A New Wave of High-Yield Investments to Enrich Your Portfolio
In this new world of volatile stock values, high-yield investments are more challenging to find, and alternative asset classes are becoming a larger percentage of our portfolios. If you are looking for an alternative investment to stocks, bonds, and bitcoin, let us introduce you to a new wave of investment – the marina industry. It is the up-and-coming hybrid asset that combines real estate investment and business ownership to capitalize on the high demand for waterfront recreational activities.
Why Marinas Should Be Your Next Investment
Not your Mom-and-Pop’s Marina
Marina ownership and management are in transition, and now is the perfect time to invest. Marinas have long been the domain of local, often family-owned operators, but within the last 15 years, a handful of institutionally backed private equity firms have realized the profitability of marinas and have begun to quietly snatch up marinas all over the country.
These firms are capitalizing on a trend. The data they study reveals that people seek outdoor recreation and have the cash to spend on boating, dining, hoteling, renting jet skis, etc. Marinas are no longer simply a place to dock your boat and fill up with gas. They have become destinations for families who love getting out on their boats with their friends and walking to marina restaurants, bars, and hotels after a day of wakeboarding.
The mom-and-pop marina owners that have long owned most of the marinas around the country are baby boomers ready to cash out and retire. They have enjoyed the profits of their small business, renting slips and selling gas, but don’t have the energy or funds to turn their marina into one that caters to the next generation. When equity firms like New Haven Marinas purchase these marinas, they bring cash to improve the property and add the amenities that turn them into serious high-yield investments with several profit centers beyond boat rentals.
The Recreational Boat Market is Exploding
In 2022, The U.S. recreational boat market was valued at USD 17.31 billion and is projected to reach USD 28.54 billion by 2028, growing at a compound annual growth rate (CAGR) of 8.69% during the forecast period. 1
During the pandemic, families looked for outdoor recreational activities and found boating and the all-inclusive marinas to be their happy places. A rising number of middle-class families and the increasing number of high-net-worth individuals (HNWI) with a preference for premium and luxury products are driving the market growth.
Their passion for boating created a $230 billion wave of US economic impact. The National Marine Manufacturers Association (NMMA), the leading trade association representing North American recreational boat, marine engine and accessory manufacturers, reports that recreational boating saw a 36% increase in annual economic activity from 2018 to 2023 and a 14% jump in recreational marine industry-related jobs over the same time period. 2
The effects of the rise in the tourism industry over the past few years are spilling into the U.S. recreational boat market. With the rising tourism industry, the recreational boat market has seen increased sales of cruises, water sports boats, and pontoons.
95 – 100% Rental Occupancy
This increase in boat sales and boating has created a new dynamic–competition for available dockage and storage at local marinas. The 2020 National Marina Market Investment Report by Marcus and Millichap reports that 70% of marina owners remain 95-100% occupied year-round. This lack of boat storage supply and increased boat sales has caused occupancy rates to trend upwards from 2011 to 2018. 3
High Barriers to Entry
The tension between more manufactured boats and not enough marinas is not easily solved. Construction of new marinas has become nearly non-existent due to high barriers to entry, lack of suitable development sites, capital-intensive upfront costs, and potential obstacles from environmental groups.
To overcome these barriers, developers interested in building new marinas must undertake a comprehensive planning and development process. This typically includes conducting environmental impact assessments, engaging with local communities and stakeholders, securing financing, and navigating the permitting and regulatory landscape. This painstaking process involves years of work and capital investment, which is why marina ownership is shifting from mom-and-pop owners to sophisticated developers with a lot of capital.
Low Levels of Consolidation
We are at a perfect inflection point for the marina industry, and now is the time to invest. Most mom-and-pops are boomers who realize today’s boater wants more than they can provide with their little marina, and they’re ready to cash out. Yet, based on available data, the largest marina operator in the United States only owns 131 marinas nationwide, or 1.4% of all private marinas. Less than 6% of marinas are owned by the top 10 marina operating companies. With so many marinas prime for purchase and redevelopment, this asset class is a rare investment opportunity.
New Haven Marinas Removes the Barriers to Entry
New Haven Marinas follows a classic private equity strategy that has proven successful over the years. We take a fragmented marina business with operational inefficiencies and build an operating platform that will allow the marina to turn into a portfolio of assets that achieve economies of scale.
Once we have increased the efficiency and profitability of the marina and its associated revenue streams – restaurants, valet services, events, activity rentals, to name a few – the marina becomes extremely profitable. Investors can see “internal rates of return based on a five-year hold that might reach 15 or 20 percent,” which is “10 percent to 15 percent higher than an average quality commercial investment today.”4
At New Haven Marinas, we offer certified investors the opportunity to participate with us in owning world-class marinas. Fill out our Contact Form to learn more about current offerings and join our exclusive community as an investment partner.
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