The Negative Capital Leg

The Income Leg and the Capital Leg

A yacht in charter service is consumed on purpose. It accumulates engine hours, guests and wear at a rate no private boat does, and at the end of the programme it is sold into a market that knows it is ex-charter.

That makes a charter yacht unlike most income assets. A bond returns its principal at maturity. A charter yacht returns whatever the brokerage market will pay for a five year old boat with a charter history, and the income paid along the way has to be measured against the capital that disappeared.

Part four showed that a fixed income contract moves utilisation risk to the operator and leaves the owner with residual value risk alone. This part puts a number on that residual.

A Published Worked Example

Catamaran Guru, a brokerage that places boats into charter programmes, publishes a worked example of a guaranteed income programme on a Lagoon 400 S2 four cabin catamaran in the British Virgin Islands.1

The same page says the charter company pays insurance, dockage and maintenance for the term, and that the owner receives up to 12 weeks of owner time. Its text says the boat will be worth up to 65 per cent of the original price; its own spreadsheet uses 60 per cent.

What 45 Per Cent Actually Means

The income leg in this example returns 200,220 dollars against a 444,914 dollar purchase. That is 45 per cent of the capital, paid back over five years.

It is not a yield in the usual sense, because the asset that produced it is worth less at the end than at the start. A 9 per cent coupon on a bond that repays at par is a 9 per cent return. A 9 per cent payment on an asset that loses 40 per cent of its value is partly the asset being handed back in instalments.

The Moorings' own programme sets the payment at 8 per cent of the purchase price a year, for 5 to 6 years.2 Catamaran Guru's example uses 9 per cent. Over 60 months the first returns 40 per cent of the purchase price and the second 45 per cent, and neither figure says anything about profit until the sale price is known.

The Residual That Breaks Even

The Moorings charges a standard 10 per cent brokerage commission when it sells an owner's boat at the end of the programme.2 Applying that to the sale and discounting the monthly payments gives the annualised result for a range of residuals.

The break-even residual, where the owner's money comes back and nothing more, is 66.7 per cent of cost at 8 per cent income and 61.1 per cent at 9 per cent. Catamaran Guru's own 60 per cent sits just below the second.

What the Residual Has to Be for a Real Return

Breaking even in nominal terms is not a return. Part six sets out the hurdle properly, but one comparison belongs here.

The ECB deposit facility rate was raised to 2.50 per cent with effect from 16 September 2026.3 For the five year programme to match that rate, the boat would have to resell for 78.5 per cent of cost at 8 per cent income, or 72.5 per cent at 9 per cent.

No published practitioner figure reaches either level for an ex-charter catamaran. The highest in the yacht depreciation analysis is Catamaran Guru's 60 to 65 per cent after five years in charter, and Estelle Cockroft of the same firm told Yachting World that an owner recovering 55 per cent of invested value is probably doing quite well.4

So on published figures, the fixed income shape returns most or all of the capital and a set number of sailing weeks. It does not produce a return that clears cash.

The Refit Nobody Puts in the Spreadsheet

The Moorings states plainly what comes back at the end. Yachts are handed over as ex-charter boats maintained to fleet standards, with all the usage expected over a 5 to 6 year charter life, and many owners then plan a post-handover refit covering cosmetic refresh, new sails and canvas, and electronics.2

That refit is a capital cost incurred either before sale, to reach the residual in the table, or by the buyer, who prices it into the offer. Either way it comes out of the owner's number.

No operator or broker publishes a typical refit cost for a five year old charter catamaran, so it is not in the table above. It is also why an owner reading a residual percentage should ask whether it assumes the boat is sold as returned or after work.

The maintenance and yard cost analysis gives the published tariffs a refit is priced from.

What the Owner Weeks Are Worth

The case for these programmes is not financial return, and the operators mostly do not claim it is. It is sailing time at a low net capital cost.

Catamaran Guru values six owner weeks a year at 4,500 dollars each in its example, and notes that most owners use about five weeks a year despite a 12 week allowance.1 Five weeks a year for five years at that valuation is 112,500 dollars of chartering, or about 25 per cent of the purchase price.

Measured that way, an owner who recovers 94 per cent of the capital and sails 25 weeks has paid roughly 27,000 dollars for those weeks, a little over 1,000 dollars a week. That is a strong outcome for a sailor. It is a weak outcome for an investor, and is a yacht a good investment draws the same line between the two.

Where This Analysis Is Weakest

The worked example is one brokerage's, on one model, published in 2016 and last modified in March 2025. The purchase price and residual reflect that period, and the cost of owning a yacht has moved since.

Residual values are practitioner estimates, not transaction data. No index publishes matched sale prices for ex-charter catamarans, so the table is a sensitivity range, not a forecast.

The calculation ignores financing, tax treatment and currency, each of which can move the owner's result materially. It treats the programme as exactly 60 months when contracts run 5 to 6 seasons.

None of these figures is a return, targeted or otherwise, and none describes any particular fund or programme. The pillar page on yacht charter investment returns collects the whole walk, and the yacht ownership programs page compares the contract shapes.