Yacht ownership programs compared

A yacht ownership programme is an arrangement in which you buy a yacht and place it with a charter operator, which runs it commercially for a fixed term of usually five to six years and pays you either a set percentage of purchase price or a share of charter revenue.

Every programme in the market resolves into one of two shapes. In what operators market as a guaranteed income programme, their wording rather than ours, the operator takes utilisation risk and pays a set rate. In a performance programme you take utilisation risk and receive a share of what the boat actually earns. Everything else is detail, and the detail is where the money is.

Two things stand out from the table. Operators that bear the costs cap your use; operators that let you use the boat freely hand the costs back. And only two of the eight publish an exit mechanism at all.

The Moorings publishes monthly income equivalent to 8 percent of purchase price a year over five to six years, described on its own site as guaranteed by contract and unaffected by the boat's actual activity. Entry is a 20 to 50 percent down payment with lease or credit. The operator covers berthing, routine maintenance, insurance, cleaning and standard repairs. Owner use is metered in points, 84 a year at two points a day, half bookable in advance and half at short notice, with no blackout dates but peak weeks burning more points.

Sunsail publishes a steady 8 percent annual return, paid monthly regardless of charter activity, over five to six sailing seasons, with up to 12 owner weeks across Sunsail and Moorings sisterships and financing from 20 percent down, with income designed to cover the whole monthly loan payment. Dream Yacht publishes a 66 month Guarantee Program advertising up to 10 percent income annually, with its own caveat on the same page that the percentage depends on destination, programme duration and yacht type. That 10 percent is a ceiling, not a rate card.

What the owner still pays

Sunsail publishes the most honest list in the market of what an all-inclusive programme does not include: financing and interest, vessel registration and documentation, travel to the base, and during owner trips fuel, provisioning, optional extras, turnaround and cleaning fees, and any hired skipper or crew. Depreciation is outside every programme in the table and falls entirely on the owner.

Dream Yacht Performance credits the owner 70 percent of gross rental revenue per booking, after annual maintenance and operational expenses, over a 60 to 72 month term with the boat payable in full at entry. Horizon retains a 20 percent management fee and credits the owner with full net charter income after booking commissions, typically over five years with unlimited owner use. TMM charges a 25 percent booking commission on charters it or its agents book, leaves owner-booked charters non-commissionable, and places no cap on owner use.

TMM also publishes the clearest owner-borne cost schedule anywhere in the market: turnaround at USD 560 to 690 per charter, boatwatching at USD 200 to 250 a month, insurance at about 2.5 percent of hull value a year, dockage at USD 27.00 per foot per month for a monohull against USD 32.50 for a catamaran, labour at USD 25 to 70 an hour, and, in the British Virgin Islands, a home-port exemption certificate at USD 950 a year plus a commercial recreational vessel licence at USD 800, 1,200 or 1,600 a year by length.

Which is why the split ratio is the wrong comparison. Catamaran Guru, a broker that sells these programmes, states that the income split in a performance programme is often very misleading and used as a marketing tool, that only the bottom line is relevant, and that what the owner is charged for after the split is what actually determines it.

Three, and none of them is about the headline percentage.

First, what is deducted before the split. An 80/20 arrangement can pay less than a 60/40 depending on whether booking commission comes off pre-split or is passed to the owner in full.

Second, the exit. The same broker calls this the element not often highlighted when you are speaking with the salesperson: what happens at the end of the programme, whether the boat goes into a second tier fleet or is sold, whether there is a good second hand market for that particular model, and how much is still owed. Guaranteed programmes typically run 7 to 9 percent of total boat value a year for around five years with 8 to 12 owner weeks, against an ex-charter catamaran worth roughly 60 to 65 percent of original value after five years on the broker's own estimate, or around 50 percent on the independent estimate from Practical Sailor.

Third, utilisation. No operator publishes a bareboat fleet utilisation rate or an average charter-weeks-per-year figure on any public page. The only hard operator-published commitment found anywhere is a seven week minimum availability floor at Navigare and Dream Yacht, which is a floor and not an average. Ask for the actual figure before you sign, and treat a refusal as information.

Every programme above leaves you holding one hull, one berth, one operator relationship and one resale. A fund holds the fleet instead, and pays cash distributions rather than an offset against a loan.

HelmShare Prime Fund, L.P. is a Cayman Islands Exempted Limited Partnership whose investors hold limited partnership interests and have no usage rights. It targets an 8 percent preferred return distributed quarterly, subject to available funds, over a six year closed term, with a minimum subscription of EUR 100,000, a 2 percent annual management fee on aggregate commitments and carried interest of 20 percent payable only after return of capital, the preferred return and a general partner catch-up. The General Partner and Investment Manager is HelmShare LLC, DFSA Category 3C licensed in the Dubai International Financial Centre.

The trade is explicit. You never step aboard, interests are illiquid for the full term and there is no secondary market. Returns are targeted, not guaranteed, and your capital is at risk.