Safe Harbor Newport Shipyard
Parking a boat at Newport Shipyard
Marinas – the main way that the average Rhode Island boater accesses the water – have traditionally been family-owned businesses, but large corporations have been snapping them up across the country.In just three years, Dallas-based Safe Harbor bought 14 RI marinas and now controls more than 3,000 boat slips.For both recreational boaters and people who make a living on the water, the corporate consolidation along the coastline has raised concerns.
“I typically, personally, want to dislike a monopoly,” Linda Hughes admitted from the deck of a forget-me-not blue cabin cruiser as it bumped gently against the dock on a cloudless July day.
“But from what I’ve seen so far,” she added, “they’re doing good things. So you can’t argue with that.”
Sitting a few hundred feet away on his own boat, Joe Couturier had a less charitable take on Safe Harbor Marinas, whose minimalist logo – a navy blue ship’s wheel – has become a ubiquitous sight along Rhode Island’s coastline.
“They’re driving regular people out of boating,” Couturier said. “They’re raising the prices. They’re raising everything.”
Marinas – which are the main way that the average Rhode Island boater accesses the water – have traditionally been independent, family-owned businesses where you’re as likely to find working quahog skiffs and small sailboats as luxury yachts. But that’s changed in recent years.
In just three years, Safe Harbor, a Dallas-based corporation, bought 14 local marinas, sometimes paying considerably more than their assessed value. Today, the company owns roughly 3,000 boat slips in Rhode Island, including more than 1,100 in Greenwich Bay.
That includes both the former Brewer Cowesett Marina, where Hughes and her husband, John, keep their boat, and the former Apponaug Harbor Marina, where Couturier and his wife keep theirs.
In the less than 10 years since its founding, Safe Harbor is now the world’s largest owner and operator of marinas, with more than 130 properties in 22 states. Its competitors, though smaller, are also an increasingly visible presence on the waterfront. They include TPG Hotels, Resorts & Marinas, a subsidiary of the Cranston-based Procaccianti group, which has 15 marinas in seven states, and Oasis Marinas, which manages 55 marinas and RV parks in 15 states.
What’s driving the trend? Real estate investment trusts have discovered that marinas offer a reliable stream of revenue while allowing investors to reap the benefit of tax breaks.
But for both recreational boaters and people who make a living on the water, the corporate consolidation along the coastline has raised concerns.
Early on, there were fears that weathered docks and working shipyards would be replaced by glistening condominiums, and whispers about Safe Harbor’s ties to the conservative, ultra-wealthy Koch brothers. As time passed, some boaters came to appreciate the company’s willingness to invest in aging marinas after decades of deferred maintenance.
But the underlying question remains: As luxury conglomerates drive up prices, will middle-class Rhode Islanders and smaller boats be left with nowhere to go?
“When there’s no competition in the marketplace, costs inevitably go up,” observed Attorney General Peter Neronha, who has watched with concern as more and more marinas are purchased by large companies. “And when costs go up, only the wealthy have access.”
How did Safe Harbor, and others, grow so large in Rhode Island?
Speaking to The Providence Journal, Safe Harbor CEO Baxter Underwood made the case that his company owns only 4% of the marinas in Narragansett Bay, “so we’re quite small.”
But that number doesn’t tell the whole story.
Safe Harbor owns just two of the 13 marinas in Warwick, but those two properties have roughly 60% of the city’s slips, a term for individual dock spaces rented to boats. Both marinas were already among the largest in the state when Safe Harbor took over, and they grew even larger as the company acquired smaller neighboring facilities and absorbed them.
In Portsmouth, similarly, Safe Harbor owns three of the five marinas open to the general public – equaling more than 80% of the boat slips.
According to financial filings, the company owns more boat slips and dry storage spaces in Rhode Island than in any other state in the Northeast. But it’s also true that, as Underwood suggested, concerns about corporate control of the waterfront aren’t being driven by Safe Harbor alone.
Warwick’s Harbor Lights Marina, formerly owned by former Gov. Philip Noel and his family, and Greenwich Cove Marina, also known as Prime Marina, were both acquired by investment firms and are now managed by Oasis Marinas.
TPG, which started by acquiring Champlin’s Marina on Block Island, has since snapped up two marinas and a boatyard in Jamestown, and recently purchased the Newport Harbor Hotel and Marina.
Marina consolidation isn’t a brand new concept, either.
Brewer Yacht Yards, founded in 1954, spent decades steadily acquiring marinas throughout the Northeast, sometimes turning competing businesses into a single massive marina. In Warwick, the company purchased Carlson’s and nearby C-Lark, which it later combined to create Greenwich Bay Marina – one of the largest in Rhode Island.
By 2017, Brewer owned 25 properties, including five in Rhode Island. That year, Safe Harbor acquired the company, which practically doubled the size of its portfolio overnight – and marked its entrance on the local scene.
Over the next three years, Safe Harbor snatched up marina after marina in Rhode Island, more than Brewer had accumulated over multiple decades.
The list included massive boatyards such as Newport Shipyard and New England Boatworks, as well as smaller properties like Wharf Marina in Warwick, which happened to sit next to the former Greenwich Bay Marina, now known as Safe Harbor Greenwich Bay. (Disclosure: One of the authors of this piece previously worked for Newport Shipyard before it sold to Safe Harbor, and at the Newport Harbor Hotel and Marina before it sold to TPG.)
“That was unprecedented,” said Matt Collins, whose family has owned Pleasant Street Wharf in Wickford since 1969. “No one had ever come and bought property like that.”
One small corner of Warwick Cove illustrates how the industry has changed. A few decades ago, it was home to three independent marinas: C-Lark, with 350 slips; Carlson’s, with 182; and Wharf, with 80.
Today, there’s just one: Safe Harbor Greenwich Bay, which has nearly 600 slips.
“If we were to look at the amount of commercial waterfront in Rhode Island, and how much of it is owned by just a couple of companies, most people would find that problematic,” said Daniel Martinez, vice president of New England Yacht Rigging.
Country club of the seas
The glossy pages of Safe Harbor’s in-house magazine, “Water,” depict laughing couples gathering around charcuterie boards, pristine yachts cruising into the sunset, and beaming families strolling along immaculate docks.
Its online store sells items like a $175 hand-painted canvas backgammon board and a branded $475 pewter cocktail shaker.
In other words, the company isn’t just selling a place to dock your boat. Safe Harbor’s marinas are “more like a membership network and a club,” Underwood said. He pointed to Relais & Châteaux, a global chain of luxury hotels and gourmet restaurants, as the inspiration.
Members – as Safe Harbor refers to customers who rent dock space or moorings – can travel up and down the coast in their boats, tying up at other locations for free. Other benefits include access to private pools, fast Wi-Fi, and a concierge service that answers queries such as where to find a veterinarian in the area.
Safe Harbor’s extensive network of marinas isn’t just a perk for its customers – it’s also a shrewd business strategy.
Local marinas’ revenues typically shrink in winter, but Safe Harbor can count on busy months in Florida and the Carolinas to offset slower months in New England. And since its properties are scattered all over the map, there’s little risk of a single catastrophic storm wiping out the entire operation.
“We’re exposed to everything across the Western hemisphere, which sounds like it wouldn’t be good – but, in fact, it’s just the law of numbers,” Underwood said. If a hurricane hits, “for us, it’s not the end of the world.”
Also key to the company’s business model: Boats are getting bigger.
Sales of vessels over 30 feet long have increased at a considerably faster rate than sales of smaller boats, the company noted in a June presentation to investors. Safe Harbor has been reconfiguring its marinas to accommodate more large yachts – though that hasn’t happened in Rhode Island as much as in Florida, Underwood told The Journal.
Marinas typically charge by the foot, so larger boats translate to more money. But Safe Harbor also typically hikes prices across the board when it acquires marinas, which can be hard for people with small, modest boats to absorb.
Wharf Marina, for instance, charged $85 per foot for slips before being purchased by Safe Harbor in 2020. The following summer, the price of that same dock space rose to $118 to $122 per foot, according to the Warwick Beacon.
Some boaters have come to terms with the higher prices, noting that Safe Harbor tends to pour money into the marinas it buys, revamping run-down facilities, replacing aging docks and shoring up critical but unglamorous infrastructure such as marine bulkheads.
“When you look at what you’re getting for your money, then you say, ‘Well, we can’t complain,’” said John Hughes, at Safe Harbor Cowesett. “At least they’re not sticking it all in their pockets.”
Boating, after all, has never exactly been a cheap activity. And even customers who lament the change in ownership, like Joe Couturier, point out that Safe Harbor membership has perks. Among them: being able to purchase fuel “at cost,” which translates to huge savings over time.
Why raise prices for dock space but make it considerably cheaper to buy diesel and gas? The thought, Underwood said, is that customers don’t like to be hit with high prices when they “don’t have an option.”
“When their slip contract comes out, they can make a decision about whether they want to stay with us or not,” he said. “It’s their choice and they choose it, they feel good or at least OK about it. But if you take advantage of them when they need something, they don’t feel good about that.”
Weathering the storm
For people who make a living on the water, the influx of corporate money is an existential threat.
“They’re squeezing us out by raising our rates, increasing the size of their marinas so they can fit bigger boats, and pretty soon little guys like me aren’t going to be around to do what we do,” said quahogger Jody King.
Oyster farmers, quahoggers and other small-scale fishermen often keep their boats at marinas that cater to recreational boaters, because Rhode Island doesn’t have much dock space exclusively reserved for commercial boats. Now, some marinas are seeing what Safe Harbor charges and jacking up their prices, King said.
And the push to attract massive, gleaming pleasure boats also means that there are fewer and fewer places where working vessels are welcome, according to shellfishermen.
“The marina operators are finding they can get a lot more money from a nice, pretty white yacht than from a commercial boat,” observed Bob Rheault, who serves as executive director of both the Ocean State Aquaculture Association and East Coast Shellfish Growers Association.
For Safe Harbor’s members, boats tend to be “social in nature” rather than “a commercial tool,” Underwood said. Similarly, TPG’s vice president of public affairs, Ralph V. Izzi Jr., said the “vast majority” of customers are recreational boaters, while less than 10% are working boats.
Neither disputed the notion that their companies are primarily interested in catering to yachts.
“We don’t put amenities in for commercial vessels,” Underwood said. “In Montauk, we put in fish stands, because people like to do that for fun. But it’s not like a business, you know?”
Corporate consolidation also has implications for the small, specialized businesses that have long been a mainstay of Rhode Island’s maritime economy – riggers, boat detailers, metal fabricators and marine carpenters and electricians, to name a few.
Martinez, of New England Yacht Rigging, said Safe Harbor, TPG and other marina operators routinely tack on their own fees when customers hire outside contractors to work on their boats. That surcharge can be as much as 25% of the final bill, he said.
Sometimes, the marina is acting as a middleman, Martinez said. But all too often, they’re simply charging for the privilege of setting foot on the property. Some customers temporarily relocate to another boatyard, but if marinas keep getting swallowed up, that option may cease to exist.
A car owner could potentially drive 90 miles to get their vehicle serviced, pointed out Neronha, whose office has fielded similar complaints. But a boat, especially one that needs repairs, can’t necessarily travel that far.
Underwood denied that Safe Harbor upcharges customers and said that contractors are only charged a $25 daily fee. Izzi said that TPG does so “in some but not all cases,” depending on the work being done and whether it requires utilities or other resources.
Martinez has also noticed another trend that gives him pause. Many of his local customers have moved out of marinas that were bought by large corporations, he said. Meanwhile, boaters from out of state are moving in.
“I love out-of-state clients,” he said. “They spend a lot of money. They’re great. But I want to make sure my neighbors can get on the water.”
What’s really driving the changes?
To understand why deep-pocketed investors suddenly trained their sights on marinas’ dirt parking lots and barnacled docks, you have to go back to 1960.
That year, President Dwight D. Eisenhower signed the law that authorized the creation of real estate investment trusts – corporate landlords whose profits are distributed to investors as dividends, which typically allows REITs to avoid paying federal taxes.
The steady growth of REITs over the years helped fuel the national proliferation of chain stores, restaurants and hotels, which gradually replaced mom-and-pop businesses. Then, the Internal Revenue Service ruled in 2013 that REITs could count marina slips as real estate assets.
Investors took note of the otherwise obscure change, seeing a way to multiply their returns, according to Soundings Trade Only, a publication covering the marine industry. In 2015, American Infrastructure Funds, a private equity firm, formed Safe Harbor Marinas. In just one year, Safe Harbor snapped up 31 marinas in 12 states and declared itself the largest marina operator in the country. The company continued to grow exponentially from there, aided by backing from powerful players such as Koch Real Estate Investments, a division of Koch Industries.
Competitors soon followed suit, snatching up properties of their own.
The family-owned, privately held Procaccianti Companies formed TPG and began acquiring marinas at the end of 2020. In an email, Izzi said that the firm’s interest in the business “was born during the pandemic when consumer preferences shifted to outdoor/open air activities and recreational boating was on the rise.”
With COVID-19 fueling an unexpected surge in boat sales, space to tie up those vessels became yet another sought-after commodity. But marina slips were already in short supply when the pandemic struck – as was apparent to Safe Harbor years earlier, when the company started buying them up.
“Even as boat sales are going up and more boats are entering the market, the supply of slips is not going up,” Underwood told Soundings Trade Only in 2017. “That limitation on supply, from an investor standpoint, is a very positive thing.”
Environmental regulations and zoning restrictions, coupled with NIMBYism and the high cost of coastal real estate, make it nearly impossible to build new marinas today. And for many years, the number of existing marinas steadily dwindled as unassuming boatyards were cast aside for more profitable ventures such as waterfront condominiums and hotels.
In 2020, Sun Communities, a REIT that owns manufactured homes and RV communities throughout the country, purchased a majority stake in Safe Harbor for more than $2.1 billion.
In a presentation to investors, Sun Communities explained that the marina business, like the trailer park and mobile home industry, was “primed for consolidation.” The nation’s top five marina operators own just 4% of the marinas in the country, one slide pointed out.
Like RV and mobile home parks, the presentation went on to say, marinas are a reliable source of reoccurring revenue. And current demographic trends work in their favor: Since boat buyers tend to be older and wealthier, the glut of retiring baby boomers will likely drive up demand.
Safe Harbor operates independently from Sun’s other businesses, which was a condition of the sale, Underwood told The Journal. He said the acquisition was intended to “give liquidity” to early investors who had a substantial ownership stake in Safe Harbor.
The Kochs were among the investors who “sold out” and no longer own a minority stake, Underwood said. There was never a point when the right-wing billionaires had a controlling share of the company, “but their shadow looms so large that everyone loved to say that it was the Kochs that owned it,” he added.
The underlying concern – that a crucial way for people to access the water is now just another commodity traded by wealthy investors – won’t be as easy to dispel.
“There’s this fear in the industry that, at some point, the shareholders are going to want to cash out,” Martinez said. “Suddenly, these marinas turn into condos.”
So far, that hasn’t come to pass. Safe Harbor’s goal is to have a network of marinas that spans the globe, Underwood said, and the company doesn’t put any thought into whether the valuable waterfront real estate it acquires has the potential to serve another purpose.
He pointed to Newport Shipyard as an example.
“If we ever did develop something there, it would be just something to serve the boats,” he said. “Because the value is in somebody leaving Palm Beach, and going and staying in Charleston, and then staying in Boston, and then staying in Newport, and going up to Maine. It’s not in any other thing that could be there.”
Is the water bluer on the other side?
For Rhode Island’s remaining independent marinas, the rise of corporate-backed chains hasn’t necessarily been a bad thing. If anything, it’s led to more demand.
“I would say that it helped us more than it hurt us,” said Collins, whose family owns Pleasant Street Wharf. “It certainly increased our customer base.”
The 42-slip marina, with an unpretentious gray shingled office that originally housed an oyster company, sits between the former Wickford Marina and Wickford Cove Marina. After both were purchased by Safe Harbor and prices went up, Pleasant Street’s waitlists for slips and moorings swelled.
“They ruffled some feathers and rubbed some people the wrong way when they came in and bought so much at once,” Collins said. “For a few years, when they first showed up here in Rhode Island, I was fielding eight to 10 calls a day.”
Pleasant Street Wharf can’t compete with Safe Harbor when it comes to hiring, or hauling the largest boats. But plenty of boaters are seeking “non-corporate” marinas, Collins said, and spaces that open up are typically filled in less than a week.
Joe McGrady, who owns the 136-slip Fairwinds Marina in Warwick, has witnessed the same phenomenon.
“Some of the consolidation in the other marinas really helped us out, because they’ve been driving up the prices, and their customer service sometimes isn’t as strong,” he said.
McGrady, an American Airlines captain, offers more of a personal touch. Customers can reach him at any time, he said – except, of course, when he’s in the cockpit. And when he isn’t flying, he cleans the marina’s bathrooms himself.
“If you go to Fairwinds, it’s immaculate,” he said.
McGrady also previously owned Dutch Harbor Marina, in Jamestown, but sold it to TPG in 2021. Though initially reluctant to sell, he was “stretched thin” managing two marinas and a sizable apartment building portfolio while raising five children and flying all over the country, he said.
Collins and his family could have cashed out, too. A few years ago, they got a call from a Safe Harbor representative who seemed to be contacting “pretty much everybody that owned waterfront property,” he said.
But his father and uncle, who’d spent several decades building up the business, weren’t interested. Neither were he and his brothers, who run the marina’s day-to-day operations.
For other marina owners who were nearing retirement age and didn’t have children willing to take over, it was a different story: Safe Harbor was paying considerably more than tax assessors thought the properties were worth.
In Portsmouth, Pirate Cove Marina sold for $2.5 million, more than $700,000 above its assessed value. Jamestown Boatyard went for $3 million, roughly double its assessed value. And on the higher end of the spectrum, Newport Shipyard, which was valued at roughly $14 million, sold for $20 million.
Some marinas are worth more to Safe Harbor than to the market, because they’re in destinations where members “really want to be,” Underwood said. For instance, he said, the company “probably paid more than anyone else would have” for Newport Shipyard.
Marina owners who sell to TPG, meanwhile, often “take some comfort knowing that they are selling to a RI-based company vs. another company from out of state,” Izzi wrote in an email. Many are ready to retire, he said.
In countless other sectors of the economy, giant corporate chains long ago replaced small mom-and-pop businesses. Perhaps the most surprising thing about the marina industry is that it resisted that trend for so long.
“It’s like Walmart and the neighborhood store,” Linda Hughes observed, looking out at hundreds of Safe Harbor-owned slips that line the western shore of Greenwich Bay. “It’s today’s world.”
Consolidation drawing scrutiny
Boaters are right to be concerned about large corporations owning a growing share of the waterfront, Underwood told The Journal.
“I grew up on horses, not on boats,” he said. “But I understand, as a consumer, how when things become corporatized, it often ruins the soul of them.”
Some of the company’s competitors may be motivated by finding ways to cut costs, “but that’s not what we’re trying to do,” he added. In his view, gobbling up marinas and stripping away their local flavor would be a “tragedy.”
But the generic look and feel of corporate-owned chains is, in the scheme of things, a relatively minor concern.
To Neronha, the bigger question is whether the consolidation of marinas has a negative impact on consumers and violates antitrust principles. He’s asked his staff to start looking at whether an “anti-competitive market” is driving up prices.
“It’s been on my mind for some time,” he said.
Until recently, the primary concern for state regulators was marinas’ impact on the environment – not the prospect of a monopoly. Even the Coastal Resources Management Council, which typically needs to sign off on physical changes to marinas, doesn’t formally track who owns them.
The “Marina Users’ Bill of Rights,” introduced in 2023 by Sen. Mark McKenney, D-Warwick, proposed additional guardrails to protect consumers. Among them: Capping price increases for slips and preventing marinas from tacking surcharges onto contractors’ invoices. But it failed to gain any traction.
Living in Jamestown, Neronha has witnessed the industry’s dramatic shift firsthand. In the span of just two years, TPG and Safe Harbor snapped up three of the island’s four marinas. Clark Boat Yard, where he keeps his 22½-foot sailboat, is the lone holdout.
“I hope they survive,” he said.
Rhode Islanders have earned a living on the water for centuries, he pointed out, including all three generations of his family who lived in Jamestown before him. His grandfather, who worked on the Newport ferry, was “not a wealthy person” but could still afford to keep a small boat on a slip and go fishing in his time off.
“Crowding someone like my grandfather out of access to recreational fishing is not something that I think most Rhode Islanders would want to see happen,” Neronha said. “But that’s a real danger.”
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Publish date : 2024-09-03 22:00:00
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