Morningstar Marinas Buys Virginia Property

Morningstar Marinas continues to expand its portfolio with the purchase of Vinings Landing Marina on Little Creek in Norfolk, Virginia. The company, based in Charlotte, North Carolina, now owns and operates 10 marinas in five states and plans to add three more marinas within the year.

“We’re excited to welcome Norfolk to the Morningstar Marinas family,” said Dave Benson, chief executive officer for Morningstar Properties, which owns Morningstar Marinas. “The marina has fantastic presence, convenience and opportunity, and is located in one of the most dynamic local markets in tidewater Virginia. Our goal at Morningstar is to create the highest quality marina experience for our customers through best-in-class properties. We are eager to begin renovations to modernize the facility and bring the marina to the high standards that boaters have come to expect from Morningstar Marinas.”

The marina, which will now be known as Morningstar Marinas at Little Creek, will undergo a renovation including rebuilding the dock systems and the addition of a new ship’s store.

With direct access to the Chesapeake Bay, the marina offers more than 500 wet and dry slips, an on-site restaurant, a full-service gas dock, unlimited launches for indoor storage, electric, water, and Wi-Fi for wet slips.

The previous owner was a private equity group that purchased the marina in July 2017. At that time the marina was underperforming and needed professional management to make it profitable. The equity group hired Coastal Properties Management Inc. to manage and reorganize the facility, and ultimately procure a buyer. Coastal’s Real Estate Division was the procuring broker in the sale to Morningstar Marinas, which closed on February 10.

In assuming management of the marina, Coastal faced several challenges related to the poor condition of the wet slip docks, dock electric systems, bulkheads, buildings, safety and protective systems, and equipment. “There had also been a lack of consistent management and customer service for years causing a loss of regular and new customers and a poor reputation in the region,” Bruce Wagner, president of Coastal Properties Management said.

Coastal hired a new manager and focused on increasing the level of customer service through team training and improved procedures. While making improvements to the infrastructure, Coastal began marketing the new ownership and professional management. The marketing plan included regional print media ads, a new website, additional social media marketing, newsletters and local outreach.

“The improvements and heightened customer service level were embraced well by our existing clients and positively affected the growth of new clients almost immediately,” Wagner said.

During the 18-month period from January 2018 to mid-2019, the marina’s total income increased by more than 110 percent, and NOI increased by 133 percent, according to Wagner.

The marina’s top profit center is the dry storage boatel, which can accommodate 300 to 400 boats. The double-bay building includes three forklifts, running seven days a week. The dry storage occupancy increased by more than 55 percent to near capacity and has remained between 95 and 100 percent occupancy.

The marina’s previous condition illustrates why it is important for owners to address deferred maintenance, especially those related to safety and security. “There had been years of deferred maintenance and neglect to the infrastructure and equipment causing failures and dangerous conditions,” Wagner said.

In addressing some of the most critical safety and security issues, Coastal replaced all fire extinguishers, upgraded and added lighting in parking lots and commons areas, installed locking gates on the docks, and hired local police to perform off-duty security patrols.

The owners provided funding for capital expenditure improvements, including:

• Repairing dock power pedestals and power cabling/connections;
• Replacing all the dockside electrical supply breaker panels, wiring and breakers with upgraded GFCI-protected new systems;
• Replacing the nonfunctioning waste pumpout system with a new dockside Sani-Sailor pumpout system;
• Repairing and upgrading the forklifts;
• Repairing and upgrading the built-in fire suppression foam system in the dry storage building.(The system had been badly damaged from improper maintenance and was not functioning when Coastal took over. The system is now functioning and certified by the fire marshal;)
• Repairing and upgrading the fuel dock system to pass required testing.

Adding to the improvements and growth, Coastal upgraded several unrented office rentals and brought in four new tenants on multiple-year leases, including a popular waterfront restaurant.

The property also received some cosmetic upgrades such as landscaping, a general cleanup and organization of all areas.

“The substantial infrastructure improvements and additions, improved customer service, and the addition of the new restaurant, and tenants were hugely successful in the overall increase of the value, financial improvements and customer appreciation of the marina,” Wagner said.