Overview
The sponsor, Breakwater (“Sponsor”), is a very experienced hotel ownership and advisory company. The Breakwater team has completed over $200 million in renovations, managed 30 investments, been involved in over $300 million in equity raises and investment sales, and oversaw 400+ renovation and construction projects. The Sponsor is seeking an investment between $5 Million and $10 Million – the actual amount and type of investment in the equity stack will be dependent upon the investment goals of the investor. Importantly, the Sponsor has been involved with this prospective project for almost five years, and at present has virtually all of the third-party reports and studies needed to support the viability of this project – all of these reports and studies are available for review following the execution of a Confidentiality Agreement. This is a unique value-add opportunity to invest in a neglected hotel that is fully-approved by Marriott for a Tribute conversion in a prime CBD location. The Property is within easy walking distance from a number of significant demand generators including Augusta University, the new James Brown Arena and Bell Auditorium which are under construction (expected to open in 2027 around the same time as the hotel as repositioned as a Tribute). Additionally, the Hotel will benefit greatly every year from the Masters Tournament and the Augusta Women’s Amateur played one week before the Masters. The Masters represents the single most important corporate sporting event held in the United States every year – the ADR and F&B revenues generated by the hotels in the market are at multiples not experienced in any other markets in the country at any time. Further, the greater Augusta MSA has very few upper-upscale or better hotels – at present only two exist with the Tribute being the third upon opening – and when opened the Tribute will undoubtedly be the market leader in ADR and RevPAR.
The framework of the Property itself is ideal for an upper-upscale asset. The Property was designed by world-famous architect I.M. PEI in the early 1970s (one of only two hotels that he ever designed, with the other being the Four Seasons Manhattan) and features atrium-like structures in what is now the pool area and indoor restaurant. The plan to convert the Property to a Tribute by Marriott will include the following:
- Reduce room count from 200 to 175 including 10 corner suites; add four 1,000 SF hospitality suites.
- Convert dated indoor pool into a 2,500 SF outdoor patio for Event pre-function space.
- Add a 2,500 SF of flex, boardroom, and breakout meeting space to existing 5,000 SF of ballroom space.
- Add a neighborhood bar and restaurant on ground floor with patio and separate entry on Broad Street.
- Relocate the ground floor back office to the second floor. Create a game room with mini golf, billiards, and other games to be used as an F&B outlet as well as buy out for groups.
Furthermore, an investor will reap the benefits of the improvements made to the Property since the Hotel is qualified to receive Historic Tax Credits on both modernization expenses and Qualified Rehabilitation Expenditures.
Investment Highlights
Premium Downtown Location - The Property benefits from its centralized location proximate to major downtown demand generators, including the University of Augusta School & Medical System, the 812-bed Piedmont Hospital, Augusta Convention Center (with 81,102 SF of meeting space), and the new James Brown Arena and Bell Auditorium that are under construction and will open 2027.
Historic Tax Credit Qualified - The Property’s Historic Tax Credit (HTC) estimate is based on 25% (Georgia) plus 20% (Federal) of the total Qualified Rehabilitation Expenditures (QRE’s) plus modernization expenditures.
Property Tax Abatement - The Property will benefit greatly from a full abatement of property taxes for 10 years, to be followed by an assessment at 10% of the market value for the following 10 years. This will be extremely impactful in boosting the Hotel’s NOI.
Marriott Key Money - The Sponsor has secured a significant amount of key money from Marriott which will further enhance the returns to be generated by the Hotel.
Highly Experienced Developer and Project Manager
Some of Breakwater's relevant experience includes the following projects:
- $40M redevelopment of the DoubleTree in Charleston's Historic District. The Property was converted to the Hotel Emeline which has been recognized by Travel + Leisure and Conde Nast amongst other publications.
- $30M renovation on the Sonesta Resort in Hilton Head, SC.
- $34M renovation to the Marriott in Downtown Greensboro, NC.
- $15M renovation/rebrand of the Hilton Downtown St. Louis to the Hilton soft-branded Pennywell.
Promising Valued-Add Opportunity - The acquisition basis of $54K per room (after reducing room count from 200 to 175) is well below replacement cost. The Property has been approved by Marriott to convert to their Tribute soft branded collection, which will result in a significant improvement in brand presence and more importantly both top-line revenue and NOI. The total renovation cost will bring the gross basis to approximately $234K per key and net basis to approximately $185K per key when all of the inducements are factored into pricing. A very good comp that fully supports this pricing is one of the top-performing hotels in the greater Augusta MSA - the Crowne Plaza N. Augusta located across the Savannah River from downtown Augusta in N. Augusta, S.C., sold in November 2024 for $231K per room and brokered by HREC with Monty Levy as lead broker. The Property is in a far better location and will be part of the Marriott-brand family, which is the premier brand family in the hotel space.
Two Blocks from $300M James Brown Arena Re-Development - The Property is a short 8-minute walk from the new 10,500 seat James Brown Arena that is under construction and set to open in 2027. Click here for more information.
Continued Upward Market Performance - Performance in the Augusta market continues to trend upwardly. According to the most recent Trend Report, January T-12 RevPAR is up by 12.3% compared to last year.
Located in an Opportunity Zone - The Property is located in an Opportunity Zone. Opportunity Zones offer tax benefits to investors who elect to temporarily defer tax on capital gains if they timely invest those gain amounts in a Qualified Opportunity Fund (QOF). Investors can defer tax on the invested gain amounts until there is an event that reduces or terminates the qualifying investment in the QOF (an "inclusion event"), or December 31, 2026, whichever is earlier. The length of time the taxpayer holds the QOF investment determines the tax benefits they receive.
Unencumbered by Management - The Sponsor plans to run an RFP process - with the input of its equity partner - to determine the best hotel management company for the Tribute.
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