Boston investment firm buys Montauk’s Sunset Beach hotel for $13M

Blue Flag Partners is making its presence known on Long Island’s East End with its second hotel deal in two months.

The Boston-based investment firm bought the 34-key Sunset Beach motel in Montauk, plus a pair of vacant lots and four nearby waterfront parcels on Montauk Harbor, for $13.5 million, Behind the Hedges reported. 

The properties, which combine for 3.5 acres, were on the market together for six months with a last asking price of $15 million. Douglas Elliman’s Lisa Grenci had the listing, but it’s not clear who sold them.

The one-story hotel will reopen this summer, rebranded as the Sunset Montauk. It spans two adjacent parcels at 540 West Lake Drive and 17 Soundview Drive and was renovated in 2019. It has fire pits, grills and outdoor lounges, though no pool.

The two built parcels were the biggest part of the sale, each going for more than $5 million on their own. A spokesperson for Blue Flag told the publication that the investor does not plan on making significant changes to the property prior to its summer opening, but may renovate it in the future.

Included in the deal was a vacant, 1-acre lot immediately to the south at 544 West Lake Drive, next to both the hotel and the Sail Inn, which sold in a separate transaction last year for $4.6 million. Other parcels acquired by Blue Flag include a half-acre vacant property with resort zoning and four nearby bayfront lots that overlook the Long Island Sound but can’t be built upon.

Blue Flag’s arrival in Montauk comes just two months after it bought the 34-room Greenporter hotel in the North Fork for an unknown amount. 

The rest of its holdings are concentrated in New England, including Autocamp in Cape Cod, which offers luxury accommodations in trailer-style suites and tents, as well as the 300-year-old Kelley House hotel on Martha’s Vineyard.

— Holden Walter-Warner