Three Southampton hotels have gone up for sale, piquing the interest of developers, hotel chains and celebrities alike.
The hotels—The Atlantic, The Bentley and The Capri—have 49 suites and 84 rooms among them, representing about 43 percent of the total hospitality market in the Southampton area, according to Massey Knakal Realty Services, the Manhattan-based broker of the sale.
“We haven’t established a price—we’ve simply opened it up for bid,” said David Waksman, the majority stakeholder in Hamptons Resorts and Hospitality, which owns and operates the hotels. However, Robert Knakal of Massey Knakal said he expects $25 million or more for all three hotels as a package.
“We have a bid deadline established of June 5, and we are hoping to have a contract executed by July 4, with a closing sometime after the summer,” he said.
To maximize the value of his potential sale, Mr. Waksman said he is willing to sell the properties as a package or individually, foreseeing that they could be converted to condominiums, senior housing facilities or some other use.
The Atlantic and The Capri are located on County Road 39 in Southampton, and The Bentley is on Hill Station Road, just off County Road 39, in Southampton.
“We’ve had people that have expressed interest specifically in The Capri, because it has the nightclub,” Mr. Waksman added, referring to Pink Elephant, a club frequently patronized by celebrities and socialites.
He said he has also been approached by Stony Brook Southampton, which is in need of student housing. And if Southampton Hospital moves to the highway, there will be a greater need for hotel rooms, he added. Also, if a large hotel company were to move in, Mr. Waksman predicted it could succeed because it would have the infrastructure to advertise and conduct publics relations that Hamptons Resorts and Hospitality does not have.
After 10 years of running the hotels, Mr. Waksman said he is looking forward to getting away from the day-to-day operations to spend more time with his children, Hannah, 4, and Evan, 6. He got into the management aspect of the business by accident when he grew dissatisfied with the previous managers and took on the duties himself.
Before the hotels, Mr. Waksman ran real estate investments for large hedge funds and advised foreign finance ministers, he said. “I went from that to serving coffee.”
Mr. Knakal, the chairman of Massey Knakal, said his firm just started marketing the properties and has already received substantial interest from both domestic and international hotel operators.
“We’ve also had interest from private individuals as well as celebrities,” he added. “I would not be surprised if the buyer of these properties was an internationally known entity or individual.”
He said he expects there is such diverse interest in the hotels because of their location, and he predicted the properties will likely continue to be run as hotels.
The late Jeff Salaway, who was an owner of Nick and Toni’s in East Hampton, and Mark Smith, owner of East Hampton’s Rowdy Hall, were among the motels’ former investors. In 2000, the restaurateurs and New York investor Mr. Waksman helped fund a renovation that aimed to convert the circa 1950s motels into places for discerning visitors to stay.
As part of the upgrade, the original names of the hotels were changed: the Sandpiper became The Atlantic, the Concord became The Bentley, and the Bayberry became The Capri. In-season weekend rates at that time were as high as nearly $400 a night.
Mr. Waksman said he is optimistic about the offers he expects to get for the properties, citing the strong high-end home sales market in the Hamptons, which regularly range from $20 million to $65 million. Many of those estates are on less than the 10 acres Hamptons Resorts and Hospitality has, he pointed out. He also noted that East Hampton Point, a restaurant and 5-acre resort on Three Mile Harbor, was up for sale for $55 million a couple years ago, and there were offers of around $40 million.
Though the country is facing an economic downturn, Mr. Waksman said that actually works in hotels’ favor, making it a good time to be a hotel owner in a resort town. People tend to have to work more during tough economic times, and that makes them more likely to go for the flexibility of booking hotel rooms rather than paying for a house share, he said. The weak American dollar also helps, he said, because travellers are more likely to stay in the country.