Private equity firm acquires historic Sag Harbor resort

Boston-based Blue Flag Capital adds Baron’s Cove to luxury boutique hotel collection

Blue Flag Capital Acquires Baron’s Cove in Sag Harbor — Blue Flag Capital's Jason Brown with Baron’s Cove (Cornell Nolan, Baron’s Cove, Getty)

Emily Davis

Jun 28, 2024, 2:00 PM

Blue Flag Capital acquired an iconic Sag Harbor resort property, adding to its march into the boutique, luxury hotel market.

Baron’s Cove, located at 31 West Water Street in Sag Harbor, has 67 rooms and cove-side views. The Southampton property’s history extends back to the 1950s as one of Sag Harbor’s first resorts and claims Truman Capote and Kurt Vonnegut among its past guests, but rooms can now run up to $1,060 per night.

Blue Flag Capital declined to disclose price of the acquisition. The most recent market value of the property itself was an estimated $17.2 million.

The iconic property is another feather in Blue Flag Capital’s boutique cap. The Boston-based real estate private equity and development firm, founded in 2015, made a name for itself in recent years developing vintage vacation spots in New England hotspots like Nantucket and Martha’s Vineyard, including its popular Faraway Hotel brand. Faraway Nantucket opened in 2021, followed by Fawarway Martha’s Vineyard in 2023.

Most recently, Blue Flag Capital opened two hotels in Montauk and one in Greenport. It owns five Nantucket properties in total, including Beachside Hotel opening in July.

The firm in December 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 has owned and operated the property for almost 10 years, including overseeing its two-year renovation, completed in 2015. Cape Resorts is known for operating historical resort properties in Cape May, New Jersey since 1986. It expanded out to eastern Long Island less than a decade ago.