As with most businesses, preparing for the sale of a marina facility requires planning and sometimes clean-up so the marina is viewed in the best light possible on the market. As the owner of a marina, you may have operated the marina for many years or just a few. Regardless, it is always important to assess your property through the eyes of a buyer. What potential “negatives” might stand out to fresh eyes? If you were the buyer, what would concern you about making the purchase? Where can a buyer find growth opportunities and strategies for greater profitability?

Cap-Ex & Cosmetic Repairs

It is not uncommon for many owners to decide to sell when there are outstanding cosmetic/minor repairs needed around the property. These are typically quick fixes to enhance the property’s presentation to buyers.  Before addressing these, we always recommend a thorough assessment of infrastructure and heavy equipment to determine if there are items you can repair before hitting the market, or if these are items better left to a new owner with a long-term plan. These areas include: any deferred maintenance affecting the seawall, dredging, slips/racks, ramps, fork-lifts/travel-lifts, utilities, decking, electrical to slips up to code, roofs, parking, utilities like water and sewer, and general grounds condition. Moving to the “curb appeal” items, you want your marina to look clean and presentable when buyers tour. Fresh paint, fresh landscaping, clearing out unused equipment and scraps, as well as organizing the ship’s store go a long way. Abandoned boats, broken cars, trailers, and rubbish on-site are also cause for concern to a buyer. Great first impressions are made with great curb appeal, which is just as important for your marina as it is for a house. Problems that are known before going to market can usually be solved or at least accounted for on the market. Problems that surprisingly arise in the middle of a deal, however, can derail the transaction and cost the seller significant money that could have been avoided with proper attention on the front end.

Preemptive Investigations

To get ahead of potential “surprises”, we have a few suggestions: Environmental: It is good practice to have a Phase I environmental study completed before going to market IF you suspect there could be a problem. Are your fuel tanks up to code? Is there hazardous runoff from your service department impacting the water and soil? Any potential problems known on the front end will save you time, money and legal liability down the road with a potential buyer. Title: Have an owner’s title check completed to see if there are any clouds on the title that could cause a problem getting a deal closed. It is not expensive and worth the peace of mind. Are there any survey issues that have not been addressed? We recommend solving those before going to market.

Financials & Accounting

After addressing the physical items of the marina, it is time to look at the financial performance and valuation of the business.  We recommend a complete Strategic Analysis because it offers owners a comprehensive approach to understanding the various exit options they can pursue, as well as learn the value of the marina in the current market. To start, financial data normally requested includes: P&Ls: · 2-3 year-end P&Ls detailing Revenues, Cost of Goods Sold (COGS) and Expenses · Each Profit Center (restaurant, ship’s store, service department, etc.) broken out to isolate the various income streams · Identify one-time Capital Expenditures in the operating expenses, and significant personal items that are not pertinent to the marina business Rent Rolls: · Organized and up-to-date list of your slips, racks, and/or land storage · Occupancy rates for each storage option · Rent rolls of on-site commercial tenants · Rental rates associated with each storage option and tenant List of Capital Improvements Made (Cap-Ex): A list of major capital improvements you have made over the last 3-5 years, including the cost of each improvement. Identifying those items will accurately reflect operating expenses vs. the one-time capital expenditures to improve the property, translating into a more accurate valuation of your marina. Appraisal: If available, an appraisal can provide additional detail on the property, and down the road information for a potential buyer to review. We recommend reviewing the appraisal to ensure the facility details are still accurate, while noting any changes that have been made since the time of the appraisal. Survey and Land and Submerged Restrictions: Ideally a recent survey will provide acreage, zoning, land use restrictions, utilities, and land for potential expansion that adds value to the marina. Many marinas operate with subsurface or real estate leases or permits. Put those documents together. If you have a recent survey, ask the surveyor if they would be willing to recertify the survey for a buyer. This will save a great deal of time and money. If you don’t have a survey, optionally, it will save time in the due diligence process if you get a survey before going to market. You can ask to be compensated for the survey by the buyer. A survey will also identify any potential issues for a title report.

Questions to Consider

· What is your exit strategy and how does receipt/re-investment of the net proceeds from a sale help you get to where you want to be? · How is the property owned, and if there are multiple decision-makers have you thought about what a sale would look like for all parties involved? (i.e. solely owned, partnership, LLC, etc.) · What operational matters need to be addressed? (i.e. does the staff know about the sale and do they wish to stay on board, are there outstanding obligations to your customers, are third-party vendors agreements/licenses/leases ready for transfer, etc.) · If you do not 1031 exchange for re-investment of your net proceeds, are you informed on the amount of capital gains tax you could owe, and are you prepared to pay it? · Have you considered your approximate loan payoff amount, if any? Is there a prepayment penalty? This penalty could be a deal killer for you. Best to know about it up front. · Is there a liquor and/or beer license which is assumable or that needs to be obtained? · Do you know the value of your marina at the time you begin to think of selling? · Do you offer services compared to your competition? If not, how does it affect your occupancy?

What is Your Marina Worth?

You do not have to do all the above before we can help you understand the value of your marina. With the above critical information (like the P&Ls and rent rolls), we prepare you with a complete Strategic Analysis. This analysis includes the following: · Complete and detailed financial analysis showing the investment financial position and how it relates to the current marketplace · Analysis of your current operation and any issues · Competitive market rate analysis · Competitive marina sales analysis · Pro Forma Business Plan that outlines a path to future profitability · Pre-marketing recommendations · Suggested asking price and likely sales price range When all combined, a valuation, cosmetic repairs and any deferred maintenance remediation will ensure you are in a strong position as you prepare for a sale. The analysis will help you make rational business decisions as you move forward; minor cosmetic touches and repairs will increase property presentation; and maintaining organized files will allow for a smoother transaction when you do decide to sell. Helping owners achieve this peace of mind and clarity of direction as they navigate the complexities of a sale is what the Leisure Investment Properties Group does. Our analysis, presentation and packaging is institutional-grade and offered to every marina owner because understanding your investment and how it can help you get to where you want to be is too important to you and your family’s future to be approached any other way.
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