Let us help you park that yacht: fund invests in two marinas

Nick Lenaghan

MA Financial has bought two NSW marinas to add to a growing boatyard fund, in a $20 million deal that highlights the appeal of alternative assets amid a choppy commercial property market.

The facilities at Batemans Bay and Port Macquarie – both with multi-decade leases – were bought from James Marshall, Marprop Real Estate Investors founder, on a yield of about 8.5 per cent. The two facilities will be berthed in the MA Marina Fund, established earlier this year with the $225 million acquisition of the 10-asset D’Albora portfolio. 

The marina at Port Macquarie. 

Investors in the fund can expect a yield of 7 per cent or higher, an inflation-crushing return that is steering the growth strategy of MA Financial’s foray into boatyards.

Although yachting may seem a luxury for some, MA Financial joint chief executive Julian Biggins says marinas stack up well as a defensive asset class, given the supply of new berths has been significantly outstripped by an increase in demand over the past decade or more along the east coast.

“You just have to look at the supply side,” Mr Biggins told The Australian Financial Review.

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“To get a DA [development application] through and to build one of these marinas is near on impossible. Once you’ve bought a boat, if it’s over a certain length, it’s very hard to park it in front of your neighbour’s house. So, even if you own it or someone else owns it, it’s got to be left somewhere.

“We see the supply side is really the very positive basis for this investment. Boats don’t really disappear very often, though they may change ownership.”

The strategy has won the support of both domestic and international investors, who contributed about $120 million in equity for a raising targeting $80 million to $90 million, to back the D’Albora deal in April.

The seed D’Albora portfolio is the country’s largest marina network, with 10 facilities along the eastern seaboard including at Rushcutters Bay, The Spit and Cabarita Point in Sydney Harbour. It also holds two marinas neighbouring the Melbourne CBD and management rights for the Port of Airlie marina at the gateway to the Whitsundays.

The portfolio for the MA Financial fund was formerly owned by Ardent Leisure before Goldman Sachs and Balmain acquired it for $126 million in late 2016. MA Financial, formerly known as Moelis Australia, was the underbidder back then. Its second chance arose when Goldman Sachs, as the portfolio’s major shareholder, moved to clean out its Australian balance sheet positions.

MA Financial is talking to investors for a further small equity raise for the fund, with hopes of ultimately creating a $500 million portfolio of marinas, through further acquisitions and capital investment in existing facilities.

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“If you can buy waterfront on an 8 to 8.5 per cent yield, the growth embedded in the contracts and the demand through the lack of supply gets into you into an IRR [internal rate of return] in the mid-teens,” Mr Biggins said.

“There hasn’t been a well-capitalised marina fund for quite some time. So, we’re seeing a lot of private interest coming to us with other assets. Clearly, you don’t buy everything. You’ve got to be very disciplined. But we are seeing a lot of opportunities to grow the portfolio.”

An ASX-listed investment manager, much of MA Financial’s focus is alternative assets – from retail, to hospitality such as its pubs fund, and credit – where it hopes to garner increasing growth as investor interests shift beyond traditional real estate sectors.

“Globally we are seeing substantial growth in institutional allocation to alternative investments, which is estimated to almost double over five years and grow to $23 trillion by 2026,” Mr Biggins said.

Nick Lenaghan edits the property section, which covers all aspects, from residential real estate and housing and construction to commercial property – office, retail, industrial – and major ASX-listed developers and real estate investment trusts. Connect with Nick on Twitter. Email Nick at [email protected]

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