NOT OPEN TO GENERAL SOLICITATION

The Opportunity

Sage is planning to raise $4,000,000 of equity to invest in the Element Basalt Hotel (the “Element” or “Hotel”) located in the Aspen Valley. The Hotel is a 113-key premium select service (“PSS”) hotel located in Basalt, Colorado.

Project Information

Key Investment Highlights

Crescent is Getting a Tremendous Deal on The Hotel

• Crescent is buying the Hotel significantly below replacement cost. The all-in cost basis ($404k/key, including land) compares favorably to replacement costs for similar assets, valued to be $415k/key (EXCLUDING land).
• Existing investors do not want to sell, but the primary equity partner has owned the Hotel for 7 years and is ready to turn their equity.
• Many buyers are struggling to find debt and raise equity due to rising interest rates, giving Crescent a HUGE competitive advantage due to their extensive relationships and lack of buyers in this market.
• The going in cap rate is 8.3%, adjusted to 9.3% with implemented expense management, and 10.3% for fiscal year 1 proforma.

Great Location

• The Hotel has a perfect location and is the only hotel in the Willits Town Center (a 250,000-sf mixed use commercial space) in downtown Basalt next to Aspen’s only Whole Foods. The Hotel is 25 minutes from Aspen and has access to 4 ski areas.
• With Aspen’s soaring prices and crowds, Basalt has become the fastest growing market outside of Aspen over the last decade. Many of our investors are members of Roaring Fork Golf Club and stay in Basalt regularly. 
• It would be nearly impossible to build a competing hotel at a comparable price to our all-in basis based on the land values, the costs of living, construction costs and increasing red tape, which gives this Hotel a tremendous competitive advantage.
• The current hotel development pipeline is limited due to high barriers to entry from natural constraint posed by Valley and strict development regulations.
• The Element opened in December 2015 and is in excellent condition. Crescent has planned a minimally invasive $2.1 million guestroom and public space refresh that will improve the guest experience and drive additional revenue growth.

Great Cash on Cash Returns Immediately

• Due to the below market purchase price and easily completed expense savings identified by HEI, the Hotel generates tremendous cash flow.
• Year 1 cash on cash net to our partners is projected to be > 10%.
• 5-year average net cash on cash is projected to be > 13%.
• The Hotel has generated positive NOI and significant NOI margins since 2017 – including during the depths of COVID.

Great Managment Team

• Crescent has proved to be one of the best real estate operators in the country and has performed extremely well before, through and after Covid, despite the circumstances.
• Crescent’s 30-year track record of performance has been > 15% IRR and they are outperforming that on a regular basis.
• Sage invested in a portfolio of two other Premium Select Service hotels this summer and both hotels are performing above proforma.
• Distributions for 2022 are anticipated to be closer to a double-digit cash on cash, rather than the 2% underwritten.

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The Asset

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