Cape Advisors has bought an interest in a Sag Harbor hotel near its condo conversion of the Bulova Watchcase Factory, The Real Deal has learned.
The development company is entering into a joint partnership with the owner of Barron’s Cove Inn at 31 West Water Street; the deal with KBR Associates closed Thursday and a “top-to-bottom” renovation of the 66-room property will begin after operations wind down in early July, said Cape co-founder Curtis Bashaw.
Bashaw described the transaction as complex and was not specific about what Cape paid; however, he said the total cost of the project would be north of $20 million.
California-based KBR Associates bought the hotel in 2009 but has made few capital improvements to the building. KBR’s principals initially approached Cape about buying the property outright several years ago but Cape declined since it was busy with the Watchcase project. KBR later proposed contributing its interest in the building to a new partnership that would be managed by Cape.
Cape is contributing some equity financing to help recapitalize the deal and will lead the charge on the development of the property, Bashaw said.
Besides revamping the hotel, the partnership plans on adding an 87-seat restaurant. Work is slated to be completed by the spring of 2014, in time for the summer season.
The deal was initially facilitated by Gregg Winter of W Financial, who introduced KBR and Cape. Cape went into contract on the property in August 2012 but held off on closing the deal until it had obtained the necessary approvals from Sag Harbor authorities.
“We love operating and have learned how to effectively operate hospitality properties in seasonal towns.” Bashaw said, referencing the five hotels it has developed in the waterside town of Cape May, N.J. “We were familiar with Sag Harbor [from developing the Watchcase] and it seemed natural for us to look for a hospitality opportunity in that market.”