Because the marina market has expanded in recent years, many marina owners may be wondering if the time has come to sell. The question can be tough to answer, especially when it comes to family-owned businesses that have been a part of a person’s life for decades. However, as time passes and the physical duties of maintaining a marina during a boating boom become difficult, an exit may become enticing. Some actions may be taken to streamline deciding to sell and bring a marina to market.
When the concept becomes a reality, marina owners should consider a few things before putting up a “for sale” sign. Before considering a marina for sale owners should consult their accountants, attorneys, tax consultants, business partners, and anybody else engaged in the process. These specialists may assist in developing a list of benefits and drawbacks of selling and putting the facts into context. Of course, a detailed dialogue with family members is always a good idea.
Finding and engaging with a broker may also aid in the choice to sell, and a broker can then assist sellers in navigating the sales process and obtaining the best price. Jeff Griesbauer, an independent real estate broker who has been involved with marinasforsale.com for more than 19 years, said he has been dealing with numerous owners who are being pushed by the subject of selling. He first talks with the seller about why they want to sell and what they intend to achieve from the transaction. He also provides his elderly clientele with a dose of realism. “If physical restrictions affect someone’s capacity to maintain the property, it’s better to sell now than put in another five or ten years and sell at a loss because the property has much-deferred maintenance to make it marketable,” Griesbauer said. “It’s difficult to hear, but it makes sense.” Furthermore, the figures in today’s market speak for themselves, deciding to sell a bit less agonizing.”
What figures might a marina expect from a sale? While marinas can search for similar sales to see whether the current market supports their sales price targets, no two marinas are alike, so there isn’t as easy a sale comp measure to utilize as there is in ordinary real estate, according to Jason Spalding, a broker with Marina Services. “The cap rate on one (or more) recent nearby sales transactions can be used to calculate a property’s potential value; however, because marinas have a diverse range of revenue streams, and some marinas have all, some, or none of these revenue streams, it is not as simple as other core real estate asset classes,” he said.
A cap rate is calculated by dividing net operating income by the current property value or asking price. More broadly, it is a statistic used to anticipate the return on investment and the perceived risk vs. the property’s revenue stream. Because not all revenue streams at a marina are seen as having the same trouble, it is not a failsafe method of determining value. “Over the last five years, the trends for marinas for sale, in general, have been toward compression, lower cap rates, corresponding to better property values and higher selling prices for sellers,” Spalding said.
With no straightforward comp approach, the only way to determine a price is to have the property evaluated and valued, which is best done by expert appraisers and brokers. However, before a valuation begins, brokers will meet with potential sellers to determine their sales goals and options, the timing of the sale, whether they prefer direct offering or mass marketing of the property, and whether they want to retain a role once the marina sells, and their overall expectations. “I learn about their timetable and whether the seller’s expectations are acceptable.” Although the period from listing to sale has recently dropped, sellers should expect a deal to take at least six months, according to Griesbauer.
If the seller and broker discover a strong match and connection, the next stage will be a financial assessment, beginning with a look at the marina’s most recent profit and loss account. “I go deep to comprehend the company thoroughly.” “That is the key to determining the asset’s worth,” Griesbauer stated. A broker will need to look at tax returns later to determine how they relate to the P&L statement. Any difference between the cash component and the tax return will throw off potential purchasers. Aside from the profit and loss statement, sellers should have their current balance sheet, slip rates with occupancy history, and copies of tenant lease on hand.