Issue link: https://read.dmtmag.com/i/776460
February 2017 | Boating Industry | 35 [ The Changing Marina Climate ] www.BoatingIndustry.com trend can help them plan their exit strategy. "On the seller side, it's a good time to sell right now," Funk said. "We have an attractive portion of our partnership that allows someone to leave part of their equity in and watch their asset appreciate along with our assets going up." Economies of scale One of the major drivers for this new wave of consolidated ownership is the opportunity to find new, efficient ways to run a large marina operation. The large players are just reaching the size where those opportunities can be realized. "Nobody has ever truly built to a true institu- tional scale," Redmond said. "There have been smaller efforts, but nobody's gotten to $1 billion in assets." Suntex is already seeing the benefits on a re- gional basis. "If you have a team in place, you can leverage those regional managers and the people execut- ing the business plan," Redmond said. "As long as they're in a close enough relationship that they can be there once a week, you can realize those economies of scale." The company hasn't yet achieved those economies of scale at the home office level, but Suntex does expect to reap those benefits as it implements new systems and continues to grow in 2017. "We really look at our home office as a sup- port system to our people out in the field," Red- mond said. "It's not our people who report to us, it's really the reverse, is how we try to operate." For customers, the ultimate benefit of con- solidation should be a better experience. "Larger players should have better access to capital to improve asset quality and services," said Mukamal. "At IGY, we have continued to invest in our portfolio of 15 marina destinations and in our people in order to increase the value proposition for our clientele. … We see value in training our staff, enhancing our facilities, and catering to the requests of our guests which all attribute to the capital used to maintain the stan- dards our visitors appreciate." Thousands of boaters leave the sport every year. Building the right boats (at the right price point) is important, but in the end the ease or hassles of boating is what makes or breaks some- one's experience. "I feel the boat manufacturers have done a great job of evolving and meeting market de- mand," Redmond said. "In the marina space, we have a lot of the same marinas sitting the way they were built in the '60s, '70s or '80s, where the facil- ity has not had capital invested into it to meet the demand for amenities. We're trying to upgrade our facilities to meet the demand and be consis- tent with where the boat manufacturers are." Not only should boaters be able to get the ac- cessories, parts and service operations they need, but also somewhere to have a meal or drink while relaxing with friends or family. "We're selling an experience," Redmond said. "A marina is just the physical asset that allows that experience to occur. We try to make that as hassle-free as possible for the customer and we believe that in the long run that is what the customer is looking for." "WE'RE SELLING AN EXPERIENCE." — Bryan Redmond, founding principal and head of acquisitions for Suntex Marinas Suntex is targeting the experience in making its acquisitions. IGY's marinas, like National Harbor Marina, focus on serving the yacht market. Finding the right fit While there are thousands of marinas across North America, the vast majority aren't obvious targets for acquisition. They need to be a big enough operation to justify investment, while at the same time having key staff that can help make the transition and a prime location that has growth potential. For Suntex to enter a new market – whether inland or coastal – it needs to find what it calls a "centerpiece" marina. That's a facility that has at least $2 million a year in earnings, with more than $4 million in revenue – and a team Suntex can build around. "Once we're established in a region we're able to leverage those team members that we have to execute the business plan [and] buy some smaller assets around them doing $1 million in earnings or more," Redmond said. "We've found that it's tough for us to work with marinas that are doing less than that … those are designed to be family-owned and operated." Safe Harbor also wants sub- stantial operations, especially those that can drive significant passive revenue through storage and slip rental. The company has mostly focused on coastal operations to this point, but likes to find multiple marinas in a geographic area in order to real- ize the best synergies. Suntex also looks for a location that can not only support storage, rental and maintenance operations, but hospitality options as well. "Maybe it's not operated that way today, but the existing assets would allow us to come in and bring the way we want to operate a 'Suntex marina,' where it's really a one-stop shop for our customers, where they can have a great experi- ence where they're being taken care of and enjoying their expe- rience," he said. IGY, on the other hand, is more selective, with a narrower focus on deep salt water mari- nas which can accommodate the larger yachts of its existing customer base. "IGY's portfolio includes 300 berths specifically de- signed for megayachts, making large-scale vessels a major factor in our strategy for marina acquisitions," Mukamal said. "We also take a close look at other elements, including where the interest lies with industry influencers, such as captains and charter companies, existing amenities and services avail- able, quality of in-water infra- structure, depth and upland real property values, as well as the regulatory and legal regime of the location of the marina."