investments. Just as the 18 percent rate may sound ridiculous to a marina owner, by the same token, the marina owner who believes his marina is worth selling at a 7 percent rate is just as ridiculous. Continue »