Middle-Atlantic Marinas Flounder

The tide is going out fast for marinas along the Atlantic Seaboard, forcing lenders in the region to learn new words to an old song of the sea: What can you do with a bankrupt boatyard?

A few years ago, it looked as if the tide would rise forever. "In the mid-1980s, you couldn't lose on a marina along the Jersey Shore," said Robert L. Buhler, vice president in the supervised loan unit of Midlantic Corp., Edison, N.J.

But today, Midlantic is one of many banks saddled with defaulted marinas. It is one more illustration of how quickly the right combination of glitter and a slick sales job persuaded bankers to toss basic credit analysis overboard.

Although bankrupt marinas form only a small fraction of bank portfolios, running them poses uncharted problems for managers accustomed to bailing out conventional real estate.

"It's not like taking an office building, where you can hire a manager and approve the bills and leases," Mr. Buhler said.

He recently gained responsibility for two major marinas, with 459 slips and extensive upland development between them. The properties represent defaults on $12 million in loans to a boat dealer who went bankrupt after branching out into marina development at the wrong time.

And the workout specialist was poised last week to take control of another marina - this one a failed "dockominium" conversion financed by the bank.

"Starting pretty much with the Wall Street crash, the boating business has changed," Mr. Buhler said. "The Jersey shore was very popular with Wall Street as a recreational area, and the first things impacted were the luxury items."

Disposable Income Vanishes

With the economic collapse along the northeastern and Middle Atlantic coast, discretionary income that had lifted the boating industry disappeared. A tax that Congress imposed last year on high-ticket items made prospects for boating even worse.

First to fizzle were marinas built on the expectation that boat owners would decide to own, rather than rent, dock space.

Failures that have rippled from Bar Harbor to the Chesapeake Bay, sending early signs of trouble to the Florida and Southern California market-places as well, have already prompted a handful of entrepreneurs to offer solutions.

Midlantic has hired one of these groups, Marina Asset Management Services, in New London, Conn., to prepare a business plan for the two marinas that Midlantic now controls. Marina Asset Management is a consortium of specialists put together by Coulter & Delaney, a marketing firm based in New London.

In a previous success, the marina workout firm helped Maryland National Bank arrange a merger between a troubled marina manager in Chester, Md., and Westrec Marina Management of North Hollywood, Calif.

In New Jersey, meanwhile, occupancy of boat slips at first-class marinas has fallen from 100% in the early 1980s to anywhere from 50% to 70%, Mr. Buhler said. Cash flows from ancillary services essential to meeting debt service, such as fueling, boat repairs, and shops, also dwindled.

That left banks that made loans to build the projects or that participated in the dockominium conversion craze, in a severe economic undertow.

Officials of the Coulter & Delaney group said marinas must be repositioned if they are to be sold in today's marketplace.

The group plans daylong symposiums for marina lenders in New York on Nov. 20 and in Boston on Nov. 21.

PHOTO : BAILOUT: This marina in Chester, Md., was taken over by Westrec Marina Management, North Hollywood, Calif.

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