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Sea Change
Michael Verdon
07/01/2005
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Beyond the ice-class hulls and
first-class accoutrements, the potential value in retired commercial vessels is
one of their strongest selling points. “You can buy these boats for pennies on
the dollar compared to building from scratch,” says Howard Stein, a Fort
Lauderdale-based captain who oversaw the conversion of one such vessel into the
194-foot yacht Altair. “We bought the yacht for well under $1 million but still
put another $8 or $9 million into it,” he admits.
TOP VIEW
With their nearly impregnable hulls, massive fuel tanks and powerful
engines, commercial vessels are attracting adventurous boaters who want to
convert them to white-yacht standards. If chosen carefully, these boats can be
upgraded
to world-class expedition vessels or “shadow boats” that do the heavy
lifting and leave the primary yachts unburdened. But buyers who sink millions of
dollars and months of work into these craft face uncharted resale waters. |
Yachtsmen would normally
spend five or six times that amount on a new 200-foot, custom expedition yacht
with luxury quarters for 18 guests. The former North Sea pilot boat transformed
into Altair had the value-added bonus of “boxcars full of spare parts and even
an extra engine,” adds Stein, who bought the Dutch boat in 1997 on behalf of the
owner. “We figured this was an inexpensive way to go from a high-speed yacht to
a full-displacement vessel that could also cover long distances.” Stein then
piloted it on an 8,000-mile maiden voyage to Australia, where it was converted
by Oceanfast into a luxury yacht.
Like converting an old home, refitting a
commercial yacht has myriad challenges. “A refit is cheaper, but it’s more
complicated than building from scratch,” Stein says. “You start taking things
apart and you’re not sure what you’ll find. I had my heart in my mouth when they
were removing panels. I was betting the Dutch government, like any government,
would spend inordinate amounts of money—stupid money, really—maintaining the
boat.” Stein was correct: Structural damage on the 25-year-old vessel was
minimal.
Giving Altair the ultimate makeover involved a jigsaw-puzzle process
of removing decks and adding cabins, building in high-tech electronics systems
with miles of cable, installing plumbing and on-board sewage systems and
rebuilding the diesel-electric engine. After a year, Stein was able to bring it
back to Florida looking like a high-caliber “white” yacht. “We used her as
intended,” he says. “We saw the best part of the world on her. The only ocean we
didn’t cross was the Pacific.”
Treasures Sunken
Still, Altair’s owners only broke even when they sold to
new owners in Greece a year-and-a-half later, Stein says. As much fun as it may
be to own an expedition yacht, selling the vessel is typically not an enjoyable
process.
 | | LATITUDE CAN cruise 40 days without refueling. The boat carries the owner and a
15-member crew to remote fishing areas. |
Calculating the return on investment for a conversion project can be
difficult. Market conditions affect the value of these vessels, as well as the
idiosyncrasies of the individual yachts themselves. The asking price for
Latitude, originally listed for sale in January 2004, was recently dropped by
$1.5 million because its sport-fishing owner received only a few nibbles and no
firm offers. Also listed last year, Giant has an asking price of $49.5 million.
Owner Herzog is waiting for the right owner and has chosen to enjoy the boat
rather than sell it at a price he believes is too low. Latitude’s owner also
plans to continue to use the yacht for fishing trips and charter expeditions
while waiting for the right of fer. Some owners, while waiting for a sale, defray
operating costs and create tax advantages for their vessels by putting them out
for charter.
Stokes says it is not uncommon for yachts as unique as these to
stagnate on the market for several years. “If the yacht is grossly overpriced,
then it tends to get forgotten,” he says. On the other hand, some might consider
the $15 million asking price for a vessel like Bart Roberts a steal. “For 265
feet, that is a lot of yacht for the money. You couldn’t touch that with a new
build.”
He notes that other conversions, such as the cargo-carrying Lady
Lola’s Shadow, have been profitable. That vessel sold for about $6 million
recently, according to sources, netting at least $1 million. While the market
for these vessels may be select, expedition yachts will always appeal to
adventurers who prefer uncharted waters. “This market is a niche,” Stokes says,
“but it’s a growing niche.”
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