Great Lakes Marina Sale
Facilitates Expansion

April 20, 2007
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MUSKEGON — The owners of Great Lakes Marina & Storage have signed a letter of intent to sell their marina operation to real estate investment trust CNL Income Properties and management firm Marinas International, and will partner with the group to develop 24 acres of adjacent Muskegon Lake frontage.

Pending environmental and financial due diligence, the transaction should close within 90 days, according to Stan Johnson, managing partner of Marinas International. He said the Texas-based company has no intention of making any significant staffing or operational changes to the marina, but it will implement an aggressive expansion plan.

Longtime owners George Bailey and John Bultema II will continue to own and operate an onsite dock manufacturing business and will partner in the development of the acreage commonly known as the marina’s “outer end.”

“We typically try to acquire what we feel to be the best marina in a given area, and we are very reluctant to make any changes,” Johnson said. “Great Lakes is a group of very skilled people that have worked under John Bultema and George Bailey quite successfully for many years. We’ll assume the overall management, but we’re going to keep all the people in place.”

All together, the Great Lakes Marina property contains an estimated 43 acres on MuskegonLake. The nearly 300-slip marina operation, along with the adjacent manufacturing operation, which is not included in the purchase, sits on 15 acres at

1920 Lakeshore Drive
. Four acres at
1918 Lakeshore Drive
are under lease to LakeExpress, the high-speed Lake Michigan ferry service.

Initial plans for the remaining, currently undeveloped, acreage include a large-scale, mixed-use development and a long-overdue expansion of the marina. Great Lakes Marina has operated at 100-percent occupancy for several years. The potential addition of up to 400 new slips would make it by far the largest marina in Michigan, and one of the largest in the Great Lakes

Johnson said the venture will partner with land-based developers to attract commercial and residential interests for the property. Tentatively, this could include luxury homes and condominiums that would allow deep-water yacht owners to park their vessels adjacent to their homes.

“Obviously, you have deep water there where they used to bring in the barges,” said Johnson. “There will probably be some larger slips to accommodate some of the bigger boats.”

Bailey and Bultema declined to comment on the record, citing a confidentiality agreement in place until the purchase agreement is finalized. Bultema, who is landlord to many of the retailers on

Lakeshore Drive
and the largest single investor in the surrounding Lakeside Business District, did say on the record that his new partners “brought to the table the means to develop the outer end,” and of the expansion plans, he said, “We’re going to try and really make a statement.”

The investment could be the turning point for development in the surrounding Lakeside Business District, which is slowly building on the popularity of the LakeExpress, which shuttles upwards of 100,000 passengers between Muskegon and Milwaukee each year.

“I think it would make the whole thing just blossom,” said Chris Jensen, president of the 38-member Lakeside Business Association and proprietor of Cracker’s, a restaurant, catering company and gift shop at

1965 Lakeshore Drive
, of the possible development of the outer end property. “I see a booming tourist town in the making. We’re a very well-kept secret, and we’re trying to get the word out. It would really raise our visibility, and that’s what this business district needs.”

David Medendorp, a Realtor with Exit Realty of Muskegon and property owner in the Lakeside district, agreed.

“I think it will reach its tipping point in the next 24 months. It’s going to happen just like it did in downtown Grand Rapids five years ago. We just don’t know who our ‘Rockford Construction’ is yet.”

Following the loss of a handful of key businesses this year — including a movie theater and gas station — the Lakeside District welcomed five new businesses. With seasonal operations opening their doors this month, the district and its association are gearing up for a busy summer. Its signature event is May 12: the annual Spring Into Lakeside fair.

The Lakeside Streetscape Master Plan, created pro bono by Muskegon architecture firm Sidock Group Inc., has been approved by the association and the city commission. In the coming months, the Michigan Department of Transportation is expected to announce that it will provide 100 percent of the funding for the streetscape beautification project.

Lake Express President Ken Szallai recently said that the character of the buildings could be a reason the ferry has had less of an impact than originally expected, citing the success of an upscale mixed-use development raised by Ghezzi’s Market proprietor Dick Ghezzi on Lakeshore Drive.

“We’ve looked very hard at the impact since we started, and we are seeing things happening,” said Kay Collins, LakeExpress director of sales and marketing. Szallai was traveling last week and unable to be reached for comment. “In the long run, it is going to be a really nice area, but it’s not coming along as fast as we originally hoped. We do see attitudes changing.”

Collins said that Lakeside businesses have historically been fierce competitors and have only recently begun to promote the district collaboratively. She is also impressed with the efforts to improve storefronts and the streetscape.

“This is definitely a business neighborhood in transition,” said Cindy Larsen, president of the Muskegon Area Chamber of Commerce. “There is a lot of opportunity there for people who know how to cater to the tourism market … and it is only just being discovered. People are starting to understand that it can be a destination, and there are destination businesses located there.”

Marinas International Aggressively Expanding

This is the second transaction this year between Marinas International and CNL Income Properties, a trust created to acquire properties and lease them on a long-term, triple-net basis by CNL Financial Group Inc., the $19 billion Orlando-based real estate conglomerate. Earlier in the year, CNL acquired five properties from Marinas International for $69.4 million, including the Sandusky Harbor Marina near the Cedar Point amusement park in Ohio. It leased all of the marinas back to the 22-year-old management firm and provided a $39.2 million loan collateralized by four additional properties.

At the time, Marshall Funk, also managing partner of Marinas International, said the relationship would allow his firm to “aggressively expand our portfolio of marinas through both acquisition and third-party management contracts.”

If the Great Lakes Marina acquisition is completed, it will be Marinas International’s first acquisition in Michigan and 26th overall. It currently operates 14 marinas in seven states.

“We have looked at other marinas in both eastern and western Michigan,” said Johnson, whose firm manages two marinas in Ohio and seven in the Midwest. “We hope to increase our presence in the Michigan market.”

This is also believed to be CNL Income Properties’ first entry to the Michigan market. It has completed transactions in other states with companies that have high-profile resort investments in northern Michigan: Wisconsin-based Great Wolf Resorts and Michigan’s Boyne USA Inc.    

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