Five Questions With: Gerard McDonough

GERARD MCDONOUGH is seeing more interest from major real estate investors for Rhode Island's marine-oriented properties, including the state's marinas. / COURTESY INTEGRA REALTY RESOURCES
GERARD MCDONOUGH is seeing more interest from major real estate investors for Rhode Island's marine-oriented properties, including the state's marinas. / COURTESY INTEGRA REALTY RESOURCES

Gerard McDonough is senior managing director of Integra Realty Resources, which has offices in Providence and Middletown, Conn. He recently spoke with the Providence Business News about increasing investment interest in marina properties.

PBN: How many marina properties are in Rhode Island, and how often do they change hands?

MCDONOUGH: We have about 100 marine-oriented facilities. A marina, people keep their boats, and then you have boat yards. Some facilities have maintenance and repair components, and others don’t. You have a mixture of marinas and boat yards. Compared with other states, other coastal states, we have a significant number of marinas. They don’t trade very frequently. A lot of them are family-owned businesses. You have a generational type of ownership, where it’s passed down through the family.

PBN: Why are larger investment groups now interested in marinas, what’s driving that? Who is interested and why?

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MCDONOUGH: You have a notable number of investment banks and hedge funds and other investor groups that have identified the marine-oriented properties as a viable asset class, an investment asset class. This has happened most notably in the past year. You have apartments, lodging, office-type properties, self-storage, those are all investment-type properties where the returns are relatively low today. Investors have recognized they can get a higher return on their investment with marine-oriented properties.

PBN: What is the benefit if any to a national or organizational ownership of a local marina?

MCDONOUGH: You’ll find the national buyers will bring along a very professional management team and the benefits to the boaters you’ll typically see [involve] investment in the facility.

PBN: How do Rhode Island’s marina properties rank nationally in terms of size or value? Is the state among the top five or 10 nationally?

MCDONOUGH: In Rhode Island we have marinas ranging in size from 20 slips up to 375 slips. We have a large, a variety of different sizes. We could possibly be in the top 10. We have over 100 marine-oriented facilities. We have more coastline than the state of Texas. When you look at Narragansett Bay, it’s 26 miles from Providence out to the ocean. [In addition}, permitting a marina is extremely difficult and can take many years. This makes it an attractive type of asset. You’re not going to end up with a saturated market. It’s a very defined market.

PBN: Are these properties difficult to value?

MCDONOUGH: There’s not a plethora of information. Most apartment complexes across the country have very similar characteristics. Marinas, they’re all different. The other asset classes have a plethora of information from the expense side. As the investment groups acquire more marinas, they will assemble more data which will make it easier to analyze and predict the cash flow.

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