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Carlyle to buy Lauderdale Marine Center; tenants hope for business as usual

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Lauderdale Marine Center (LMC) is under contract to be sold to Carlyle U.S. Real Estate Group in a deal expected to close on July 1, according to a source close to the transaction who spoke on the condition of anonymity. Terms of the deal were not disclosed.

“Immediate and long-term plans are to operate in the same manner as it operates today,” the source said. “Almost all onsite personnel will be retained and no changes are expected other than those in the ordinary course of business.”

Neither LMC nor Carlyle executives would comment on the sale, but with no official word, there has been speculation from tenants and business partners surrounding the sale and the future of the property, located on Ft. Lauderdale’s New River just east of the I-95 overpass.

“I think there will always be speculation when a private equity group purchases a marine entity,” said Philip Purcell, executive director of the Marine Industries Association of South Florida (MIASF). “That said, LMC is a thriving yard that is a valuable component of our industry and the jobs that reside in it.”

One LMC employee said the yard wanted to communicate with employees and tenants before talking to the press. They had not done so by June 19.

Lauderdale Marine Center, with the skyline of Ft. Lauderdale in the background, is one of the largest service and repair facilities in the United States. PHOTO BY DAVE KRESGE/davekresge.com

In the past few years, LMC has acquired adjacent properties, including River Bend Marine Center and six other lots, to make the property about 60 acres. This makes it Florida’s largest yacht facility and the largest yacht repair facility in the United States in terms of how many large vessels it can haul and service, according to Jim Parks, operations manager at LMC. It is owned by Dr. Selvin Passen and Morio Mito.

“It’s difficult to give exact numbers because we can mix and match according to different boat sizes,” Parks said.

The yard has 19 covered sheds for boats up to 165 feet, space for about 70 others under 100 feet and about 150 slips, he said. LMC handles hauling, pressure washing, docking, forklift, crane, some rental equipment and vessel storage, but does not do service and repair work. Instead, customers have the option to work with about 60 on-site contractors or provide their own licensed contractors.

“It’s up to the owner, crew or contractors; we don’t get involved or mark-up services,” Parks said. “It’s a do-it-yourself yard on a very large scale. The equation works because it is so large.”

Carlyle’s parent company, The Carlyle Group, has holdings in residential and commercial real estate, including condos and hotels. That has some tenants concerned.

“As one of the biggest on-site contractors, we see this yard is successful under the current operating mode,” said Chris Brown, owner of High Seas Yacht Service and Hydraulic, tenants since about 1998. “I have talked with a lot of different people about the new owners and every indication I have leads me to believe that they will continue to operate in the same way.”

A lot of people would be affected by changes to the business model.

“I look around this yard and see the volume of 150-foot yachts,” Brown said. “It’s June and it should be slow, but the yard is full and we are very busy. It would be crazy for the industry to see this facility change. If you count the number of contractors that come through the gate each day, they represent tens of thousands of jobs.”

He and his company hope the new owners continue to run it as LMC has.

Lauderdale Marine Center, Ft. Lauderdale.

Lauderdale Marine Center, Ft. Lauderdale.

“Each year they’ve made improvements for the captains, crew, customers and contractors,” Brown said. “Here at High Seas, we’re 19 employees and growing. I expect to hire three more this summer.”

Dennis Foster, owner of Foster’s Yacht Service, has been on the property since it was just dirt roads. He and his 15 employees specialize in repairs for insurance damage claims as well as custom refits.

He pointed out that Carlyle’s investors will expect to make money with the purchase of LMC and they can do that a variety of ways.

“I realize it’s a real estate deal, but there is need for this to stay as a boatyard,” he said.

Advanced Mechanical Enterprises (AME), with headquarters in Ft. Lauderdale off of State Road 84, recently opened a second machine shop at LMC to be closer to its customers. As of press time, Christine Battles, office administrator, said her company had not received official notice that the yard had been sold nor how a sale might impact her company’s leased space.

“We heard they would keep the same business model, but we have no e-mail, no phone call, no letter,” Battles said. “I expect we will hear soon. … I love change. I am excited about what this could possibly bring. This may open up new opportunities.”

One tenant not so excited about the change is Roger Moore, CEO of Nautical Ventures Group, which previously managed River Bend Marine Center. Before that marina and yard was bought by LMC, Moore said his company had about 75 boats and was doing a brisk business with refits.

“We expected this to be our long-term home,” Moore said. “We had completed negotiations to acquire the ground lease. At the 11th hour, Dr. Passen purchased the land from the owners.

“We remained as tenants [with LMC] as the landlord began the clean up, upgrades, new power and purchased new floating docks to the standards of the rest of LMC.”

But then in April, all construction stopped, Moore said.

Plans are still being formulated for what happens to River Bend Marine Center and adjacent residential lots as they transfer to new owners, according to the source close to the sale.

According to its Web site, the Carlyle U.S. Real Estate Group “focuses on opportunistic investments in the major metropolitan markets in North America, primarily in the residential, hotel, industrial, office, and retail sectors. The U.S. Real Estate team focuses on acquiring assets whose fundamentals are under-priced, and by implementing a business plan to capture that value for investors.

“The team locates pricing anomalies by identifying situations where the real estate fundamentals are under-priced by the capital markets, and locates assets in markets with diverse tenant demand, supply constraints and exit liquidity. Simultaneously, the team seeks out situations where fundamentals are under-appreciated.”

Lauderdale Marine Center, Ft. Lauderdale.

Lauderdale Marine Center, Ft. Lauderdale.

Although it has invested in and acquired condo properties in the past, the LMC property is zoned industrial and likely would be difficult to change.

“It would take a zoning and land use change,” said Jim Naugle, a realtor who specializes in the marine industry and who also was an elected official in Ft. Lauderdale for more than 20 years. “It would be a long process where there would be a lot of public input.”

The city’s master plan protects marine properties, he said.

“The master plan recognizes that marine uses are vital to the city’s economy and wouldn’t rezone an industrial area along the river to residential,” he said. “There are plenty of places to build condos, but not so many for a shipyard.

“Is it impossible? No, it’s not impossible,” he said, “but I sure would hope it would get the scrutiny of the neighborhood.”

Marine acquisitions by private equity firms are not new, and not necessarily bad, MIASF’s Purcell said.

“Venture Capital, a private equity or industries group have made purchases in our industry in recent years,” Purcell said, such as when Louis Vuitton acquired Feadship and Princess Yachts, Versa purchased Hatteras, and Shandon Group purchased Ferretti, Pershing and Riva.

“All have a presence here in South Florida,” Purcell said. “We should focus on the benefits, awareness, and capital being brought to our industry, and continue to drive awareness of the global marine businesses that heavily contribute to our region.”

But until official word comes, speculation continues.

“As of today we have had no communication and we have no idea of our position. Rumors abound,” Moore said. “We are as anxious as everyone else to learn what is going on. It is amazing the number of lives that are impacted by this.”

Dorie Cox is associate editor of The Triton. Triton Editor Lucy Chabot Reed contributed to this report. Comments on this story are welcome at dorie@the-triton.com.

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One thought on “Carlyle to buy Lauderdale Marine Center; tenants hope for business as usual

  1. Bill

    Anyone who doubts the property was acquired for conversion – at some later date, but as soon as possible – to residential use, needs only go to Chinook Marine. Oh wait, it’s gone, replaced by a condo. And it is not the only example of a commercial marine property going residential. Fort Lauderdale has a critical marine industry, but that cannot continue if they continue to lose their places of business. Transactions such as this are forcing our business to relocate. If we are ok with that, say so. If not, don’t stick your head in the sand and assume it will be ok. This company focuses on under-performing properties, to be converted to a higher ROI. $5 says it will be a residential property within 10 years.

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