Spinnaker Sound marina near Bribie Island sold

Stephen TaylorJuly 30, 20130 min read

The former Macquarie banker Andrew Hooper-Nguyen and business partner Chris Ellis have just bought the picturesque Spinnaker Sound marina near Bribie Island in Queensland.

Together they look over the 138-berth marina (pictured below), established in 1982, with its flotilla of luxury craft up to 18 metres and think how lucky they are.

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‘’It’s taken us a long time to get here from Sydney,’’ Hooper-Nguyen told Property Observer on achieving his dream.

‘’Queensland is a lovely place and ideal for boating. It’s where all the major activity is.’

‘’Boaties can sail the open waters of the Pumicestone Passage or go north to many safe harbours and islands.

"Pelican Waters and Caloundra are ideal for sailing with Bribie Island forming a breakwater to the ocean swells. Moreton Island and Tangalooma Resort are a 30-minute cruise away.

‘’No matter how rough it gets on Moreton Bay it’s calm here.’’

Hooper-Nguyen and Ellis, the founder of ASX-listed Excel Coal, bought the marina at Sandstone Point, from AMP Capital Select Property Portfolio 2 for less than $10 million, the Australian Financial Review reports.

Hooper-Nguyen would not confirm the price but did not refute it.

Along with the marina comes 8500 square metres of land on which AMP had planning approval for up to 40 units. The men have no development aspirations at this stage, but hope to turn the marina into a community hub where boaties can eat and drink before setting sail.

Hooper-Nguyen described marinas and other related leisure assets as ‘’ideal counter-cyclical investment opportunities’’ benefitting from the potential increased tourism caused by the falling Aussie dollar. ‘’Queensland has been hit badly by falling tourism numbers and the end of the mining boom, so we are in a ‘perfect storm’,’’ he said.

Knight Frank’s Andrew Burke and Jason Degn negotiated the deal which is one of a number of recent marina transactions. These include the $27 million sale of the Abel Point marina at Airlie Beach in far North Queensland, and the currently listing of the 85-berth Marina Oceanus marina at Marina Mirage on the Gold Coast. It reportedly cost $14 million during the boom but may resell for $7 million now.

Receivers for the Meridien Marinas Horizon Shores have reportedly placed the 488-berth Horizon Shores marina on the market. It’s billed as the largest freehold marina asset in Australia.

Hooper-Nguyen suggests many marinas had been purchased pre-GFC and then valued based on their redevelopment potential – not their core earnings potential.

He said they were often highly leveraged and, as a result, many for sale are now in the hands of receivers.

But things have gone well for this keen boatie. ‘’For years I’ve spent money on boats and now I’m hoping to make money from them,’’ he says.

The pair may also target other marinas in good locations with turnaround potential.

The marina first sold in 1996 when purchased by Ted and Lyn Godden who operated the marina until August 2006.

It was then bought by Spinnaker Sound Joint Venture Pty Ltd, a consortium comprising a development company, in partnership with APM whom paid $8.9 million in 2006.

 


The 2006 sale was followed by a capital gains tax dispute during which Syttadel Holdings noted it had acquired the asset, comprising land, buildings, marina berths, goodwill and plant and equipment for $1.675 million in 1996.

The venture was not initially profitable but by 2006 its net profit was $280,306, noted the tax dispute summary by Omega Partners, who provide resources to accountants and financial planners on.

It was noted the majority of the marina revenue was earned from the hiring of wet berths and dry storage and some income was received from the lease of commercial premises within the marina and the sale of fuel.

Mr Godden, a director and member of Syttadel gave evidence about several enquiries and offers to purchase the marina over time.

One at $2.5 million was made in 2004 – it was rejected because the proposed purchaser wanted vendor finance.

The first serious offer was made in mid-2005 was for $3.7 million.

A written offer of $4 million was made by the same prospective purchaser in early 2006. It was not accepted as Mr Godden was hoping for a price closer to $4.5 million.

Whilst these dealings were taking place a consortium led by a local real estate agent enquired at what price Mr Godden would be prepared to sell. He replied $9 million, which response he said was made tongue in cheek with the figure of $9 million being completely over the top.

The consortium negotiated with Mr Godden and a written contract for the sale and purchase of the marina at $8.7 million was executed in early December 2005. The purchaser, World Housing Corporation Pty Ltd, ultimately failed to complete the transaction and forfeited its deposit.

After that Mr Godden had further dealings with the local real estate agent which led to the execution of a new contract, dated 4 July 2006, by which Spinnaker Sound Joint Venture Pty Ltd agreed to purchase the marina as a going concern for $8.9 million. The contract was completed on 14 August 2006.

Syttadel submitted a private ruling request to the tax commissioner in November 2008 requesting that the commissioner rule that, despite the sale at $8.9 million, the market value of the marina was in the range of $4 million to $4.5 million so that Syttadel would be eligible for the small business CGT concessions.

The commissioner ruled on 25 November 2008 that the value of the asset was its sale price and that Syttadel did not qualify for concessional capital gains tax treatment.

Syttadel objected to the ruling, but by then an assessment had issued, and the commissioner treated the objection as being one against the assessment. The Commissioner disallowed the objection.

The tribunal mentioned that both parties made reference to the passages from Spencer v The Commonwealth (1907) 5 CLR 418 where Griffith CJ said,

"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor will to sell it for a fair price but not desirous to sell?’

and where Isaacs J said

"To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding
features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

The tribunal also noted that the parties agreed that the market value of the land had to take into account the highest and best use of the land.

The tribunal had been provided with two valuations, one for the company where the value was set at $4.5 million, and one for the ATO where the valuer had originally set a value of $6.3 million but revised that down to $5.3 million.

The tribunal were unprepared to accept the $4.5 million valuation figure as the Deputy President did not agree with the valuation methodology employed.

The company’s valuer had set the value as being the value at which the vendor would be prepared to sell, and justified this by valuing the component parts of the marina using capitalization rates of 9% and 12%. The ATO’s valuer by contrast had used capitalization rates of 6% which the Deputy President considered ‘appropriate rate having regard to the market evidence and the potential for future growth but taking account the generally poor condition of the marina’. The ATO’s valuer had also supported their valuation by using comparable sales data.

As the tribunal was unprepared to accept the company’s valuation it held that the small business CGT concessions were not available, the Omega report noted.

 

Stephen Taylor

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