The New Way To Own
There are few who would argue that the megayacht industry isn't rife with innovation, particularly when it comes to construction and design. There are, after all, vessels on the water today sporting amenities and control systems that until recently were the stuff of science fiction. And yet there's one area of the industry that has suffered from a conspicuous lack of originality: ownership. To date, anyone interested in purchasing a megayacht has been limited to two options: full and fractional ownership. Well, no longer. With the recent advent of YachtLease, a potential revolution is looming.
Launched in 2008 under his holding company, Air, Land & Sea, Argosy Financial and YachtLease are the brainchildren of John J. Flynn, a businessman who at various points in his career has owned and operated three transportation-leasing companies specializing in trucks, aircraft, and plant equipment respectively. Each enjoyed substantial success (Flynn says that he "purchased, originated, documented, and financed more than $3 billion in assets") and, ultimately, each either went public or was sold to a public entity. However, it was not until 2006, when he put First Fleet Corporation—"my last company"—on the market, that Flynn was "finally able to realize a much-awaited opportunity to organize a yacht-leasing company, Argosy Financial."
It isn't simply Flynn's background as something of a giant in the leasing industry that led him to establish Argosy and YachtLease. He's also a lifelong boat owner, having purchased his first vessel, a 15-foot outboard-powered Winner runabout, when he was 16. In the years since, Flynn has owned all manner of vessels, from a 42-foot Uniflite Double Cabin to the 112-foot Westport he has today. Indeed, it was when he purchased his first 112-foot Westport in 2005 that his plans for YachtLease truly began to take shape. Attracted by the reliability of his Westport and the company's build process, he made his move: Argosy Financial purchased three 112-foot Westports, two of which are currently under lease.
Those three 112-footers make up the company's "signature series" of raised pilothouse motoryachts. Although the four-stateroom yachts feature Jack Sarin-designed hulls, Greg Marshall styling, spacious saloons (thanks to a 23'9" beam), and crew quarters for five, Flynn did call upon his personal experience as a Westport owner to request a few tweaks aimed at making the yachts even more appealing to potential lessees. Marble was traded for granite here, doors were widened there. In short, the revisions were aimed at improving the yachts' creature comforts. And, according to Flynn, they proved so successful that Westport plans to incorporate many into future builds.
But of course, what sets these yachts apart from all others is that they're leased and here's how the process works: Customers order vessels directly from Westport or through a broker, just as they would if they were buying a yacht. However, rather than exploring traditional modes of financing or paying cash, individuals apply for a lease, which can be structured for as long as ten years or as little as two, with extensions available. At the end of the term, lessees can either turn in their yacht or purchase it at its fair market value, as determined by two appraisers, one selected by the lessee and one selected by Argosy Financial. According to Flynn, "Much of our research indicates that the people who acquire a new yacht keep it for three to five years and then look for a new model. So we added a unique feature: the ability to 'upgrade' to a larger yacht during the lease term." To hear him tell it, a YachtLease customer can all but trade the keys to his existing vessel for those to a new one and cruise off into the sunset, while the company handles the re-lease or sale of his previous vessel. And anyone not interested in a lease extension, vessel swap, or outright purchase can simply walk away. There is no resale obligation at the contract's conclusion.
This article originally appeared in the February 2009 issue of Power & Motoryacht magazine.