Dock Duel

Dock Duel

A pair of marina owners are trying to reshape the boat docking industry along the Gulf Coast, using competing business plans.

STRATEGIES by Sean Roth | Real Estate Editor

Steeven Knight and Ed Ruff own companies that are so similar they could be related.

Both Knight's Yacht Clubs of the Americas LLC and Ruff's BoatClubsAmerica LLC recently acquired their fourth marina property, with plans to knock the existing structures to the ground and build modern club-house style replacements. Economically, both of the two marina developers will make most of their money selling off the boat slips, although both companies plan to stay on to manage the new amenities.

But like a pair of fraternal twins seen in a certain light, the specifics of the two business plans are starkly different.

Naples-based BoatClubsAmerica, founded, by Ruff, a real estate agent, bought its first marina property, now called Barefoot BoatClub, in 1996. Since then, Ruff's spent the past ten years or so working on developing another two marina properties. Knight's Fort Myers-based company is the relative newcomer; he bought his first property, eventually called the Sanibel Harbour Yacht Club, a mere two years ago.

Business trends

Dock acquisition has been a trendy business, principally because of the pristine waterfront locations and the high barrier to entry for new marinas, both in cost and government regulation. Dockominium developers have also had fewer competitors and more opportunity, too, as investment money had been focused in other areas.

"It's almost liquid gold," says Tim Field, managing director of the Michael Saunders & Co. International Group. "There certainly aren't going to be any new boat yards built. Getting the permitting alone for dredging is almost impossible. I can't imagine there would ever be a glut of condominium boat slips on the market."

Still, prices for marinas have certainly reflected that residential impact. Knight has seen prices increase more than 300%, from $6.5 million for the 5.4-acre, 350-dock Sanibel Harbour Marina in 2004 to about $28 million for the 10.57-acre, 678-dock former Naples Marina in July. Knight, who recently purchased marinas in Naples, Tampa and Key West, spent nearly $100 million for his properties. He is also in the middle of land-use work for a fifth marina, a joint venture with the owner of a New Smyrna marina to create New Smyrna Harbour Yacht Club.

BoatClubsAmerica has seen a price increase as well. It purchased the 440-slip 12-acre Jackson Marine Center in Fort Lauderdale for $16 million earlier this month.

Public or private

The biggest difference between the two companies' business plans involves a gate.

The Yacht Clubs of Americas model emphasizes security and exclusivity of services for dock owners, making the marina sites private. The developments are gated-off, accessible only to dock owners, renters and their friends and family.

The business plan is designed to create a collection of amenities and reciprocal relationships between all of the company's yacht clubs. Knight emphasizes his company's high level of customer service delivered at a wholesale cost: Fuel, food and drink are all provided to dock owners or renters at cost, along with boat washing, engine flushing and no-tip valet service.

Knight says the company will sign agreements with boat manufacturers to allow specific service for some public boats. In addition, the company is considering selling boat fuel to the public because of the lack of other fuel sources in a number of areas.

"We might do that because it would be another revenue source for our members to keep their annual membership fees low," Knight says. "But the bottom line is that this is a site dedicated to its members."

More public uses, such as restaurants, tend to require too much parking, which ultimately hurts owners, Knight contends.

Ruff's business model takes an opposite approach. It keeps the site open to the public, with the exception of actual boat launching. BoatClubsAmerica developments include office, boat service, restaurants, boat brokerage and other retail space, which likely couldn't survive without public access. Aside from new facilities and private dockage, the sites are as accessible as they were under the previous rental business structure.

Ruff says keeping the marina public allows for a greater diversity of product and also lets him offer services that wouldn't have been economical feasible just to cover the private buyers.

"We emphasize the full-service boat repairs because with so many marinas being developed there are a lot fewer service centers than there were before," Ruff says. "It's pretty essential for boaters."

Different backgrounds

Knight comes to the marinas from the construction industry. In 1992, he bought the Bonita Springs-based pool-services company Certified Pool Mechanics Inc. He added pool construction to the company's staple of work and eventually became a subcontractor for Bonita Springs-based WCI Communities Inc.

"We were probably making $300,000 when I bought it," Knight says. "In early 2004, it was generating $24 million." Knight says his mentor at WCI was Al Hoffman, the company founder and a well-known builder in Southwest Florida.

In late 2003, when Knight became more interested in marina redevelopment, he turned over Certified Pool Mechanics to a few key employees.

Ruff has been a real estate broker for the past 35 years, handling residential projects through his Edward J. Ruff Realty. He took a do-it-all approach.

"I would find a piece of dirt, raise the money and pull in the developer-types to orchestrate the deal," Ruff says. "Then I would market the product, do all the sales and later the resales."

In the early '90s he brokered a deal to sell the 350-unit Barefoot Beach Club, a $120-million residential condominium surrounding a marina in northern Collier County. It was from those connections that Ruff learned the Barefoot marina owner wanted to sell.

Money maneuvers

While neither company released revenue figures, the expenses of the business are considerable. In Ruff's case, the total cost of the Fort Lauderdale marina will be more than $50 million - $16 million in acquisition costs and $35 million in redevelopment.

Ruff is financing the Fort Lauderdale marina through a mortgage with First National Bank of Pennsylvania. He also has about 25 investors.

Knight is making a big splash in the financing arena, as well. After financing his first marina development through Wachovia Bank of Fort Myers, Knight decided that to grow as quickly as he wanted he needed a big institutional lender.

"Our business model calls for us to create marinas within three to four hours of each other all the way up the eastern seaboard into Virginia and Maryland," Knight says.

He found his backer in New York City-based iStar Financial, a public REIT that principally capitalizes commercial real estate ventures. It offered Knight a $200 million loan to buy and develop the three marinas. "Our local banks just didn't have the depth to do the loan," Knight says.

BoatClubsAmerica

Name Dry slips Wet slips Status Commercial (square feet)

Barefoot 90 18 sold out 2,000

Deep Lagoon 344 91 under construction 80,000

Naples 167 47 sold out 40,000 (10 residential condos)

Ft. Lauderdale 286 14 purchased 70,000

Source: BoatClubsAmerica LLC

YCOA Yacht Clubs

Name Dry slips Wet slips Status

Sanibel 387 5 open

Tampa 700 38 purchased

Naples 638 0 purchased

Key West 500 125 purchased

New Smyrna 325 50 joint venture being permitted

St. Augustine 330 0 under contract

Charleston, S.C. 500 66 under contract

Destin 850 140 under negotiation

Source: Yacht Clubs of the Americas LLC