The One Ocean Resort & Spa in Atlantic Beach, Florida, was acquired for $87 million by a JV that includes Sage Hospitality Group. We dig deeper into
the deal.
ATLANTIC
BEACH, Florida — When referring to Sage Hospitality Group’s first acquisition in Florida, the One Ocean Resort & Spa in Atlantic Beach, President Daniel del Olmo said the opportunity was too good to pass
up.
“One Ocean is a
gorgeous resort… The beachfront location is especially valuable. It would be
extremely difficult to replicate that building with today’s
zoning laws,” del Olmo said.
“We saw an opportunity in this market,
and the timing was also right for our partners. The entire area around Atlantic
Beach is poised for significant growth.”
Denver-based Sage Hospitality entered into a joint
venture agreement with a trio of Jacksonville-based companies, Aspect Real
Estate Group (an affiliate of Denver-based Aspect Holdings), Corner Lot, and
Kelco Management and Development, to acquire the 193-key resort just north of Jacksonville from Dallas-based
REIT Ashford Hospitality Trust (AHT) for $87 million, according to an 8-K
filing.
AHT announced the sale last week as part of its plan to
divest properties to pay off its debt.
The sales price of One Ocean was reported for a lower
value ($48.6), but Michael Bellisario, director and senior research analyst for
Milwaukee-based Baird Equity Research, told Hotel Investment Today that the
lower price was likely just for the allocated real estate value and AHT’s filing
last week confirmed the $87 million sales price.
Bellisario said the value add in the sale of One Ocean
comes from it being fully unencumbered from a brand and management. “At some point —
either down the road under Sage’s ownership or when the asset trades next time — a
brand can provide key money, which could be significant dollars,” he said. “That
optionality to Ashford and Sage is worth something — perhaps up to 10% of the
value of the trade.”
Inside the deal
Del Olmo said Sage Studio, the company’s
interior and brand design teams, will lead One Ocean’s
renovation, culminating in repositioning the asset by 2025.
One Ocean has not received much investment over the past couple of years... Together with our partners, we saw an opportunity to reposition the resort to continue to attract modern travelers, as well as neighbors, year-round.
Daniel del Olmo
“One Ocean has
not received much investment over the past couple of years,” he said. “Together
with our partners, we saw an opportunity to reposition the resort to continue
to attract modern travelers, as well as neighbors, year-round.”
The outlook for the Jacksonville market is very favorable
in the coming years, del Olmo said. “There will be
relatively limited new supply given the market. So, we took the opportunity to
collaborate with strong partners,” he said.
This is the first partnership for the JV, del Olmo said
(though Kelco and Corner Lot recently partnered on a Home2Suites by Hilton in
Jacksonville and Sage and Aspect are both located in Denver).
Del Olmo said Sage will also manage the property (its 19th currently under management), which
offers more possibilities, including taking over the property's
food and beverage (and its signature restaurant Azurea) through its
company Sage Restaurant Concepts.
“This is a great
project for Sage, not only as investors but also as managers,” he said. “We expect
the project to deliver strong returns.”