1. RICHARD GRAVES & ASSOCIATESMARINA BUSINESS PRESENTATION Please click on the slide you are viewing to move on to the next slide 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves

2. HISTORYThe early concept of the marina, including public access and common ownership of waterfrontproperty for commerce and transportation , dates to Roman Law of 2,000 years ago. The concept waslost during the Dark Ages, however, the Magna Carta restored public rights to coastal tidelands in1215 ADIn the United States, marinas developed slowly. The U.S. Congress passed the River and Harbor Actof 1899, which authorized the Secretary of the Army, through the Army Corps of Engineers, toapprove the building of any structure on or over navigable waters. Recreational boating increased andthe wealthy built private harbors in the early 1900s. By the 1930s , the term marina (Italian for a smallcraft harbor) described a recreational boating facility. After World II, the middle class boughtrecreational boats with discretionary income thereby creating a demand for more marinas.Until the 1960s most marinas were owner operated. Then developers showcased the marina as thefirst stage in long term, mixed use plans for Urban revitalization and resort complexes. As a result ofthe increase of recreational boating across the country. Congress broadened the River and Harbor Actin 1968 to require approval of building recreational structures, further protecting U.S. waterways. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 3. MARINA INDUSTRY OVERVIEW According to the National Marine Manufacturers Associations estimate in 2002, there are about 12,000 marinas,boatyards, dockominiums, equity yacht clubs and private clubs operating in the U.S. Additional research shows of the12,000 marinas, 60% are salt water and 75% are 25 years or older. About 70 percent of marinas are privately owned,profit-making businesses that sell services to the public. The remaining 30 percent are municipal and state marinas,which are open to the public at minimal cost. Todays marinas are generally freestanding and dockage is considered the main profit center (40%) of the business. Inaddition to a stand alone, a marina may be an additional amenity to an upland project. Marina dockage rates aregenerally charged on a daily, monthly, seasonal and annual basis and dockage rates are normally calculated by slipsize, either by a linear ft or sq. ft. There is also a close relationship between the marina business and the hotelbusiness. Basically, a boat slip is like a hotel room, one accommodates the guests boat and the other the guest. Bothdeal with one of the most perishable products in the world. Once a slip or a room goes empty, that loss of revenue cannever be recovered. As an alternative to a wet slip marina, dry rack storage operations are quite popular. By stacking boats on racks in alarge building, an operator can handle hundreds of boats on less waterfront property than a conventional wet slipmarina. This type of operation can also be adapted to storing both boat and trailer at an inexpensive inland location.Most Municipalities do not allow parking of boats on trailers on streets . Most Home Owner Associations (HOA) alsoforbid the storing of boats on trailers in driveways, yards and streets. This type of boat rack storage is an emergingmarket and quite popular in lake regions of the West Coast. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 4. FINANCE AND MAINTENANCE COSTSMore than 70 percent of marinas are owner operated, stand-alone facilities. Investment sources are often friends, family and local banks.Depending on a marinas geographic location, cash flow can be highly seasonal. Other important financial issues are the high investment in facilities and management of accounts receivable. Because of the risk of accidents inherent in managing large numbers of people and boats, broad insurance coverage is necessary.Building and maintenance costs can be high, depending on weather and water characteristics, and soil conditions. Ocean marinas subject to heavy tides are generally more expensive to build and maintain than lake marinas. Pilings, floating docks, and other waterside structures need periodic replacement. Modern docks have a life expectancy of 40 years, but earlier structures have shorter lives. Costs per new slip are around $50,000 to $70,000. In addition to waterside equipment and services, marinas typically need large parking areas. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 5. PERFORMANCE OF MARINA PRODUCT LINES AS OF THE 2002 CENSUS Product Description Sales of thisLine Percentage of Industry($000) industry Sales (%)Industry total 3,351,721 100 Pleasure boat dockage, slip rental, 1,307,940 39.02 launch fees, & storage Merchandise sales811,73924.22Personal & household goods repair487,21714.54& maintenance Sales of food & beverages271,011 8.09 Membership dues189,689 5.66Other 284,125 8.48 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 6. MEDIAN COMPANY STATEMENTS %2011 7. MEDIAN COMPANY STATEMENTS $ 2011 8. FINANCIAL RATIOS2011FINANCIAL RATIOS 9. HUMAN RESOURCESDue to the high percentage of manual and maintenance labor, the average hourly wage for marina employees ismoderately lower than the national average. Personnel turnover rate is high in recreation-related industries. Theindustrys safety record is on par with the national norm. Industry Employment Growth Bureau of Labor Statistics Average Hourly Earnings & Annual Wage Increase Bureau of Labor Statistics 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 10. COMPETITIVE LANDSCAPE Sales and ownership of boats create demand for marina services. Theprofitability of an individual marina depends on location and good marketing.Marinas compete by offering amenities, customized services and/or a preferredlocation. Competition for discretionary income from other less expensive forms ofrecreational activities. Demand for marina services are tightly tied to boat salesand continued use. Power boating is not an inexpensive leisure activity. Boating Industry ForecastThe output for US boat building, an indicator for marinas, is forecast to grow atan annual compounded rate of 4 percentbetween 2012 and 2014. Data Published: October 2009Boat Building Growth Peaks After Recession 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 11. SALES & MARKETING Rent varies according to the length of slip a boat needs. In high demand areas typical slip rents can beas high as $15 to $20 per foot per month. Guest slip rates are usually between $2 to $3 per foot per day.Some marinas still have flat slip rates of $120 to $250 per month. Dry stack storage costs are mostlybased on per ft rate and rack storage is generally only available on an annual contract basis payablemonthly. Depending on the area annual stack storage rates can range from $2,500 to $4, 500 per yearfor a 25 boat.Most marina owners cater to annual/seasonal slip holders and transients. Although transients may bemore profitable, their use of marinas is strongly affected by weather and the economy. Marinas generallysplit their slips between annual, seasonal and transient customers. The types of marketing used by marinas depends partly on the mix of annual and transient customersthey cater to. Word-of-mouth is very important. Contacts with boat brokers and boat dealers areimportant to attract annual customers. Cruising directories, newspaper and magazine advertising isoften aimed at transients. Boat shows are a major marketing tool, and Internet sites and on-line socialnetworking have become a very important new source of business for both types of customers. Special Events sponsored or hosted by marinas are becoming important marketing tools for promotingthe facility and producing additional revenues during off peak periods. Special events are normallygeared to location and the type of boater the marina attracts. Fishing Tournaments and Poker Runs arethe most popular marina special events. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 12. TRENDSMore power boats, fewer sail boats.- Because operating a powerboat is easier than operating a sailboat, especially a large one, powerboats are more popular in recent years. Of the more than 700,000 boats and personal water craft sold in 2008 more than 200,000 were powerboats, according to the National Marine Manufacturers Association (NMMA)In the realm of structural changes, docks and other structures are increasingly made of refined composite structures or concrete designed to withstand the elements more effectively than wood. Marinas have increasingly turned to new products with environmental and fire-resistant attributes. Engineers in the 1990s have also redesigned boat yard and dockside disposal systems to meet environmental regulations.In areas of the country with limited waterfront space for new wet slip marinas, dry rack storage facilities are an attractive alternative. By stacking boats on racks in a large building, an operator can handle hundreds of boats on less waterfront property than can a conventional marina. Drawbacks are the need for constant operation of special forklifts and the lack of accommodation for "transient" boaters. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 13. TRENDS IN SERVICES AND AMENITIES Utilities - The type and quality of utilities provided by the marina depend on the market it wants to attract. Utilities provided to yachts and megayachts are much greater than to other types of boats. Electrical power, sewer pump out stations, and Wi-Fi are all necessary utilities, and demand is greater for some type of upscale convenience and grocery stores to provide essentials. High-Speed Fuel Pump - A high-speed fuel pump can offer marinas the opportunity to greatly expand fuel revenues, a major income component. Boats, especially yachts, require a lot of fuel. Installing a high-speed, instead of a standard, fuel pump can save many hours of fuel pumping for large boats. While expensive to install, if a marina is the only one in its market with such a pump, yachts from other marinas will be attracted. Online Reservations - Although most reservations for guest slips are still handled over the phone, bookings via the Web are increasing. Some marina operators offer automated reservation services and promotional information on their websites. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 14. BUSINESS TRENDS Destination Marinas - To attract both annual and transient boaters, marinas are providing more than justdocking facilities. Some are associated with restaurants, hotels, retail shops, condo developments, and golfcourses. Boaters increasingly are looking for destinations, rather than cruising or fishing. Megayacht Marinas - A niche market that is continuing to grow is the Megayacht segment. These are boatsin the 80 + category and are priced anywhere from $10 to $ 100 million dollars and more. At present, due tothe fast growth of this segment of the market, there is a critical shortage throughout the world of marinas withdocks large enough to accommodate these boats. The dockage rate for this segment of the pleasure boatingcommunity is generally 2 to 4 times higher than the rates for boats of a smaller size. Picking Location - Thelocation needs of the Megayacht markets are very different from cruiser or other smaller boat size markets. Build and they will come doesnt work. There must be a reason for these boats of the ultra rich to visit thedestination. Slip Sizes- Development of new ocean access wet slip marinas with slips less than 40 is becoming a rarity.The owners of boats of this size and larger are willing to pay higher dockage rates. Also, it is possible toaccommodate a smaller boat in a larger slip but not the reverse. In addition, many of the newer boat rackstorage buildings and marina fork lifts are designed to handle boats up to 40. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 15. BUSINESS CHALLENGES Highly Leveraged Business - Marinas require heavy investment and have high fixed costs, so ongoing highoccupancy is crucial to financial success. With PP&E (Property Plant & Equipment) high and variable costslow, marinas depend largely on the ability of the operator to achieve high occupancy rates through astutemarketing and excellent services. Small changes in occupancy rates have a big impact onprofitability, increasing the overall risk of this business. Dredging Regulations - Dredging regulations, coupled with limited dredged material managementoptions, typically make dredging a significant operations cost for marinas. While new work dredging, for themost part, is more strictly regulated than maintenance dredging, the biggest problems are created formarina operators in terms of permits and costs by the ongoing need to maintain channel and basin depths. By 2017 more than 27 million people are expected to reside along U.S. coastlines The desire of people tobe on or near the water has caused a spiraling escalation of waterfront property values. This has created anew challenge in the marina business. With all this land being purchased for land side development ofresorts, condominiums and rental apartment buildings there is less opportunity for building new freestanding marinas. Many of the free standing marinas that have traditionally been small family businessesare selling out to land-side developers. Needless to say, the competing interests for valuable waterfrontproperty and new environmental policies are creating major hurdles for new marina development. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 16. CRITICAL ISSUES Dependence on Economy - Boating, because its recreational, tends to be more subjective tofluctuations in the economy than other activities. Demand for marina services are tightly bound tonew boat sales, which in turn depend on the health of the US economy and consumer spending.The long economic expansion of the 1990s promoted steady increases in sales of inboard-motorand sailboats. In the current economic slowdown, boat sales dropped considerably over the pastfew years. Environmental - Marinas are subject to various state and federal environmental regulationsconcerning direct water pollution from boaters, contaminated storm water runoff, and dredgingoperations. Because of the high concentration of oils, fuels, soaps, paints, solvents, sewage, andsanded materials, in addition to unknowledgeable boaters, marinas must take extraordinaryprecautions to prevent water pollution. Voluntary standards have been established for bestpractices that result in a Clean Marina designation. Violations of environmental regulations canresult in heavy fines and other penalties. High Construction Costs - Construction costs for new or expanding marinas can be $60,000 ormore per slip, due to the extensive permitting processes, requirement for more durablematerials, and because underwater soil must be environmentally tested. Although lumber costs fell0.4 percent in January 2006 compared 2005; steel grew 13.3 percent; cement climbed 4.5percent, according to Engineering News-Record. To produce a 10 percent return on such aninvestment, monthly slip rental and other income must average $600. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 17. SUMMARYMany inland marinas are starting to report greaterConstruction costs for new or expanding marinas can customer volume as boaters leave expensive and be expensive, due to the extensive permitting damaged coastal marinas for safer and lower priced processes, requirement for more durable materials, and locations. because underwater soil must be environmentallytested. Marinas require heavy investment and have high fixed Although most reservations for slips come over thecosts, so ongoing high occupancy is crucial to financial phone, the internet is beginning to play a bigger roll insuccess. booking reservations Property and construction costs, coupled with limited Marinas near upscale retirement locations fare particularly supply of prime locations, inhibit new marinawell in times of increasing numbers of retirees. development. Boating, because its recreational, tends to be more subject Many marinas are being bought by developers andto fluctuations in the economy than other activities.converted into luxury waterfront residences. Dry stack facilities are common in areas with cold winters, Newer Marinas offer electricity, water, TV and phoneand are also a launching alternative where waterfront is hookups; bilge and sewerage pump outs; maintenancelimited. This type of boat accommodation is ideal for casual and repair services; fuel sales; grocery and supply sales;boaters. bar and restaurant sales; laundry services; boat sales; etc Marinas located in areas prone to adverse weather In some cases marinas can apply for federal grants under conditions such as yearly hurricanes and harsh winterNational Boating Infrastructure Grant Program (NBIG) tostorms are more likely to have higher insurance andconstruct, maintain, and renovate docks; dredgemaintenance costs.waterways; install utility services. 2012 Unpublished work no portion of this presentation may be copied in whole or in part without written approval of Richard Graves 18. Richard Graves & AssociatesMarketingOperations Market Research Start-up Management and Analysis Strategic MarketStaff Hiring/TrainingPlanning Media Planning and Grant ApplicationPlacement Assistance Collateral Design and Marina AcquisitionProductionAnalysis Market PositioningandCompetitive Analysis Marina Expert Witness Customer RelationshipManagementFeasibility Studies Event PlanningandPublic RelationsOperation Manuals Full Marketingand Sales Florida Certified CountyRepresentationCourt Mediator Web Designand Marina BusinessPositioning Brokerage1000 SE 4th Street - Suite 224 Fort Lauderdale, Florida 33301 Phone: 954-524-2131 Skype: rvgraves - Email: rvgraves@rgassoc.comRichard Graves & Associates Web: http://www.rgassoc.comProfessional Marine Realty, LLC Web Site: http://www.promarine-realty.com