Marinas, like golf courses, are niche amenities to such projects and can be generally funded for construction financing as a part of the entire development. In situations where there is recourse against a credit worthy owners other assets, financing for the marina as a "stand alone" entity. Reasons for this are varied. First, unless slips or dry racks are presold, new marinas do not generally provide positive cash flow for several year. Secondly, marinas depend on the synergy of the entire projects stabilized absorption rates from residences, hotels, time-share and/or commercial elements, as well as the surrounding MSA's boaters. If the marina is to be part of a "gated" community, then absorptions within the project become more critical to those sole, of the marina. If the project's interlocking development elements are not carefully timed, the marina may be finished and remain un-stabilized until the project achieves its stabilized absorption rates. Once achieved, the marina too will get to its stabilized occupancy level and permanent financing can then be sought.

The traditional manner in which marinas are developed for these types of projects, are as an aspect of the total development package. While a hotel segment can be carved out and separately developed, this can occur because traditional hotel funding sources for such projects are based on the demographics, feasibility data and acceptable returns on the investments that funding sources seek, as well as the financial strength and reputation of the developer/owner of each such discipline within the project. The same philosophy applies to residential or commercial development.

Generally, the master land developer will contract with Brandy to apply its expertise to the feasibility, market study, basin design and financial proforma of a marina, and then even be hired to act as construction manager for this segment. Once open and interfaced with the other aspects of the project, the marina will begin to attain its occupancy levels and cash flows. It is then the master developer can consider selling the marina on the basis of a trailing Net Operating Income, which provides credibility to the marina's ability to achieve its forward forecasts.

As illustrated in the book co-authored by Brandy for the Urban Land Institute, a case study of such a development was that of Longboat Key, Florida by the Arvida Corporation. This land development included two, 18 hole golf courses, a condominium hotel, tennis complex, club houses with food and beverage and a variety of residential neighborhoods. Included in the plan was a marina.

Once permits were obtained, the marina was dredged to a depth of 18 feet to provided needed fill for building pads and golf courses. Brandy designed the marina with 277 large boat slips and a section on one end for commercial development. The master developer carefully scheduled the timing of various aspects of the development so the marina and golf courses could be available for resort play and accept the addition of residential and club use.

Six years after opening, Arvida sold the marina at approximately 60% occupancy. The commercial pad was included and the subsequent buyers developed the area into a clubhouse and restaurant.

Brandy Marine has capability to research, plan, design, forecast, manage the construction process, manage the asset, operate the marina, provide likely sources of participating equity and debt financing, as well as determine and implement take-out strategies for the eventual exit by the developer. Given the dependence of the marina on the overall development's progress, lenders are reluctant to provide permanent financing for this segment as a "stand- alone" element until such time as it has a proven cash flow.

The same holds true for converting wet or dry slips into membership or condo slips. Brandy's 30+ years of marina experience has shown us that sales can be initated at the onset of a comprehensive development given the current market conditions. Sales conversions are also best accomplished when a marina matures. Once rentable dock space is occupied and boaters have established their "boating neighborhood," or home away from home ( especially if a good number of these boaters are residents within the development) conversion to dockominiums are absorbed faster and at a higher linear foot rate than if they were sold upon construction.

Conclusion:

Brandy has the expertise, knowledge and experience in planning, design, construction and management of marinas within various types of residential, resort, or mixed-use developments. Brandy has worked in concert with developers of such projects as part of their development team in the design and operational aspects, with is focus on the importance of the marina to the overall success of the development. And, thereafter, insuring its operations were in tune with this focus and that its employees were well versed in the marinas importance as a sales tool for marketing the projects various development elements.

Although Brandy does not have the resources internally to put equity dollars into a marina project, or finance its construction or provide required operating funds until it is stabilized, we do have knowledge of mutiple investors with the resources to purchase the marina once it has achieved its NOI levels to trigger the exit strategy for the developer.

Brandy's goal is to either initially become a minor equity partner in the marina with the developer or initial owning entity on the basis of achieving set goals and forecasts during the initial operating years prior to the exit whereupon, our equity would be derived from achieving these forecasts, and/or, to bring in equity partners to purchase the marina at the time of exit by the developer. As part of our agreement with the developer/owner, we would also be responsible for the preparation of data required for financing the marina, both as to construction as well as permanent, as well as the disposition program to accomplish the exit strategy. These programs would be in concert with Brandy's management and operation of the marina in a proficient and professional manner in order to optimize the marinas full earnings potential and achieve these goals.

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