Get Your Piece of the Pie
A fractional-ownership program offered by Sanlorenzo may suit passionate boaters seeking alternative opportunities.
Boaters often prove to be an enterprising lot. Once the object of a boater’s passion becomes clear and defined, the focus with which it is pursued is unalloyed. But there’s another side to that coin, and that’s an authentic pragmatism that is the source of the boater’s true pleasure: Perhaps we could define it as getting what you want on your own terms.
When big, beautiful boats such as the Sanlorenzo SD92 enter the picture, the game is on. Sanlorenzo Shares, the fractional-ownership division of Sanlorenzo Americas, may be offering a different way to look at these boats. The idea is to create a new kind of yacht ownership for boaters with different needs. And along the way, this story may dispel some of the myths that may have formed in your mind about fractional ownership.
Sanlorenzo Shares is guided by its director, Philip Burroughs, who was brought in by George Jousma, president of Sanlorenzo Americas, to run the program. Burroughs and a partner first developed the concept while he was working as a stockbroker, and they started a company called Yacht Smart in 2000 that fine-tuned the details selling fractional ownership of a Fairline 62, an Azimut 85, and others. The program shows an understanding of the needs of boaters at a certain phase in their lives.
Here’s how Sanlorenzo Shares works. You purchase one of five shares in a Sanlorenzo SD92, for $1.6 million. Sanlorenzo Shares forms a corporation which owns the boat, and you and the four other owners are equal shareholders in the corporation—each shareholder holds 20 percent, and Sanlorenzo does not maintain any stake in the ownership. “You buy the boat from Sanlorenzo,” Burroughs says. “There’s an outside yacht-management company that manages it, that takes care of hiring the crew and maintenance and the cleaning—everything else, the yard periods and the schedule.” Each shareholder also pays 20 percent of maintenance and upkeep—you’re a boat owner, after all.
Burroughs developed the program by considerating the needs of boaters. Sanlorenzo Shares hopes to offer one yacht per year, divided among five owners.
Burroughs’s experience has taught him what he needs to know about managing a boat’s schedule, and informed the Sanlorenzo Shares plan. “Five owners, and each owner gets up to six weeks of use per year,” he says. “That’s 30 weeks a year, and that’s the most you ever want to use this boat. I think the boat’s basically going to be used about 50 percent of the year, which leaves a lot of time for downtime for the crew, maintenance for the boat—because it needs it—and seasonal movement, because it’s going to go up to the Northeast in the summer months, and down to the Caribbean, so the real key is the flexibility of the schedule.” This is the first point that sets this program apart: The corporation acts like a boat owner, not a faceless entity. Instead of overscheduling and pushing limits, the corporation takes into account the needs of the boat and crew.
“I also found that our owners aren’t going to want six weeks, they’ll most likely use it for four or five,” Burroughs says. “They’ll probably use it for four weeks themselves, and they’ll give away one week to a friend. With five owners, and each only has this many weeks, there’s a high likelihood that the boat’s available when you want to use it.” The boat is not chartered for off weeks—in fact it’s not offered for charter at all—so the owners see the benefit of the lighter schedule: The boat is kept up and the crew is fresh. Share owners can book the boat four months in advance.
“We don’t do fixed week schedules,” Burroughs explains. “Like you get this week or this week. We don’t do that—we don’t want rules. You have to have rules and regulations but we don’t want it to be too confining.”
Burroughs has a telling anecdote that taught him a valuable lesson about setting rules about a boat’s schedule. “We had the first of the Fairline 62s at the Annapolis Boat Show, and this woman comes by and she says, ‘Well what happens when everyone wants the same week?’” he says. “She said ‘Everyone’s going to want to be on the boat Christmas week.’” Burroughs and to his partner had a nervous discussion about the prospect of most of the owners being disappointed. “We told her, ‘Well if that’s the case, then book it... If you really want that week....’” Burroughs says. “She kept saying: ‘Everyone’s going to want that week.’ So everyone is going to be calling exactly four months in advance for Christmas. If that happens it’s first-come first-served. It can’t be perfect.”
Burroughs’s fears were unfounded: “That Fairline sat empty three of the five Christmases,” he says with a laugh. “And one of the Christmases we had to beg people to use the boat.”
After five years, the boat is sold—Sanlorenzo’s brokerage YachtBlue retains exclusive rights to the listing—and the proceeds of the sale are divided equally among the shareholders. “They don’t have to sell it after five years,” Burroughs says. “It’s just a good time to sell it, in terms of engine hours.” Again, the corporation, by design, acts like a good boat owner. The result is a better maintained boat that keeps its value, and keeps its crew—a critical factor for boat owners in this size range.
“One of the benefits of this over charter is more consistent crew—you can’t keep the same crew for five years,” Burroughs says. “You need to be where every time you get on the boat, it’s not a new crew. So we overpay crew for the size boat it is, to keep them around, because we know a captain on a boat like this makes money based on how big the boat is. We pay the captain as though the boat is bigger than it is. So if he can make 110-footer money being on a 90-footer and only has to manage three other people instead of five or whatever, well that works out pretty good, so we have a better chance of keeping these people around. We want this to be a crew-friendly fractional ownership program, and most fractional programs are not.” And, aside from the money, it’s a more pleasant experience for the crew—no same-day turnarounds, and there’s time built into the schedule to deliver the boat and do the maintenance she needs to stay in top condition.
Because when you get to your boat, you want her to be ready to go. “Some people will say if you only use a boat three or four weeks, why don’t you just charter?” Burroughs says. “Very few people charter three or four times a year anywhere, because it’s a long process. You’ve got to find what you want to do. You’ve got to find where the boat is, and what boats are going to be available.” Charter is an excellent way to try a different kind of boating, enjoy your favorite sport in another part of the world, and relax with family and friends. But, as any boater knows, owning the boat is a fulfilling part of the experience. Add in the benefit of having a crew that you know and like and you’ll see the difference. “This familiarity is a key, this is your boat,” Burroughs says. “The captain and the crew, they know you. They know what you like to eat. They know what you like to do.”
And who are the people who end up in fractional ownership? Again Burroughs draws on his experience with the Fairline 62 to explain. “We anticipated that when we first started the business we were going to get more of the ‘wannabe’ clientele,” he says. “There’s somebody who could afford a 40-foot Sea Ray, but they didn’t want a 40-footer—they wanted a 60-foot boat with a captain. That wasn’t the case.” Instead, Burroughs found that every one of the shareholders on that Fairline could have afforded to buy the boat individually. But the share program made sense to each of them.
“We allow people to sell their share at any time,” Burroughs says. “So if they decide a year from now that they want their own boat or for whatever reason, if they want us to remarket that share, we can do that.” So that five-year commitment isn’t really a commitment at all.
Is fractional ownership for you? Only you can say for sure. Sanlorenzo Shares seems to have it structured in such a way that it may make sense for busy people to own part of a Sanlorenzo SD92, be it as a complement to the current boat, as a stopgap while a custom project is built, or your own unique scenario. Just be sure to start thinking about how to spend Christmas.
- Builder: Sanlorenzo
This article originally appeared in the November 2013 issue of Power & Motoryacht magazine.