Driftwood Florida Space Coast Portfolio

Four-Asset Portfolio on
Florida’s Space Coast

12.0% Target*

Preferred Equity IRR1

29.3% Target*

Common Equity IRR

6-Year

Anticipated Hold Period2

$250,000

Minimum Investment

1. Anticipated to be paid current each quarter in arrears.
2. The anticipated hold period is subject to extension by the General Partner as further described in the Private Placement Memorandum.

The investment returns in this offering are projections and not guaranteed. They may change without notice and are subject to various factors. Investing in securities carries risks, including potential loss of principal. The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Click here to see important disclaimers and disclosures

A blend of established, newly-renovated, and soon-to-break-ground hotel investments anticipated to provide “day-one” cash flow and the expectation of an attractive IRR over the duration of the investment.

Following the completion of the Westin Cocoa Beach development, the Driftwood Space Coast Portfolio is expected to represent approximately 62% of the Space Coast’s beachfront hotel guest room inventory.

As designed, the Portfolio is expected to feature 1,218 guest rooms, 166,000 square feet of meeting space, and 21 food & beverage outlets.

The portfolio anticipates generating cash flow from two operational full-service hotels (Hilton Cocoa Beach and Crowne Plaza Melbourne) and a newly-constructed upscale extended-stay hotel (element by Westin Melbourne), which opened in June 2024.

Lastly, scheduled to open in early 2027, the Westin Cocoa Beach Resort & Spa is expected to perform well in a currently unserved market segment, the goal being to establish the hotel as a regional landmark destination hotel.

The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

On-demand webinar

Flexible and attractive investment structure

Combining preferred equity for current cash flow and common equity for future upside, this investment offers investors the opportunity to customize their allocation between preferred and common investment options to suit their particular preferences.

Investment Choice:
Accredited investors have the discretion to allocate their investment between common equity and preferred equity. 

Funding Options:
A 30% capital call upon initial closing, with the remainder to be called at the General Partner's discretion over 18 months. Alternatively, you may elect to fund your entire capital commitment at closing.

Initial Funding:
Commitments for new equity of at least ~$170M are required for the initial closing. To date, approximately 80% of the minimum equity needed for the initial closing has been committed. 

Total Equity:
The portfolio’s total equity is expected to be ~$330M.

1. Represents hard and soft commitments as of August 20, 2024.
2. Total fund equity capitalization.

The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Target Returns*

Preferred Equity

12.0% Target

IRR

1.6x Target

Equity Multiple

Common Equity

29.3% Target

IRR

2.5x Target

Equity Multiple

Anticipated to be paid current each quarter in arrears. The investment returns in this offering are projections and not guaranteed. They may change without notice and are subject to various factors. Investing in securities carries risks, including potential loss of principal. Please refer to the Private Placement Memorandum, including its disclosures, disclaimers and descriptions of risk factors, for important additional information. The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Click here to see important disclaimers and disclosures

Portfolio Assets

Planned Development

Westin Cocoa Beach Resort and Spa

View Details

502

Keys

15.7

Beachfront Acres

~14K SF

Meeting Space

11

F&B Venues

Westin Cocoa Beach Resort and Spa

  • Expected to be a transformative development, positioned in one of the top five fastest growing MSAs in the US
  • State-of-the-art resort and conference facility designed by world-renowned architect, Gensler
  • Marriott distribution gap – no full-service Marriott beachfront properties for 160-miles, from Daytona Beach to Hutchinson Island
  • Unprecedented $30M grant from Brevard County, $1M per year for 30 years, to promote the Resort
  • $25M Marriott Performance Guaranty
  • Updated construction costs of market-tested GMP (Gross Maximum Price) in September 2023

Recently Renovated

Hilton Cocoa Beach

View Details

296

Keys

8.0

Beachfront Acres

21.7K SF

Meeting Space

6

F&B Venues

Hilton Cocoa Beach

  • 300 linear feet of beach frontage
  • $10M ($34K/ key) spent on a transformational renovation that positions the Hilton as the current market leader
  • 141% RevPAR Index projected in 2024
  • Six food & beverage outlets
  • Well utilized, versatile function and event space

Recently Renovated

Crowne Plaza Melbourne

View Details

290

Keys

9.9

Beachfront Acres

20.0K SF

Meeting Space

3

F&B Venues

Crowne Plaza Melbourne

  • Largest beachfront group house in Melbourne
  • $18.5M ($64K/key) renovation of guest rooms and public spaces 2018-2019
  • Outside deck replacement in 2023
  • Operational synergies expected with the adjacent element by Westin Melbourne opening in 2024

Newly Built

element Melbourne

View Details

130

Keys

2.6

Beachfront Acres

525 SF

Meeting Space

1

F&B Venues

element Melbourne

  • Newest hotel product on Melbourne Beach by more than a decade and the first beachfront element by Westin
  • Premium amenities that exceed brand standards with an elevated pool deck overlooking the Atlantic Ocean
  • Lack of extended stay and Marriott product in the vicinity is expected to capture outsized market share
  • Only Marriott-branded beachfront extended stay hotel in 170-miles of oceanfront, from Daytona Beach to Juno Beach
  • Opportunity for operational cost savings and synergies with adjacent Crowne Plaza Melbourne

The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Exciting market with strong demand drivers

Fueled by diverse demand drivers, from aerospace and beach tourism to major tourist attractions, this historically high-growth area is expected to continue to benefit from significant economic activity. Key attractions like Port Canaveral, Kennedy Space Center, and Orlando’s theme parks are expected to provide consistent demand.

  • Cocoa Beach is among the closest beaches to Orlando amusement parks and MSA which attracted more than 74M visitors in 20231
  • The aerospace sector contributed $4.2B to Brevard County’s economy in 20212
  • NASA Kennedy Space Center Visitor Complex receives ~1.5M visitors yearly3
  • Cocoa Beach was named the US Top Surfing Destination4
  • Cocoa Beach serves over 2.5M visitors annually5
  • Port Canaveral, the #1 Busiest Cruise Port in the World, welcomed ~6.8M passengers in 20236
  • U.S. Patrick Space Force Base supports ~14K personnel with a $29.4B FY 2025 Space Force budget7
  • Space Coast hotel RevPAR has grown 6% on average YoY8

1. Visit Orlando, “Visitor Volume to Orlando 2023 report”; 2. Kennedy Space Center Economic Impact Study FY 2021; 3. NASA. “Kennedy Space Center Visitor Complex Fact Sheet; 4. Travel + Leisure. “Cocoa Beach Rated Best Surf Spot in the U.S.” 2022; 5. Business View Magazine. “City of Cocoa Beach, Florida – Brevard County.” 2023; 6. Port Canaveral. “2023 State of the Port Report”; 7. U.S. Air Force Financial Management and Comptroller. “FY 2025 Budget Overview”; 8. CoStar “Space Coast market historical RevPar report”, Oct, 2024.

Experts discussing the strength of market & barriers to entry

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The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Investment Rationale

Impressive scale in an attractive location

Spanning over 36 beachfront acres within Florida’s thriving Space Coast, the portfolio epitomizes high-value hospitality real estate. With a planned 1,218 keys, 166k SF meeting space, 21 food & beverage venues, and a significant market share (11.1% of total market keys), four complementary hotels are set to transform the high barriers-to-entry Space Coast region.

Upon completion of the Westin Cocoa Beach development, the Portfolio expects to control ~52% of the hotel beachfront inventory in Brevard County (1), which encompasses both Melbourne and Cocoa Beach. We expect this majority market share to position the Portfolio as the market leader in the region, allowing to effectively maneuver market dynamics and enhance profitability across its properties.

1. CoStar, “Melbourne market total beachfront hotels key count”, November 11, 2024. Melbourne Market includes, Space Coast, Brevard County, Cape Canaveral, Satellite Beach, Melbourne Beach, and more.

High barriers to entry

Stringent zoning, entitlements, community buy-in, and the Brevard Barrier Island Area Protection Act are expected to limit competition and protect investment value. In fact, the element Melbourne took just over 2.5 years to get entitled, and Westin Cocoa Beach Resort and Spa took 5+ years to get shovel-ready, which required obtaining a special development district designation to get the desired height through a community referendum for approval.

Decade long presence on the Space Coast

Headquartered in Florida, Driftwood possesses extensive experience and history within the Space Coast, having been invested in the region since 2013, including major renovations of the Hilton Cocoa Beach and Crowne Plaza Melbourne, as well as the recent opening of the new element by Westin Melbourne and the completion of a five-year entitlement and design process of the new Westin Cocoa Beach Resort & Spa.

Potential operational synergies

With two sets of adjacent properties, operational cost savings and pricing power are expected to yield a competitive advantage.

Recently renovated

The Crowne Plaza Melbourne completed a $18.5M ($64K per key) renovation of guest rooms and public spaces in 2018-2019 and $10M ($34K per key) was spent on a renovation of the Hilton Cocoa Beach in 2023, which helped position the hotel as the current competitive set leader.

Compelling incentives for Westin Cocoa Beach Resort & Spa development

The portfolio benefits from a $30M grant from Brevard County to the Westin Resort & Spa and an anticipated $25M performance guarantee from Marriott to the Westin’s construction lender. With the scarcity of convention hotels along Florida’s coast, and notably, the absence of any full service Marriott beachfront properties from Daytona Beach to Hutchinson Island—a span of around 160 miles— the Resort is projected to be in an exceptional position to leverage Marriott’s reservation network of more than 141M affiliated members worldwide(1).

1. Marriott.com

Seeking to leverage major reservation and loyalty systems

The portfolio is expected to benefit from distribution to the three largest reservation systems and loyalty programs in the world (Marriott, Hilton, and IHG)

Diversified market leadership

Each hotel within the portfolio caters to a distinct market segment. The Westin Cocoa Beach will target the luxury market and is expected to be the only 4.5-star hotel on the beach. The Hilton Cocoa Beach, which completed a $10M renovation in January 2024, appeals to the upper-tier market and has consistently been the leader in the Space Coast. The Crowne Plaza Melbourne, which underwent a $18M renovation in 2019, serves the mid-tier market and is believed to be well-positioned despite its competitive environment. Lastly, upon opening, the element by Westin Melbourne became the market’s newest hotel construction and is currently the only extended-stay hotel on the beach.

The description of the project listed herein is summary in nature and does not include all of the relevant and potential high degree of risks. Any person considering an investment must read and review in its entirety the private placement memorandum describing the terms and risks of investment in detail prior to making an investment. Additionally, any person considering an investment should be aware of all the risks and should consult their own investment, legal, business, tax and financial advisors with respect thereto.

Experts Discussing the Strength of Market & Barriers to Entry

Lisa Sexton

Senior Vice President, Development Hospitality Expertise for Marriott International

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Dale Ketcham

VP of Government & External Affairs for Space Florida

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Wayne Justice

Commissioner, Secretary/Treasurer of Canaveral Port Authority

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Ben Malik

Former Mayor of Cocoa Beach

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Keith Capizzi

Mayor of Cocoa Beach

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Rita Pritchett

Brevard County Commissioner for District 1 & Chairwoman for the Tourism Board of the County

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