Highrise Luxury on the High Seas

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1:27Russell Galbut:IBM.

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2:08Megan Murphy:You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Back in March, our Bloomberg News team reported on an ambitious project. A developer of residential towers in New York, Miami, and Los Angeles is planning to spend more than a billion dollars converting cruise ships into luxury condos on the seas.

2:29Russell Galbut:I'll take a condo on the high seas.

2:31Megan Murphy:Okay,$750 ,000 to$8 million. The ships will travel the seas as people live on them. That developer joins us now. Russell Galbitt is managing principal and co-founder of Crescent Seas. He's also founder of GFO Investments, also former chairperson of Norwegian Cruise Line. He joins us from Miami. Russell, welcome. How are you?

2:51Evan Kuo:I'm doing great.

2:52Megan Murphy:Thank you.

2:52Evan Kuo:And it's nice to be with you, Carol and Tim. Tim and Carol. Nice to be with you.

2:56Megan Murphy:Just give us an update on where you are in the conversion of a first cruise ship to luxury condos. Where are you in the process?

3:05Evan Kuo:So thank you so much. So we're through the design phase with our partners, Lassoni, who did the spa and pool areas, and March and White, who did the interiors of some of the units on board. So the design is all done. And we're in the process of now talking to the yards in order to get all of this work done on a timely basis and to be ready for December of 26, which is only about 15 months away. So we're excited. All right.

3:33Russell Galbut:I spent a lot of time in a yard, and I know it can be timely, expensive. I thought you were going to spend a lot of time.

3:37Megan Murphy:Wait, a lot of time where?

3:39Russell Galbut:In a yard.

3:40Megan Murphy:A shipyard or?

3:41Russell Galbut:Well, a boatyard.

3:43Megan Murphy:Is that what you're talking about? Yeah, exactly. I thought you meant like a backyard. For the people who don't spend any time on the seas, Carol, you have to translate this stuff.

3:50Russell Galbut:Russ gets me. Yeah, I don't. That's the story of my life. I'm a sailor. I've spent a lot of time in a yard doing work myself or waiting for somebody to do work. So that can be kind of tricky. Tell us about, especially on a day where we were supposed to get a labor report, we didn't get it. Are the workers there the tradespeople? Because we find that increasingly harder and harder to find.

4:09Evan Kuo:No, no, the tradespeople are available. And, you know, all of the yards today are busy. But there's a tremendous amount of talent. It's from Italy, from Germany, from all of Europe. And that's predominantly where the ships are done. And maybe one day it comes back to America, but currently that's where it is. And we're excited because we have the talent. We have everybody on board. And we will deliver on the product. And by the way, that's just the first of three ships that we have planned. So the insignia comes in December of 27, and our new build is coming in 32. So we're pretty excited about what we have lined up.

4:46Evan Kuo:And as you know, the Earth's surfaces are 71 % water. So while millions of condominiums are sold on land, very seldom do you see any condominiums sold at sea. So it's an exciting concept, a new industry, and something that's done very nicely because, you know, it's anything that you built in a shop is much easier than building one off. So it's easier and more common to develop a luxury cruise ship than it is a single individual condominium, which, you know, we have a lot of experience having built condominiums for over 50 years.

5:24Russell Galbut:Right. But as you said, sometimes building from the ground up is a lot easier than doing a retrofit. So talk to us about what what how do you change these? What are they going to be like? Are they I have been on a big ship. I know what those rooms are like. But what is it about somebody who buys a luxury residence on one of your ships? What does it look like?

5:44Evan Kuo:So I'll tell you, one of the things that we do is we combine cabins. So on the Navigator, for instance, there's only one hundred and eighty nine suites and they're true residents. So it's something magnificent that gives you the space. You own all of the space inside your cabin and you share the common amenities outside of your cabin with your fellow 189 other unit owners. So you sort of have to think of it as 189 private yachts together on a 555 foot long ship. And the difference is, is that you don't have to worry about the captain, the first mate, the second mate or the third mate, because it's all done for you.

6:18Evan Kuo:And you don't have to worry about shipping your 100 foot ship or 100 foot boat to Europe, because this ship is big enough that it can go to Europe and travel the entire world, go to the North Pole, South Pole, and all of those types of places in between.

6:32Russell Galbut:I have to ask, though, so you have a bedroom, I'm assuming. Yes, you do. You have a head. You have a salon. Do you also have a galley of your own that if you want to cook up something?

6:46Evan Kuo:Yeah, all residents have small kitchens, but the bigger units obviously have bigger kitchens. So, and the idea of being on board the ship is not to cook for yourself, but to enjoy the company of the ship to discover the world and not have, but if you, listen, if you want to have a party, we also have a common chef's kitchen that you can use and you can have a chef from the ship as well, or you can do it all on your own, depending on whatever you want. So, but the idea really is to spend your time and things that are fun and luxurious and things that you want to do. So we do have a lot of amenities on board.

7:26Evan Kuo:We have a huge library, a geographical center, observation decks, beautiful pools and spa. And so the concept really is to, we have six different restaurants. So why would you ever want to cook by yourself? But if you did, we could also have any type of room service that you want from any of the restaurants as well.

7:44Megan Murphy:So I have a few questions regarding just the general idea of living on one of these. And one is the initial cost I mentioned is$750 ,000 to$8 million a year. But the annual maintenance fees, talk a little bit about how much those would cost, because in some cases, according to our reporting, could be$210 ,000 a year.

8:05Evan Kuo:Yes, it could be. But when you look at that number, it's inclusive of everything, right? So it's inclusive of your big expenses like your fuel and and all of the employees who are there on board. Everybody's going to have their own butler and so on. So when you think about it, it also includes your real estate taxes, your insurance and all of those other benefits. And I was just listening to the story of the chaos in the world and everything else that was on was on your station before Carol and Tim and Tim and Carol. And I'll tell you, just think about it. This is an opportunity to be at sea and not even worry about the world's problems.

8:40Evan Kuo:I mean, you really have your own community and you're discovering the cultures and communities of everywhere else in the world. I like the way you think when you say Tim and Carol.

8:49Russell Galbut:Or Carol and Tim. Whatever you like. He's equal. I love it. It is. It's great. Very sweet. He loves everybody.

8:57Megan Murphy:I want to know a little bit about the demographic here because I read about this and I look at it. It seems like it's for retirees. And one thing that we know is people do age as they do require health care. And I know that people think a lot about living in places that are close to that is close to abundant and quality health care. How do you get that on the ship?

9:17Evan Kuo:Well, there's a full time doctor and two nurses on board who will know all of your medical records. OK, so it's not for emergencies, but it is there and they are there for emergencies, not for operations or or ongoing other types of things. But I would also tell you that I would say that you're wrong when it comes to who actually buys, because there's families on board that are buying today. Remember, the world today is quite different because today between satellites, between Starlink and our existing satellites, our existing satellites have gotten so much better that when you go to the north and the south, you have absolute clarity.

9:55Evan Kuo:So when you go to one of the conference rooms on board, you can be in your office in Tokyo or in Berlin, and no one would know that you're on a ship in Alaska. No one, because that's how good the communications are. So you'll find that on board we have we have two families who have bought that are taking their children with them on a year round cruise because they want them to experience and learn firsthand the world. And what's interesting is that because of COVID, the availability of materials for third graders, second graders, first graders for all classes is so much more improved.

10:30Russell Galbut:Russell, one of the things I've got to ask, because you're planning for a lot more ships. You mentioned one coming out next year and then another one in another bunch of years. Are people lining up already putting deposits down? Because it's not a business unless they buy it and stick with it.

10:48Evan Kuo:Absolutely. And we are open for business. All you have to do is just Google CrescentHeights, CrescentSees.com.

10:55Russell Galbut:How many have already said, yep, plunked a deposit down and said, we're going to do this, sign a contract?