Blue Flag Partners Plant Flag in Montauk With $13.5M Purchase

Blue Flag Partners, Montauk, Sunset Beach Hotel
Blue Flag Partners made a $13.5 million investment in what was briefly called Sunrise Beach Hotel in Montauk Harbor. It will reopen this summer as Sunset Montauk. The deal closed in December.
Taylor K. Vecsey

Blue Flag Partners, a company that owns several leading accommodations on the East Coast and recently purchased a boutique hotel on the North Fork, now has a foothold in Montauk.

Blue Flag confirmed last week that it purchased what was the Sunset Beach Montauk, and will now be called the Sunset Montauk, as well as two vacant properties and four waterfront parcels in Montauk Harbor, totaling 3.46 acres, within walking distance to Gosman’s Dock.

“We are honored and excited to be the next steward of Sunset Montauk. We look forward to investing in the hotel’s future and becoming a part of this incredible community,” said Eric Brown, the principal of the Boston-based firm.

Suffolk County deed transfers available recently through a report from Suffolk Vision show the eight transactions totaled nearly $13.5 million, all closing on December 14, 2022, making it one of the biggest commercial real estate deals on the East End last year, when combined.

Lisa Grenci of Douglas Elliman had the listings, marketed together, for six months. The last asking price was $15 million. Douglas Elliman and Grenci declined to comment.

Blue Flag Partners, Montauk, Sunset Beach Hotel
Part of the hotel is on Soundview Drive.Taylor K. Vecsey

The single-story hotel with three buildings and walk-out rooms, renovated in 2019, straddles two contiguous properties at 540 West Lake Drive and 17 Soundview Drive. There are 34 turn-key rooms spread across the buildings, one of which used to be Culloden House and, in recent years, was combined with Sunset Beach Hotel. There are common areas with lounges and fire pits, as well as several parking lots, but there is no pool.

The signs currently say Sunrise Beach Hotel, which was the name of the hotel briefly last fall, but it will be reopening this summer as the Sunset Montauk. Blue Flagg plans “to operate as is,” with minimal upgrades to the hotels for the 2023 season, according to a spokeswoman. Future renovation plans are still being worked on.

The Sunset hotel properties, totaling about an acre, made up the bulk of the sale with 17 Soundview Drive trading for $5,536,726 and 540 West Lake Drive going for $5,107,610.

The company purchased 544 West Lake Drive, an adjacent 1.17-acre vacant lot to the south, also adjacent to the Sail Inn, for $1,049,985. The vacant lot is zoned as commercial business. (Grenci was also the exclusive agent on the sale of the Sail Inn that traded in late October 2022 for a total of $4.65 million.)

Across the street, Blue Flag also bought 525 West Lake Drive, a 0.46-acre vacant property, to the east of Haven, another hotel in Montauk Harbor, which does not officially appear to be on the market. This untouched property enjoys water views from its higher perch and has resort zoning and traded for $1,049,985.

Blue Flag Partners, Montauk, Sunrise Beach Hotel
A view of the Long Island Sound from West Lake DriveTaylor K. Vecsey

Down West Lake Drive a bit and across the street are the four bayfront lots Blue Flag bought for guests to sit overlooking the Long Island Sound. Totaling 0.64 of an acre, they are flanked by two East Hampton Town-owned parcels, including a parking lot on the jetty. Because these are beach parcels, nothing can be built on them.

These beachfront parcels sold for the smallest amounts; 516 West Lake Drive for $257,665, 512 West Lake Drive for $167,482, 508 West Lake Drive for $154,599 and 504 West Lake Drive for $115,959.

The purchase marks Blue Flag’s first property in Montauk.

The company also recently purchased the Greenporter Hotel, which offers 34 retro-style accommodations on Front Street, for an undisclosed amount. The company has plans to expand it. The Greenport and Montauk hotels will operate as two separate hotels and brands.

Blue Flag Partners owns the iconic Kelley House on Martha’s Vineyard, two inns on Nantucket and one in Boston, as well as AutoCamp, a luxury Airstream campsite on Cape Code that allows guests to retreat to some of the most sought-after outdoor destinations.

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