Blue Flag Capital has landed a construction loan for the renovation of an iconic Sag Harbor hotel.
Blue Owl Capital provided $54 million for the 67-room Baron’s Cove luxury hotel, according to a press release from JLL, which brokered the deal for the owner, a partnership between Blue Flag Capital and Bain Capital Real Estate. The three-year floating-rate loan will go toward an extensive renovation.
The Boston-based real estate private equity firm snapped up Baron’s Cove last summer for $66.5 million, Behind the Hedges reported, noting it was unclear whether the price included the business or just the real estate.
The history of the property at 31 West Water Street extends back to the 1950s. It was one of Sag Harbor’s first resorts and claims Truman Capote and Kurt Vonnegut among its past guests, but rooms can now run over $1,100 per night.
Blue Flag has been on a New England resort hotel buying spree since it was founded in 2019. The firm made a name for itself in recent years developing vintage vacation spots in hotspots like Nantucket and Martha’s Vineyard, including its popular Faraway Hotel brand. Faraway Nantucket opened in 2021, followed by Faraway Martha’s Vineyard in 2023. It owns five Nantucket properties in total.
Most recently, Blue Flag Capital opened two hotels in Montauk and one in Greenport. The firm has also pursued New England’s well-heeled crowd on their vacations out west, acquiring two Teton Village locations in Jackson Hole, Wyoming, Snake River Lodge and The Alpenhof.
Blue Flag Capital acquired Baron’s Cove from Cape Resorts, which had owned and operated the property for almost 10 years and oversaw a two-year renovation, completed in 2015.
Blue Flag’s renovation is slated to begin in October and will include upgrades to the guest rooms, public spaces and exterior. The financing will also be used to secure employee housing, according to the press release.
Read more
Private equity firm acquires historic Sag Harbor resort
How Hamptons hotels beat the seasonality curse
NYC real estate bigwigs buy up more Hamptons retail, commercial
