Insurance Costs Can Stop a Marina Sale

Buying a marina can be overwhelming for the uninitiated. In its basic form, a marina purchase price includes land, infrastructure, and a business, or several businesses. But often overlooked is the cost a buyer will incur for insuring a marina and the many nuances to carrying the right type and the correct amount of coverage for every aspect of the business. A lack of proper insurance can quickly turn the thrill of owning a marina into a disaster. It’s best to explore what’s needed well before a final deal is signed.

Finding an Agent
Marissa Tranghese, director of underwriting for Maritime Program Group, a subsidiary of One80 Intermediaries, said the best advice is for buyers to find an insurance agent that specializes in the maritime industry and talk to them well before a property is purchased. “Find an agent that specializes in marinas to help shed light on what is needed beyond basic property and general liability. There are exclusions pertinent to marinas like coverage for docks, boats that are stored, and legal liabilities. Typical insurance umbrella policies will not pick up marine exposures,” she said.

When looking for an insurance agent, Tranghese said there are important questions to ask starting with whether the agent typically writes policies for marinas. “Lots of companies could write a marina policy by just taking a standard product and making a marine policy, but it would open the marina owner up to things not being covered versus having a product tailored specifically for the special needs of a marina,” Tranghese said.

She said it is also important to find out the agents’ experience—how long they’ve written marina policies, how many have been written, and their personal experience in the maritime industry. Many insurance agents that work with marinas have transitioned from other careers or jobs in the marine industry and that experience gives them a clearer understanding of risks.

Another indication of experience in the industry is to ask if the agency is affiliated with maritime associations like the Association of Marina Industries, state trade associations, or the Marine Retailers Association of America. Many agents with these affiliations regularly attend conferences and events where they learn the latest trends and issues.

Weather and Natural Disasters
Even with an experienced insurance agent, potential buyers still need to be aware of variables that dictate what marina insurance will cost, starting with location.

Marinas in warm climates that are open year-round will carry a greater insurance expense than those that shut down for the winter season, but a greater consideration is the expense for the natural disasters that may plague an area. Wind coverage differs dramatically depending on location. Marine markets don’t have the capacity to write wind policies in the southeast or Gulf states that have hurricanes. Many insurance companies in Florida simply don’t have the capacity to cover wind damage, or they are limited to $100 million in coverage. That leaves marina owners to bear the risk.

Similarly, finding coverage for snow damage in the Midwest can be complicated. This region is known for having covered docks, but those same covers can collapse under the weight of a significant snowstorm. There is no standard carrier that will cover that type of damage. “An agent would have to approach insurance markets or wholesalers to find a niche company to cover this potential loss,” Tranghese said.

While the western states had been easier to insure with their lack of significant and widespread natural disasters, the last few seasons of wildfires have changed that. Wildfire coverage has been making property insurance highly expensive as agencies are starting to run out of capacity.

Floods are another coverage to consider. While most umbrella polices, known as bumbershoot policies in the maritime world, will cover flooding of docks and infrastructure on the water, they do not cover flooding of anything upland. Fortunately, private carriers still have flood insurance readily available for what sits on high ground, but with flooding becoming more prevalent, these costs are rising rapidly.

“Marinas carry a lot of exposure to natural disasters. Owners need to decide how much coverage they need to protect themselves or how much they are willing to risk,” Tranghese said.

Operational Contracts
Dispersing some of the risks comes from well-written contracts. Potential buyers should request to see copies of any boat storage, moorage, or rental agreements, as well as agreements between any subcontractors performing work on the property. Having an attorney vet the contracts is good practice.

Contracts should help limit an owner’s exposure. Tranghese used an example of a boat sinking in a slip to explain the importance of contract language. “If a boat sinks in a slip, the marina owner may be liable for raising it and any cleanup costs if it wasn’t stipulated in the contract that such an incident would be the responsibility of the boat owner. This would raise the rates on the marina owner’s insurance because he’d have to cover it,” she said.

She gave another real-life example where a contractor came to a yard to work on a boat and accidentally caused the boat to catch fire. The fire spread to multiple boats and to the marina itself. Because the marina owner did not require even minimum coverage for contractors, he was liable for all the damages.

Determining the amount of coverage is dictated in part by the boaters a marina caters to. “One million dollar coverage is pretty standard, but it depends on the types of boats serviced. If a facility holds primarily smaller runabouts, $1 million works, but if they work on megayachts they should have $5 million or more,” Tranghese said.

The cost of insurance cannot be overlooked and for any potential buyers, understanding that factors such as location and types of customers served will dictate how expensive insurance will be is a critical part of the buying decision. Before you sign the papers to become a marina owner, have a long discussion with a qualified agent.

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BRP’s Marine Revenue Up, Volumes Down

BRP yesterday reported lower marine retail sales in North America but higher marine revenue in its fiscal second quarter.

As a result of favorable product mix and higher pricing, revenue in BRP’s marine division increased by 8.3 percent to CAD$139.5 million ($106 million) in the quarter ended July 31, the Valcourt, Quebec-based company said in an earnings statement. Retail sales of marine products in North America fell 9 percent as a result of lower unit availability caused by supply-chain disruptions.

BRP said the supply bottlenecks are loosening, and the company raised its full-year guidance for overall revenue and profit. Fiscal 2023 marine revenue is now forecast to be up 12 to 17 percent from the CAD$512.8 million ($389.5 million) posted in fiscal 2022. The second quarter already has delivered the highest overall revenue of any quarter in BRP’s history, the company said.

“Demand for our products continues to be strong across our portfolio of products and markets,” president and CEO Jose Boisjoli said in the statement. “With current improvements in the supply chain and our additional production capacity, we are in a favorable position to deliver an expected record second half of the year.”

Overall, BRP’s revenue in the fiscal second quarter rose to CAD$2.44 billion ($1.85 billion), from CAD$1.9 billion ($1.44 billion) in the same quarter last year. Net income was CAD$237.7 million ($180.6 million) in the recent quarter, up from CAD$212.9 million ($161.7 million) in the second quarter of fiscal 2022. The company said introduction of the Sea-Doo pontoon helped its results, while volumes of personal watercraft fell.

In its earnings release, BRP disclosed that it had been the target of a cyberattack in the current quarter. The Aug. 8 incident impacted the company’s operational and information technology systems. One week later, production was “progressively resuming,” the statement said.

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MasterCraft Posts Most Profitable Year

MasterCraft Boat Holdings said fiscal fourth quarter revenue rose and the company posted its most profitable year ever, but the new fiscal year may not match 2022.

Sales in the quarter ended June 30 increased 39.9 percent to $217.7 million, the Vonore, Tenn.-based company said in a statement yesterday.

Net income slipped to $11.5 million, from $16.5 million in the fourth quarter of 2021. However, adjusted earnings before interest, taxes, depreciation and amortization leaped 65.6 percent in the quarter to $44.6 million.

“For the second consecutive year, we achieved record-setting results, introduced an array of new and innovative products across our brands, produced industry-leading organic sales growth, and gained market share, all while navigating arguably one of the most challenging business environments in recent history,” CEO and chairman Fred Brightbill said in the statement.

MasterCraft then offered an outlook for fiscal 2023 that it said could “deliver the second-best year in the history of our company in terms of both revenue and earnings,” meaning potentially lower than 2022 but higher than the previous record year, 2021.

The company expects sales for fiscal 2023 in the range of $580 million to $615 million, and adjusted EBITDA of $105 million to $115 million.

“The potential for a weakening economy has caused us to approach our wholesale production plan for fiscal 2023 with a prudent level of conservatism,” Brightbill said. “Even so, if our business performs to the lower end of our guidance range, we will deliver the second-best year in the history of our company in terms of both revenue and earnings.

“Furthermore … our highly flexible business model will allow us to adjust our production plan and generate outstanding financial results should retail demand outpace our initial expectations,” he added.

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MarineMax To Acquire IGY Marinas Significantly Expanding Global Marina and Services Business

CLEARWATER, Fla.–(BUSINESS WIRE)–MarineMax, Inc. (NYSE: HZO), the world’s largest recreational boat and yacht retailer, today announced that it has entered into a definitive agreement to acquire Island Global Yachting LLC (“IGY Marinas”), which owns and operates a collection of iconic marina assets and a yacht management platform in key global yachting destinations. MarineMax will acquire IGY Marinas for $480 million in cash, with an additional potential earnout of up to $100 million two years after closing, subject to the achievement of defined performance metrics. IGY Marinas, through recent acquisitions and organic growth, is projected to generate over $100 million of revenue in calendar 2022. Subject to the satisfaction of customary closing conditions, MarineMax expects the acquisition to close in the first half of fiscal 2023 and to be accretive within the first twelve months of closing. IGY Marinas will maintain its luxury branding that is well recognized as best-in-class in the global marina and superyacht communities. Tom Mukamal, CEO of IGY Marinas, and the IGY Marinas existing management team will continue to lead the growth and operations of the business.

IGY Marinas distinguishes itself with a synergistic network of strategically positioned luxury marinas situated in the world’s most coveted yachting and sport fishing destinations. IGY Marinas has pioneered best-in-class standards for service and quality in nautical tourism around the world. It offers a global network of 23 curated marinas in the Americas, the Caribbean, and Europe, delivering year-round customer touchpoints. IGY Marinas caters to a wide variety of luxury yachts, while also being exclusive home ports for some of the world’s largest megayachts. The network of marinas is further bolstered by its exclusive Trident superyacht membership program, expansive service offerings, and comprehensive yacht management platform. In addition, IGY Marinas is a venue for exclusive events such as the Cannes Yachting Festival, Cannes Lions International Festival of Creativity, Superyacht Miami, and Art Basel. IGY Marinas is unique in that its scale and strategic geographic footprint enables it to provide vertically integrated services to superyacht customers as they travel to popular destinations.

“We are delighted to announce our acquisition of IGY Marinas, a transformative transaction for MarineMax, that significantly strengthens our ability to provide the best customer experience to yacht owners around the world,” said W. Brett McGill, Chief Executive Officer and President of MarineMax. “The addition of IGY Marinas positions MarineMax as the preeminent leader in the superyacht industry—the only company able to offer an integrated experience coupling high value superyacht berthing and marina services in premier locations with exclusive superyacht service offerings. Moreover, this investment continues to diversify our business mix with not only higher margins, but also a larger geographic footprint, especially in highly desired destinations in the Mediterranean and the Caribbean.”

Mr. McGill continued, “We are very pleased to strategically expand with IGY Marinas and have tremendous respect for their outstanding management team for building a high-quality real estate portfolio of luxury marinas with extraordinary growth potential. IGY has experienced significant recent growth, as its brand has become sought-after by yacht owners, as well as public and private marina owners worldwide. This investment aligns with our ongoing strategic acquisition plan, including our superyacht business, to selectively expand our service offerings with acquisitions of high growth, high margin businesses. Furthermore, we strongly believe that IGY Marinas will offer our Fraser Yachts and Northrop & Johnson current and future superyacht customers the opportunity to enhance their yachting experiences by providing them access to the world’s only superyacht marina network.”

“We are excited to join the MarineMax Family and its experienced management team,” said Tom Mukamal, CEO of IGY Marinas. “MarineMax brings significant resources, synergies, and competitive advantages to our business amplifying our potential for both organic and inorganic growth. With IGY’s irreplaceable destination portfolio, demonstrated track record of successful acquisitions and a robust pipeline, we are confident in our collective ability to strengthen and build on our position as the global leader in superyacht and luxury marina destinations and related services.”

As stated above, MarineMax expects the transaction to close in the first half of fiscal 2023, subject to the satisfaction of customary closing conditions. The transaction will be financed through MarineMax’s recently completed expansion of its credit facilities and cash on hand.

Raymond James represented MarineMax, while Moelis & Company LLC represented IGY Marinas.

About MarineMax

MarineMax is the world’s largest recreational boat and yacht retailer, selling new and used recreational boats, yachts and related marine products and services, as well as providing yacht brokerage and charter services. MarineMax has over 100 locations worldwide, including 79 retail dealership locations, which includes 34 marinas or storage operations. Through Fraser Yachts and Northrop and Johnson, the Company also is the largest superyacht services provider, operating locations across the globe. Cruisers Yachts, a MarineMax company, manufactures boats and yachts with sales through our select retail dealership locations and through independent dealers. Intrepid Powerboats, a MarineMax company, manufactures powerboats and sells through a direct-to-consumer model. MarineMax provides finance and insurance services through wholly owned subsidiaries and operates MarineMax Vacations in Tortola, British Virgin Islands. The Company also operates Boatyard, a pioneering digital platform that enhances the boating experience. MarineMax is a New York Stock Exchange-listed company (NYSE: HZO). For more information, please visit www.marinemax.com.

Forward Looking Statement

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include the acquisition being accretive, the acquisition being transformative to MarineMax and strengthening its ability to provide superyacht services and making MarineMax the preeminent leader in the industry and related timing, and the post-closing management of IGY. These statements are based on current expectations, forecasts, risks, uncertainties, and assumptions that may cause actual results to differ materially from expectations as of the date of this release. These risks, assumptions and uncertainties include the Company’s abilities to reduce inventory, manage expenses and accomplish its goals and strategies, the quality of the new product offerings from the Company’s manufacturing partners, the impacts (direct and indirect) of COVID-19 on the Company’s business, the Company’s employees, the Company’s manufacturing partners, and the overall economy, general economic conditions, as well as those within our industry, the level of consumer spending, the Company’s ability to integrate acquisitions into existing operations, and numerous other factors identified in the Company’s Form 10-K for the fiscal year ended September 30, 2021 and other filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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BREAKING: OneWater to Acquire Denison Yachting

OneWater Marine today announced it reached an agreement to acquire Denison Yachting.

“We are thrilled to welcome Bob Denison and his team into the OneWater family, which expands and strengthens our presence in the superyacht and yacht categories,” OneWater CEO Austin Singleton said in a statement. “As we move through the second fiscal quarter, we continue to capitalize on record demand and a growing backlog.

“Orders at the Miami boat show were off the charts for both OneWater and Denison, which underscores our combined position as the premier marine retailer of choice, from superyachts and yachts to traditional boat sales, parts and service,” Singleton added.

OneWater operates 75 retail locations and 10 distribution centers, and maintains an online marketplace.

Denison Yachting has 21 offices in the United States and in 2021 reported more than $80 million in sales. It is a dealer for such brands as Alpha Yachts, Beneteau Power (Monte Carlo, Gran Turismo, Swift Trawler), Beneteau Sail, Numarine, Dufour, Van der Valk Yachts and Excess Catamarans. The company also provides charter management services and has a substantial brokerage network with a focus on superyachts.

“Strong consumer demand continues to fuel our growth and strengthens our position as industry leaders throughout the United States, Europe and the Mediterranean,” Bob Denison said in a statement. “Denison’s team of experienced yacht brokers is unparalleled in the world of yachting. Their commitment to take incredible care of clients will be accelerated thanks to OneWater’s tools, resources and support.”

The transaction is expected to close in the fiscal third quarter.

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Power Lodge Acquires Miller Marine

Marine and powersports dealer Power Lodge acquired Miller Marine in St. Cloud, Minn. Power Lodge owner Tom Dehn announced the sale in a statement.

Miller Marine is the world’s largest seller of high-performance Bennington pontoons and is one of the largest single-point boat dealerships, the statement said. It was once named the No. 1 Yamaha outboard dealer in the nation.

Dehn said the dealership will continue to offer the Bennington brand and will retain the entire Miller Marine staff.

Power Lodge now has four locations in Minnesota and one in southwestern Florida.

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TopSide Marinas Acquires Texas Yacht Club

TopSide Marinas has acquired North Point Yacht Club on Lake Belton in Texas.

TopSide plans to invest in the Temple, Tex., marina by adding more than 70 wet slips, TopSide cofounder Jacob Boan said Tuesday in a statement. The property, previously owned by the Brashear family, is TopSide’s third marina.

“The Brashear family has always wanted to make a positive impact on the community, and we believe that TopSide Marinas will help continue that legacy,” Price Brashear said in the same statement.

“We are excited to take the baton from Price and continue to provide an outstanding boating experience for all members of North Point,” said Stephen Lehn, another cofounder of TopSide Marinas.

TopSide acquired two marinas in 2021: Beavers Bend Marina on Broken Bow Lake in Oklahoma and Galveston Yacht Marina in Galveston, Tex. The company said it plans to continue acquiring marinas and will consider all opportunities within the United States, including properties located on lakes, rivers and along the coast.

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Trident Acquires Chesapeake Marinas

Trident Marine Group announced that it merged with Coastal Properties Management, adding six Chesapeake Bay marinas to the management company’s portfolio.

Trident already manages Nabbs Creek Marina & Yacht Yard, Chesapeake Harbour Marina and Annapolis Maryland Capital Yacht Club. The deal will add Coastal Properties’ Bowley’s Marina, Diamond Teague Piers, Piney Narrows Yacht Haven, Fort Washington Marina, Belmont Bay Harbor and Little Creek Marina.

“Trident Marine Group remains focused on delivering exceptional customer service to our clients, who are both marina owners and slip holders,” Trident CEO Jeremy Parks said in a statement. “With the addition of new clients, we aim to maintain the individuality and uniqueness of the marinas we serve while making sure current best practices are in place.”

Parks and COO Marie Carbone will remain in their roles, and Trident added that little will change with day-to-day operations. Coastal Properties’ Bruce Wagner will assume the role of vice president of maritime operations at Trident.

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Suntex Acquires The Wharf

Suntex Marina Investors last week announced that it acquired The Wharf, a marina in Marathon, Fla., in the Keys. The company plans an extensive renovation of the property, which it plans to relaunch as Ocean View Marina.

“In just the short year that we’ve owned Faro Blanco, we’ve seen the incredible draw of this region, and when we got the opportunity to acquire the facility a mile down the road, we had to take it,” Suntex Marinas investments partner David Filler said in a statement. “We are looking forward to taking the reins and completing the construction.”

In addition to The Wharf and Faro Blanco, the company owns two other marinas in the Keys: Caloosa Cove and Garrison Bight.

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Suntex Marinas Acquires Key West Facility

Suntex Marinas yesterday announced the acquisition of Garrison Bight Marina in Key West, Fla.

The marina has 20 wet slips and 213 dry slips and is located near hotels, restaurants and shopping. Suntex said it is the only full-service marina on the island with dry storage facilities. Amenities include a fuel dock, ship’s store, service department and a Thai restaurant with a deck overlooking the marina.

“This purchase provides Suntex with an excellent opportunity to expand upon our holdings in the Florida Keys and our footprint in the South Florida market,” investment partner David Filler said in a statement. “We are committed to offering our guests a best-in-class experience, and Garrison Bight has incredible potential.”

Filler added that Suntex will make a “significant investment in upgrades” to the marina.

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