SITUATION

LaPrade’s Marina is a high-quality marina located on Lake Burton, a mountain lake 80 miles northeast of Atlanta. Lake Burton is on of the most desirable lakes in the country attracting a veritable “Who’s Who” from the Southeast. Notable part-time residents include Nick Saban (coach of Alabama), Alan Jackson (country singer), and Dr. Sanjay Gupta (CNN). Colony Northstar, a $58 billion AUM investment fund, took control of the marina via a foreclosure in September 2016 when it acquired a portfolio of defaulted loans. The motivation was strictly to maximize proceeds with an immediate sale.

PROCESS

Because of the trophy nature of the marina in the Atlanta market and significant concentration of wealth on Lake Burton, we were confident that it would attract a lot of interest from prospective buyers and possibly a “vanity” buyer who had to own it allowing us to push price. We recommended, and the client agreed, that the property should be marketed without a price. Marketing began in November 2016 with a combination of calls to a list of prospects we had put together and traditional marketing. There were a couple of challenges during the marketing process. Because Colony was had acquired the property via a foreclosure and was not viewed as a long-term owner buyers were looking for a “deal.” In addition, the Seller did not possess the familiarity with the operation nor the current the financial data that a long-term marina owner would typically have. In addition, there were a lot of negative rumors in the market that had to be addressed to maximize proceeds for Colony in a sale. We were able to overcome these challenges by our expertise in marinas, which allowed us to put together marketing materials including a credible pro forma that highlighted the opportunity to prospective buyers, which led them to put forth reasonable offers.

RESULTS

The marketing process proved to be highly successful. We generated five offers that supported a market value in the $3.5M range. The winning bid came from a family office with three principals; all of whom had homes on Lake Burton. We felt, based on our conversations with this group, that there was significant motivation to control the property that could be beneficial if there were any issues during due diligence or closing. Thus, we were able to move them up in price from $3.5M to $3.875M. During due diligence, some issues arose including a determination by the buyer that they would need more capital expenditures than they had planned. There was an attempt to re-trade on the price. Because we had back-up offers and correctly assessed the motivation of the buyer, we were able to limit the price reduction to $175,000, which still kept us above the market. The transaction closed after the Summer 2017 season, which allowed the owner to retain the income and the Buyer to step into the operation during a time that they could make the changes they envisioned.