Marina Dock Age, April 2003

Another Look at Refinancing in Tough Times
by Dennis P. Kissman

In the December 2002 issue of Manna Dock Age, I wrote about the difficulties involved in financing the purchase of marinas, as well as the obstacles marina owners face trying to refinance existing loans. Based on the response to that column, there appears to be a demand for more discussion of financing in the current economic climate.  

To gain further insight, I contacted Holmes Simons, the only person I know who still specializes in marina financing. Simons worked for NationsBank and Debis Financial, but because both companies have abandoned the marina business, he now works as an independent mortgage broker for marina loans.

Disturbing News

For anyone intending to refinance a marina, the news he shares is not good. Still, it’s worth hearing, as it will prepare you for the inevitable difficulties ahead.  

“Finding competitive financing for marinas is very difficult,” Simons says. “Office buildings and apartments, traditionally strong commercial real estate performers, are experiencing soft demand and high vacancy in many markets. This has lenders and portfolio managers worried, and real estate finance underwriting guidelines are tightening everywhere.”

It’s fair to say, under these circurnstances, that the financial community will not be very interested in deals involving “recreational” property.

Even more disturbing is the fact that there are only a few regional banks and insurance companies that will even consider granting a loan to a new customer for the purchase of a marina. These lenders are only interested in well-run properties with experienced, financially sound sponsorship. And, it appears that larger companies will only consider loans of more than $5 million. If you require less, you will probably be left with no other option but to apply for a loan at your local bank.  

The non-recourse loans that were available in the ‘9Os — which were backed up by the properties themselves and required no personal guarantees — are now very scarce. Gone are almost all the credit lenders that just a few years ago offered non-recourse, floating-rate bridge loans to the marina industry.   Continue »