[Rhodes22-list] Stretch Rhodes-22

[Brad Haslett]

Stan, maybe you need to stretch the Rhodes-22 by 170 feet or so.  Brad Smooth
sailing for yacht builders despite economy

By ALAN SAYRE, AP Business Writer*Fri Jul 4, **8:30 PM ET*

Fuel prices are soaring and credit markets tightening, but the super-rich
are still lining up to pay tens of millions of dollars for mega yachts.

The well-heeled buyers of the floating mansions are increasingly coming from
emerging economies — in the Middle East, Russia and South America. The
source of their wealth runs the gamut — technology, venture capitalism, new
industries. And, yes, oil.

"There are a lot of people with new wealth looking for relaxation and
enjoyment," said John Dane III, president of privately owned Trinity Yachts,
the largest U.S. builder.

These days, the biggest problem at Trinity's shipbuilding yards is having
enough workers to handle the 24 custom contracts the company currently is
working for the luxury vessels.

"Nobody is buying these yachts because they need them," said William S.
Smith III, Trinity's vice president. "They're buying them because they want
them."

Another builder, YCO Deuxil PLC, has nine yachts under construction — more
than double from last year. Sales for the first five months exceeded the
entire amount for 2007, the London-based company said.

YCO Deuxil, which also provides services for super yacht owners, saw its
profit more than double to $549,367 in 2007 over 2006.

According to Camper & Nicholsons International, a broker of yacht sales and
charter contracts, there are about 3,800 yachts over 80 feet in service
around the world now. About 1,800 of those have been built since 2000. The
study predicts that that by 2010, there will be 5,000 such yachts on the
water.

"There's not enough supply," said Ed Slack, editor of International Boat
Industry. "It takes two years to build some of these yachts and the demand
hasn't slowed down."

So far, Trinity's largest vessel has been a 192-foot yacht that would carry
a replacement price of $60 million to $65 million. The company is working a
242-footer that will have a price tag in excess of $90 million.

In the Netherlands, the First Export Association of Dutch Shipbuilding, or
Feadship, can put together a 128-footer for about $40 million. On the upper
end of an already high scale, a 300-foot monster yacht typically will run
around $150 million.

Francois van Well, chief executive of Feadship America, said about 50
percent of his company's business comes from the United States, but more
buyers are coming the rest of the world. And it's not old family money.

"Most of our clients have earned their wealth in one generation," van Well
said.

Trinity, which once had an almost exclusive U.S. buyer base, also is seeing
more overseas buyers who have recently moved into substantial money, Dane
and Smith said.

At the Global Superyacht Forum, a meeting of yacht owners in Amsterdam last
November, Steven Rattner, manager of DLJ Merchant Banking Partners, said
there are 90,000 families in the world with a net worth of more than $360
million each. That number is expected to increase over the next three years
by 10 percent a year.

Because most of the new buyers are still active in business, they only have
so much time a year for their yachts. Many also have vacation homes
overseas. And they know about investments.

Enter the charter business, especially in the Mediterranean where, according
to Dane, a 164-foot yacht can easily bring $350,000 a week. By chartering a
boat 10 weeks a year, the owners can pay operating expenses for a full year,
he said.

"The charter market has allowed people to buy boats a little larger than
they would have wanted to invest in had they not seen it as a source of
revenue to help defray their operating costs," Dane said.

And these vessels don't depreciate in price.

Dane said the first owner of every Trinity-built yacht who decided later to
sell got more for it than the purchase price. Three were sold by the
original buyer even before they were delivered.

"We have one owner and this is his fourth boat and he's never taken
delivery," Dane said. "Rich people don't want to wait on a boat and they'll
pay a premium. This owner has taken that premium and moved to the back of
the line."

Trinity has about 900 employees at its yards in Gulfport, Miss., and in New
Orleans, where the company's yard was used to build the Higgins vessels of
World War II and D-Day fame. Feadship has three European yards that keep
1,200 workers busy turning out an average of five yachts a year.

Dane said he could use more workers to keep up with the orders. When someone
is ready to buy, a long delay could mean "they look for another yard," he
said.