The Opportunity

Sage is pleased to present another opportunity to invest alongside Crescent in a fee simple acquisition of Hotel Colonnade (the “Colonnade” or “Hotel”) located in the heart of Coral Gables, Florida. The Hotel is a 157-key full-service hotel located in Miami’s highly sought-after submarket of Coral Gables. This will be Sage’s 16th partnership with Crescent.

Sage Equity Partners loves this opportunity for several reasons:

Crescent is getting a deep discount to market value – Crescent is buying this Hotel from a public REIT that has owned it for 8+ years and is obligated to sell. This REIT has an $81mm cost basis in the Hotel ($22mm of which are capital improvements) and Crescent is buying the Hotel for an all-in acquisition price of $63mm.  This is an institutional asset and because of the debt markets disruption, the REIT was looking for a buyer with certainty of close and thus Crescent was able to buy the Hotel for a significant discount to market over other potential buyers.

Florida/Miami have seen tremendous population growth – The Hotel has benefited from South Florida’s unprecedented growth. Many businesses and people have relocated from the Upper East Coast to South Florida permanently. This has dramatically increased the near-term outlook for the Hotel which has nearly returned to pre-pandemic occupancy and is poised to benefit from Miami’s continued growth.

Irreplaceable historic asset in strategic location – In addition to being a historic hotel that comes with a long heritage of customer demand, its located in the heart of Miami’s central business district and near the University of Miami. There are three main occupancy drivers from (1) business travel, (2) leisure and event travel and (3) university related travel.

Strong cash flow – Crescent expects to do some guest facing improvements in the first 12-18 months of the investment period and bring in their proven operating partner, HEI, who has already identified approximately $2mm of expense management opportunities and has a great plan for revenue improvement as well.  Once the renovation is complete and HEI has had time to fine tune the expense and revenue management opportunities, Crescent expects to generate a 5-year average Cash on Cash net to our LPs around 13%.

Project Information

Name of Property – Hotel Colonnade

Year Built – 1988

Floors – Condo 10-14

Meeting & Event Space – 34,00 sf

Managment – HEI Hotels & Resorts

Location – Coral Gables, FL

Renovated – 2016

Keys – 157

Parking – 157 Spaces

Brand – Marriott Autograph

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 of $442k/key is well below sellers cost basis of $518/key and projected replacement cost of $600k+/key.
  • Additionally, Crescent was able to achieve $3.2mm in key money proceeds from Marriott due to their fear of losing the brand, waiver of the franchise application fee, and reduced royalty fees.
  • Crescent was not the highest bidder for Colonnade however ‘won’ the asset below market’ due to their solid track record and reputation for certainty of close.
  • The going in cap rate is 6%, adjusted to 9.1% with some expense management adjustments.

Irreplaceable Historic Asset & Location
  • South Florida continues to experience significant in-migration and economic growth due to lifestyle changes caused by the pandemic. Both companies and individuals are flocking to the pro-business state.
  • This is a critical location and hotel for Marriott’s Autograph brand with no comparable Autograph locations nearby.
  • The Colonnade is located on the ‘Miracle Mile’, a half-mile long strip in the CBD of downtown Coral Gables, a heavily sought- after hub for luxury retail and dining.
  • The hotel has three primary sources of demand: 1) business travel, 2) events and social travel, and 3) leisure which is why the hotel has historically achieved 80%+ occupancy.

Cash on Cash Yield Over the Hold Period
  • 5-year average net cash on cash is projected to be around 13%.
  • The Hotel generated positive NOI margins before and after Covid, achieving nearly 22% margins in 2021, despite the impact of Covid the year prior.
  • The attractive basis and easily implementable expense savings identified by HEI allow cash on cash distributions to ramp up over the hold period after the initial transition and guest facing renovation is complete after year 1.

Great Managment Team and Success on Other Full-Service Hotels
  • 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 has been > 15% IRR and they are consistently outperforming that metric.
  • Hotel Colonnade marks Sage’s 11th full-service hotel acquisition alongside Crescent and 16th partnership.

Business Plan

Hotel Colonnade is an ideal candidate to implement Crescent’s proven full-service value-add hospitality business plan and is summarized below.

Cost Savings & Operational Efficiencies – HEI will replace Davidson as manager and execute on our previously identified cost-savings and operational efficiencies to the tune of $1.9 million, which results in an additional ~50% flow through to the bottom line.

Renovation – Crescent will initiate $4.0 million of primarily guest facing renovations that will compliment the $22.0 million investment the previous owner, Pebblebrook, invested into the property since 2014.

  • $1.7 million – Guestrooms and Corridors, including tub to shower conversions, and the replacement of televisions, soft goods, artwork, and light fixtures
  • $1.1 million – Soft Costs & Contingency
  • $800k – Public Areas focusing on the lobby and dining area, including replacing tables and seating, improving decorative lighting, and providing new artwork as well as a targeted rebranding and subsequent PR strategy
  • $143k – Systems & Back of House
  • $27k – Exterior & Sitework

Re-finance – Base case underwriting assumes a refinance in Year 3 as Crescent anticipates debt spreads to normalize and assumes approximately $11.7 million in estimated net proceeds from the re-financing to be distributed to the equity.

Exit – Crescent underwrote an exit in Month 60 (March 2028) upon realizing the growth generated from our renovation paired with the market expansion of Coral Gables. Crescent’s underwriting projects an exit price of $90.6 million ($577k/key), representing a steep discount to recent comparable sales in the greater Miami market that have averaged $660k/key in today’s dollars.

The Asset


Offering size


Timing of Funds:

March 1st, 2023

Timing of Close:

March 20th, 2023