Get Flexible CMBS Financing for Marinas and Boatyards
If you’re looking for financing for your marina, a CMBS loan could be a great option. There are currently between 10,000 and 12,000 marinas in the U.S., and with marinas in high demand due to geographical constraints and building challenges, CMBS lenders are often willing to finance these properties, particularly due to the fact that they generally have extremely strong cash flow. In addition to traditional marinas, CMBS loans can also be able to finance large boatyards and even industrial-style boat storage facilities.
Unlike other types of commercial properties, marinas often provide a wide variety of services, including sailing instruction, boat repair, and may even broker boats and yachts themselves. Many marinas are functionally mixed-use properties, as repair shops, sailing schools, and even restaurants may rent out space from the marina itself.
While the fact that most marinas are owner-occupied may make the CMBS origination and approval process challenging, this shouldn’t put off potential marina borrowers. CMBS loans generally provide some of the least expensive fixed-rate loan terms in the industry and can be far better than bank loans in many situations.
Common Uses for CMBS Marina Loans
Marina acquisitions: With marinas being so lucrative, CMBS financing could be a great way to add a marina into your portfolio. Since marinas are such a unique property type, and management can be far more complex than traditional types of commercial real estate, lenders will generally prefer that the incoming owner or management company has significant experience in the marine industry.
Refinance existing debt: If your current loan has a high interest rate or is about to come to maturity, a CMBS loan could be an ideal financing solution. CMBS loans typically have terms of up to 10-years, so in an environment of low interest rates, a conduit loan could be the perfect way to lock in a low rate for a substantial period of time.
Property improvements or expansions: While CMBS loan covenants often prohibit owners from making changes to their property during the loan term, if you own more than one marina, as many marina operators do, you can use the proceeds of a CMBS cash-out refinance to upgrade other properties in your portfolio. You can also use the funds as working capital to promote your marina through marketing efforts, or even use the funds as a down payment to acquire another marina, boatyard, or to diversify your portfolio with other types of commercial real estate.
Prospective Terms for CMBS Marina Loans
Unlike bank loans or life insurance company loans for commercial properties, or Fannie Mae, Freddie Mac, and HUD multifamily financing for apartment properties, CMBS loans have relatively lenient borrower requirements.
CMBS terms and requirements typically include:
Loan Size: $2 million+, no maximum loan amount
Loan Terms: 5, 7, and 10-year fixed-rate terms, interest-only (I/O) financing available for well-qualified borrowers
Amortization: Generally 25-30 years
DSCR/LTV: 1.25x -1.35x, 75% LTV
Eligible Properties:
Marinas generally must be occupied in areas with a high amount of boating activity
Long-term boat slip or retail leases are generally preferred
Management or ownership should be extremely experienced
Loan Pricing: Pricing based on current swap rate or relevant U.S. Treasury rate, LTV and DSCR, as well as asset quality, rate buydowns available in some situations
Loan Assumption: Fully assumable pursuant to master servicer approval and a fee, generally 1%
Prepayment: Yield maintenance or defeasance
Recourse: Generally non-recourse with standard bad-boy carve-outs for issues like fraud, embezzlement, or international bankruptcy
Third-Party Reports: Third-party reports are paid for by the borrower, and typically include:
Full appraisal
Phase 1 ESA (Environmental Assessment)
Property Condition Assessment (PCA) is often required
Rate locks: Available at loan commitment, 30-day rate locks may also be available with lender approval
Replacement Reserves: Typically required and paid for by borrower on a per-year basis, may be waived or reduced in some situations, particularly for Class A assets
Lender Legal Fees: Generally $15,000 for smaller loans, larger for larger loans
Origination Fees: Generally 1%, can be higher in some scenarios