Safe Harbor Marinas announced earlier this week that it has acquired four marinas in California as part of a “big expansion mode”, according to Baxter Underwood, Safe Harbor president. The acquisitions include Ballena Isle Marina in Alameda, Ventura Isle Marina and Anacapa Isle Marina at the Channel Islands, and Cabrillo Isle Marina in San Diego. The four marinas contain nearly 1,900 slips.

The addition of the four California properties means that Safe Harbor Marinas now owns and manages 35 marinas in 14 states, making it the largest marina owner in the US.

“We have another one under contract and expect to have 36 marinas under ownership in the next 30 days,” Underwood told IBI. “We’re currently in a big expansion mode.”

Dallas-based Safe Harbor has come a long way since its formation last year from the acquisition of four other marina companies. The equity fund that acquired and consolidated the four marina companies, San Francisco-based American Infrastructure MLP (AIM), had been analysing the marina space for seven years.

“Our mandate is to continue to grow the company by acquiring more assets,” says Underwood. “We’re very well-capitalised, so it feels like we have much room to grow.”

Safe Harbor currently has 15 coastal marinas with the remainder being inland. Underwood, whose background is in commercial real estate, sees a “stable” market for marina properties. “There are a lot of theories out there on how properties perform in economic downturns, and marinas have tended to be incredibly stable,” he says. “During the last downturn, we saw industrial and retail assets get hammered, but not so much marinas. Revenues dipped a bit, but boats typically stay there in good times and bad.”

Regarding future marina acquisitions, Underwood says that Safe Harbor is basically “agnostic” about whether a marina owner has one or ten properties. “Our goal is to make smart investments,” he says, adding that Safe Harbor isn’t looking to get into boat sales on marina acquisitions. “Even boat rentals or food and beverage will be done through third parties,” Underwood adds. “What we really want is storage on water and storage on land. We just want to keep the facilities clean and well-cared for. We want the boat owners to feel well cared for.”

Safe Harbor is one of a half-dozen US companies with a portfolio of marinas, but Underwood notes that it remains a “highly fragmented” industry. “There has been a disconnect between the psychology of capital markets who view marinas as one of risk with discretionary assets and being on the water and the reality of the business,” he says. “It’s actually a very stable business when run properly.”

Underwood expects the marina business to transition away from being run by entrepreneurs to one with greater consolidation. “We’re the largest group with 35 marinas, but there are thousands of marinas out there,” he says. “We’re seeing other companies like Suntex enter the market.”

The transition of the four entities, Flagship Marinas International, C&L Marinas, Florida Town Harbor and IMG, into Safe Harbor Marinas has been an interesting exercise, says Underwood. “All of our 30-plus managers have come up with some great ideas, ranging from service to operations,” he says. “Building the new company has been really exciting, unlike anything I’ve ever experienced in real estate investment. There’s just a tremendous opportunity to take best practices from one property to the next.”