Recently the team at CIVIC MJD have valued several marinas for our major banking clients. Marinas come in various configurations and are associated with a lease or licence from the NSW government for the water area and often have an adjacent freehold parcel owned by the proprietor.
The nature of the operation may be that the leased area comprises jetty and wharf improvements facilitating berths which are rented to boat owners on a long and short-term basis. Often there are swing moorings licences allocated to the proprietor which are also leased to vessels, swing moorings are often located in close proximity.
Key considerations when valuing a marina facility include:
- The terms and duration of the lease or licence for the water area from the government, the profitability of the marina business operation, maintenance requirements including obligations under the lease, competing marina business operations and surrounding vacancy rates. The preferred method of valuation is the discounted cash flow approach and the direct comparison/market approach.
- The treatment of the freehold land component associated with the marina operation depends on if the land is required for the business operation of the marina or if the land has standalone utility, marketability or development potential. There are various ways to approach the balance land.
- Contamination and environmental issues – for example where there is a boat repair or renovation operation associated with the marina there may be contamination risk, particularly in the slip way area where vessels are often extracted from the water and chemicals used in the restoration/maintenance process. In addition, many marinas have fuel systems further increasing contamination risks to a sensitive waterfront environment.
What makes a marina related property valuation interesting and often challenging is understanding the value drivers and associated services of the operation. A full analysis of the financial statements of the business is undertaken. A conventional commercial marina may provide berth rentals, fueling services, boat maintenance services and associated commerce. The balance land component is considered based on its relation to the marina operation – it may be necessary for the operation of the marina such as for access to the water lease area or may have additional and even alternative uses such as kiosk, shed, residential property or even redevelopment options.
Examples of marina valuation projects undertaken by our team include:
- Sydney harbor-based operation with a commercial marina, swing moorings, vintage boat repair business and residential use with plans to convert the primary improvements to a large luxury residential premises and retain the commercial marina use under the lease.
- Central coast-based operation where the land-based component comprised a kiosk and residential use flat, and the water-based component comprised a commercial marina and a boat hire lifestyle business.
- Commerical marina which provided berth hire and, mooring, fuel sales, kiosk, boat storage and associated commerce with plans to reconfigure parts of the land-based improvements to a bar and hospitality area, the land was intrinsic to the operation of the marina business.
The team at CIVIC MJD have over 40 specialist valuers nationally. In addition, we have an extensive and highly experienced quality assurance risk team. Our senior team have extensive experience in the valuation of water related real estate including complex lease negotiations in deep water ports, seabed leases and luxury waterfront properties.
Our valuations are relied upon by all major banks and boutique lenders – don’t hesitate to reach out to the CIVIC MJD team if you or your clients have any specialised waterfront commercial or residential property or marinas for which you require valuation advice.