Listed asset manager, MA Financial (ASX: MAF) reminded the market of the attractiveness of alternative assets when it added to its existing $225 million portfolio of 10 d’Albora marinas by acquiring two additional east coast marinas for $20 million.

The alternative asset manager is buying Batemans Bay Marina (pictured below) and Port Macquarie Marina (pictured above) – two of the fastest growing areas in New South Wales – from James Marshall, founder and managing director of Marprop Real Estate Investors.

What attracted MA Financial to these two assets was an attractive yield of around 8.5% – underpinned by multi-decade leases on both sites.

MA Financial’s decision to acquire Batemans Bay and Port Macquarie Marinas follows the establishment of the MA Marina Fund earlier this year.

Since then the fund has amassed exposure to Australia’s largest marina network across the eastern seaboard and includes the iconic Rushcutters Bay, The Spit and Cabarita Point in Sydney Harbour, and two marinas adjacent to the Melbourne CBD.

The fund also has the management rights for Port Airlie marina at the gateway to the Whitsundays.

Too few berths

With the outlook for Australia’s marina market looking extremely positive, Joint CEO of MA Financial, Julian Biggins expects favourable supply-demand dynamics to continue driving strong revenue and earnings for marina operators.

“We have received significant interest in the MA Marina Fund from domestic and international investors keen for exposure to defensive, cash-generative assets largely uncorrelated to other asset classes,” said Biggins.

Boat registration numbers on the east coast continue to rise, outpacing the supply of new marina berths which are limited by a strict regulatory environment.

In addition to difficulty getting a DA to build a new marina, other barriers cited by Biggins include lack of available and suitably located development land and seabed.

Growing investor demand for alternatives

Biggins expects continued growth in alternatives – estimated to almost double over five years – with investors shifting their interests beyond traditional real estate sectors.

Much of the substantial growth in institutional allocation to alternative investments globally, adds Biggins, can be attributed to its strength as a defensive asset class.

As a case point, while waterfront assets are expected to deliver 8-8.5% yield, Biggins expects demand through lack of supply to result in an internal rate of return (IRR) in the mid-teens.