The government's recent announcement that it has commenced the privatisation of three yacht marinas was, as expected, the highlight of last week's annual stockbrokers' meeting held by Grand Harbour Marina. Ever since the government's announcement that it intended to seek private operators to take over the management of the existing marinas across Malta and Gozo, GHM had openly indicated an interest in expanding its local operations once the privatisation process kicks off.
Moreover, the company had also indicated that it would be interested in other marinas within the Grand Harbour, with Kalkara Bay as one of the main contenders for new facilities. Grand Harbour Marina's non-executive director Nick Maris confirmed that the company is currently analysing the tender documents prepared by the Privatisation Unit ahead of the deadline for submission of proposals in early August.
GHM's director, who is one of the larger shareholders of Camper & Nicholsons Marina Investments Limited (the 79 per cent shareholder of GHM), explained that the commercialisation of the local marinas will greatly improve the facilities offered while service charges will move in line with commercial rates as these will not remain subsidised by the Malta Maritime Authority.
The current subsidies being provided by the MMA were distorting market prices making comparison with GHM's Vittoriosa marina difficult. Mr Maris did not confirm whether GHM will be submitting bids for all three marinas (i.e. the pontoon berths along the Msida creek between Ta' Xbiex and Pieta together with the berths in Mgarr Harbour Gozo).
However he did mention that a successful bid for any of the three marinas would be very good news for the 250 GHM shareholders. Mr Maris also touched upon the importance for the government of selecting operators who can ensure a quality operation. In this respect Mr Maris mentioned that Camper & Nicholsons has all the right credentials since it is one of the most renowned names in the yachting industry and has proved this by transforming the Vittoriosa marina into a world class facility.
Camper & Nicholsons has been associated with premium marina and waterfront development for several years and is among the most recognised international brands in the sector. Recently Camper & Nicholsons announced that it has relocated its global headquarters to Malta which in the words of Nick Maris is another important development and a milestone for Malta in its objective to become a centre of excellence in the yachting sector.
The government also recently published a document showing various possible locations for new marina facilities across Malta and Gozo. When discussing these options, Mr Maris argued that, in his opinion, new marina facilities should be mainly centred around the two natural harbours (Grand Harbour and Marsamxett) and the authorities should not seek to turn most bays into marinas as this will lead to lower quality facilities which would not fit into Malta's aim of creating world class marinas.
Mr Maris also focused on the current Vittoriosa marina and highlighted the company's aim of generating profits at the operational level without taking into account berth sales. The CEO of Camper & Nicholsons indicated that this should be achieved in the very near term as a result of the full occupancy of the pontoon berths coupled with a healthy occupancy level of the larger super-yacht berths during the winter months as well as tariff hikes introduced during 2009. Pontoon berth rates increased by 15 per cent during 2009 with visitor rates climbing by 50 per cent on the back of other rate increases in 2007 and 2008.
The other component of the Vittoriosa marina, i.e. the sale of superyacht berth licences for periods typically of 25 years, continued to experience a strong level of enquiries. However, the current international economic climate has resulted in a lack of completions of these sales as owners delay their commitments.
Mr Maris re-iterated his bullishness on the eventual achievement of these sales but could not assure stockbrokers on the timing of such sales. However, his recent address to shareholders in the 2008 Annual Report of Camper & Nicholsons highlighted that GHM is targeting completions in the current financial year.
Superyacht berth rates have increased from €500 per sqm to €2,200 per sqm and it was estimated that the value of the remaining berths for sale was in the region of €35 million, equivalent to €3.50 per ordinary share of GHM. Contrary to popular perception, once a super-yacht berth is sold for a 25-year period, GHM still generates a yearly income in the form of a service charge which amounts to circa €39 per sqm. Moreover, when such berths are not being occupied by their owners, these can still be leased out for short periods to visiting yachts, generating revenue both for GHM as well as for the owner of the berth.
GHM is constantly seeking ways of reconfiguring the marina to increase the lettable area. During 2008, an additional 20 berths of 15 metres and four berths of 12 metres were created by installing pontoons in the space allocated to a number of 30-metre superyacht berths which were not programmed for sale in the short-term.
These pontoon berths were immediately let and remain fully occupied. Meanwhile, the company also submitted an application to the planning authorities to reconfigure the existing two berths of 100 metres in length, which should yield a new 90-metre berth and two 130-metre berths. This would be a valuable addition if approved.
Apart from the management of the marinas, internationally Camper & Nicholsons is also focused on real estate or waterfront developments. This could be another area of expansion for GHM locally both in the Vittoriosa area as well as elsewhere should the company succeed in its bids for the Msida, Ta' Xbiex or Mġarr marinas.
The creation of commercial and retail outlets in the vicinity of the marinas and the potential income from the leasing of such areas could be another important revenue contributor for GHM in the years to come. Developments in the sector should lead to very interesting times ahead for the company and its shareholders.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, RFC, is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
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