Rising tide in boat sales leads to consolidation in the marina sector


Rising boat sales during the pandemic have resulted in a flurry of profits for marina operators, and now one player is cementing a dominant position in the commercial real estate sub-sector.

Private equity firm Centerbridge Partners, owner of Suntex Marinas, the second-largest marina operator in the United States, is paying about $400 million to acquire the third-largest, Westrec Marinas, The Wall Street Journal reported.

Worth $2.5 billion, the combined companies will have more than 50 marinas, according to the publication.

Mergers and acquisitions have been common in the marina industry in recent years. In 2020, real estate investment trust Sun Communities acquired Safe Harbor Marinas, which will remain the largest owner of marinas in the United States even after the consolidation of its two main rivals. Centerbridge became Suntex’s largest shareholder in a recapitalization last year.

The National Marine Manufacturers Association reported that annual sales of boats, marine products and services reached $49.3 billion in 2020, a 14% increase from 2019. Motorboat sales in 2021 are expected to exceed 300,000 for the second consecutive year.

“People who were [boating] some are doing it more often, and some are doing it for the first time,” Centerbridge senior managing director Billy Rahm told the Journal.

Another benefit for marina owners came in 2019, when the IRS ruled that fees paid for boat slips and storage could be counted as real estate rent, granting real estate investment trusts tax benefits similar to those of other types of commercial properties.

While the marina industry is benefiting from people turning to boating as a hobby or socializing activity during the pandemic, there are still risks lurking in the water. Inflation could increase labor costs associated with marinas, such as dockworkers and maintenance crews. Climate change is also a concern for the entire boating industry; Centerbridge has begun investing in storage locations at higher elevations, according to the Journal.

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Still, the sector may be on the verge of further consolidation. Centerbridge estimates that there are approximately 11,000 marinas in the United States, the majority of which are privately owned.

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