THE SECURITIES DESCRIBED HEREIN (THIS “SUMMARY”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED UNDER ANY STATE’S SECURITIES LAWS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS SUMMARY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS SUMMARY WAS CREATED FOR THE SOLE PURPOSE OF IDENTIFYING INVESTOR DEMAND AND NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED, AND IF SENT IN RESPONSE, WILL NOT BE ACCEPTED. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE CONTENTS OF THAT CERTAIN PRIVATE PLACEMENT MEMORANDUM DATED APRIL 24, 2024 (THE “PPM”).
AN INVESTMENT IN THESE SECURITIES INVOLVES A SUBSTANTIAL RISK OF LOSS, WHICH MAY INCLUDE ALL YOUR INVESTMENT. YOU SHOULD REVIEW THE ENTIRE CONTENTS OF THE PPM, INCLUDING THE RISKS SET FORTH THEREIN.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
As a prime and growing market, the Florida Space Coast, located 45-minutes east of Orlando in Brevard County, presents an array of demand drivers. These include the world’s busiest cruise port, Port Canaveral, which projects serving 7.3M passengers in 2024; the globally renowned Kennedy Space Center which projects 90+ launches in 2024 and upwards of 300+ in 2028; the aerospace sector, which contributed $4.2B to the county’s economy in 2021; and the iconic surfing destination of Cocoa Beach, which was voted #1 surf town in the USA in 2023.
Additionally, the Space Coast is a 45-minute drive from Orlando’s MSA, including its renowned theme parks, conference centers, and one of the busiest airports in the USA which saw over 27M passengers in 2023.
Over the last decade, Driftwood has strategically acquired three premier beachfront hotels on the Florida Space Coast and one development parcel. Starting in 2013 with the Hilton Cocoa Beach; then in 2016 with the acquisition of a nearby resort (covered land play) that is now the site of the Westin Cocoa Beach Resort & Spa (projected to be completed in 2027); followed in 2018 by the acquisition of the Crowne Plaza Melbourne and the adjacent land, which was used for the development of the element by Westin Melbourne (opened in June 2024).
As projected, the portfolio will be comprised of 1,218 guest rooms (1), 166K SF of meeting space and 21 food & beverage venues on 36 beachfront acres.
This portfolio may represent ~11% of the Space Coast 2023 market inventory by key count.
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.
Scheduled to open in 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.
Sponsor is seeking ~$56M of common equity and ~$41M of preferred equity to cover deferrals and redemptions as part of the ~$334.1M of total equity in the fund.
(1). 716 in place and 502 expected to be delivered in 2026
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
| Portfolio Highlights 1 | |
|---|---|
| Number of Hotels (1) | 4 |
| Number of Rooms (1) | 1,218 |
| Markets | Space Coast, FL |
| Year Built / Renovated | 2019-2027 |
| 2028 NOI | $47.6M |
| Management | DHM (2) |
| Fees (4) | |
| Placement Fee | 1.5% |
| Fund Management Fee | 1.5% |
The Portfolio may offer a flexible and attractive investment structure by combining common equity for future upside and preferred equity for current cash flow. Investors have the opportunity to customize their allocation between preferred and common investment options to suit their particular preferences.
Common Equity
Preferred Equity
A 12% annual coupon which is anticipated to be paid current each quarter in arrears.
A ~$9.1M reserve account fully funded at the initial close may be used to cover any preferred interest payment shortfalls as well as other fund costs.
(1). On a fully-developed basis assuming completion per current designs.
(2). Driftwood Hospitality Management, an affiliated hotel management company.
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 target returns presented on this slide are hypothetical in nature, are based on a number of assumptions, do not reflect actual investment results, and are not any guarantee of future results. In addition, a specific investor’s actual performance may be materially different from such illustrative data depending on numerous factors. There are certain limitations inherent in hypothetical results like those portrayed on this slide. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they do not reflect trading in actual client accounts and do not reflect the impact that material economic and market factors may have had on the decision-making associated with actually managing client funds. Unlike an actual performance record, hypothetical performance results do not represent actual trading. The information contained on this slide is intended only for qualified investors who are knowledgeable about investments and the associated risks. No representations or warranties whatsoever are made by Driftwood Capital, LLC or any other person or entity as to the future profitability of investment outcomes or the results of making an investment. All information provided is for informational purposes only and should not be deemed as advice in relation to legal, taxation, or investment matters. Potential investors should conduct their own due diligence and consult financial advisors before investing. Past performance is not a guarantee of future results.
(1). In no event will preferred interests exceed 40% of the Holding Vehicle's total equity.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
| Sources | Amounts | % of Total |
|---|---|---|
| Senior Debt | $333,813,316 | 46.2% |
| Hold Co. Bank Loan | 50,000,000 | 7.0% |
| Preferred Equity | 133,640,000 | 18.5% |
| Common Equity | 204,460,000 | 28.3% |
| $721,913,316 | 100.0% |
| Sources | Amounts | % of Total |
|---|---|---|
| Crowne Plaza Melbourne Purchase Price | $70,463,236 | 9.8% |
| Hilton Cocoa Beach Purchase Price | 131,329,187 | 18.2% |
| element by Westin Melbourne Purchase Price | 70,090,657 | 9.7% |
| Westin Cocoa Beach Resort & Spa Purchase Price | $55,438,327 | 7.7% |
| Westin Cocoa Beach Resort & Spa Remaining Development Cost | 360,900,088 | 50.0% |
| Reserves | 9,100,000 | 1.3% |
| Closing Costs | 3,602,146 | <1% |
| Working Capital | 15,000,000 | 2.1% |
| Placement Fee | 5,989,676 | <1% |
| 721,913,316 | 100.0% |
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
Impressive scale in a dynamic location
Spanning over ~36 beachfront acres within Florida’s thriving Space Coast, the curated portfolio epitomizes robust hospitality real estate. With a projected 1,218 keys (1), 166k SF meeting space, 21 food & beverage venues, and a significant market share (~11.1% of total market keys), four specialized and complementary hotels may play a part in transforming the high-barriers-to-entry Space Coast region into a national destination.
Decade long presence on the Space Coast
Headquartered in Florida, Driftwood possesses deep experience and history within the Space Coast, having been invested in the region since 2013. Over a decade of work is complete, including considerable renovations of the Hilton Cocoa Beach and Crowne Plaza Melbourne, as well as the completion of the new element by Westin Melbourne and a five year entitlement and design process of the new Westin Cocoa Beach Resort & Spa.
(1). On a fully-developed basis assuming completion per current designs.
Operational synergies
With two sets of adjacent properties, operational cost savings and pricing power may 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 substansive renovation of the Hilton Cocoa Beach in 2023, which helped position the hotel as the current leader in the competitive set.
Compelling incentives for Westin Resort & Spa development
The portfolio may benefit from a $30M grant from Brevard County and an anticipated $25M performance guarantee from Marriott. This, combined with the absence of full-service Marriott beachfront properties within the 160 mile coastal area between Daytona Beach and Hutchinson Island, may present a unique opportunity within a potentially under-served, premier market.
(1). Luxury Hotel Sales Comparables, 2024
| PROPERTY | KEYS | STATUS | OPEN/RENOVATED | ACRES | GBA (SF) | MEETING SPACE (SF) | F&B VENUES | BRAND PARENT |
|---|---|---|---|---|---|---|---|---|
| Crowne Plaza Melbourne | 290 | Opened | 1979/2019 | 9.9 | 154,567 | 20,000 | 3 | IHG Hotels & Resorts |
| Hilton Cocoa Beach | 295 | Opened | 1986/2023 | 8.0 | 283,843 | 21,678 | 6 | Hilton Worldwide |
| element by Westin Melbourne | 130 | Opened | 2024 | 2.6 | 113,256 | 525 | 1 | Marriott International |
| Westin Cocoa Beach Resort & Spa | 502 | Development | 2027 | 15.7 | 800,000 | 123,700 | 11 | Marriott International |
| 1,218 | 36.2 | 1,351,666 | 165,903 | 21 |
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
The assets are situated in what Sponsor believes is an economic impact resilient portion of the nation that is further bolstered by booming economic growth sectors, and strong leisure, corporate, and government demand. Pristine beaches and space-related attractions may create a robust tourism market supplemented by the exponential growth of the space industry.
Closest beach to Orlando amusement parks and MSA which attracts approximately 58M annual visitors (1)
The aerospace industry contributes $5.9 billion to the state’s economy and supports over 151,460 aeropsace-related jobs (2)
Kennedy Space Center Visitor Complex received 1.5M visitors in 2022 (2)
Cocoa Beach was named the US Top Surfing Destination (3)
2.5M visitors to Cocoa Beach in 2022 (4)
Port Canaveral - #1 Busiest Cruise Port in the World (5)
US Patrick Space Force/Air force Base & defense Contractors; 14K active personnel & $29B budget (6)
(1). Visit Space Coast, Orlando’s closest beach, 2024; (2). Road Genius, Walt Disney World Tourism Statistics, 2024; (3). New Soace Economy, Expanding Economic Impact and Job Creation, 2022; (4). Nasa, Landing Page, 2024, (5). Business View Magazine, City of Cocoa Beach, 2023; (6). Port Canaveral, Best US Cruise Homeport of 2023, 2024; (7). Financial Management & Comptroller, U.S. Space Force, 2024; (8). United States Space Force, Organization and Location, 2024
With the increased cadence of launches from both NASA and commercial entities, the Space Coast is becoming a premier destination for space tourism potentially attracting tens of thousands to the Cocoa Beach area.
Rocket launches may not only draw in national and international space enthusiasts, but also photographers, and media outlets, potentially creating a consistent flow of visitors to the area.
(1). Dale Ketcham - VP of Government & External Affairs for Space Florida
As the busiest cruise port in the world, Port Canaveral serve as a significant demand generator for the Project and region (1).
Voted the Best US Cruise Homeport for the fourth consecutive year (2020, 2021, 2022, 2023) by Cruise Hive’s annual Cruise Ship Awards
Homeport to 13 cruise ships (2), including Carnival, Disney, MSC, Norwegian and Royal Caribbean, bringing in approximately 7M passengers annually (3).
Total economic impact of Port Canaveral in the Central Florida region was $6.1B in 2023, with 66% ($4B) coming from the cruise industry (2).
Beyond cruises, the port is also a hotspot for dining, fishing, and other waterside activities (2).
One of the major employers in the area generating over 42K jobs annually (4)
Relatively few hotels may currently be serving this market
(1). Business Insider, Top 10 Busiest Ports around the World, 2023; (2). Port Canaveral, Economic Contribution to Florida, 2023; (3). Port Canaveral, John Murray State of the Port Address, 2023; (4). Port Canaveral, Economic Study, 2023
Patrick Space Force Base, with a $29B budget (1), is a significant employer in the region and a key driver of economic activity.
The base is home to 14K military and civilian guardians and houses 77 spacecraft (2).
With its strategic importance in the nation’s defense and space operations, it ensures a steady influx of military personnel, contractors, and their families.
This base further cements the region’s reputation as a nexus for aerospace and defense activities and is expected to provide consistent lodging demand to region for years to come.
(1). Financial Management & Comptroller, US Space Force, 2023; (2). US Space Force, Organization and Location, 2023
The Florida Space Coast lodging market has demonstrated historically stable occupancy and strong room revenue growth
The Crowne Plaza Melbourne and Hilton Cocoa Beach have historically outperformed the market
$100+ RevPAR gap between 2020 and 2023F
5.4% RevPAR growth since 2016
Hilton Cocoa Beach achieved a 156% market penetration in 2022
Crowne Plaza Melbourne achieved a 120% market penetration in 2022
In considering the information on this slide, prospective investors should bear in mind that past performance of the investments is not indicative of future results of such investments or the performance of individual investments. There can be no assurance that the investments will achieve the intended results, that targeted expectations will be metor that the issuer will be able to implement its investment strategy and investment approach or achieve its investment objectives. A specific investor’s actual performance may be materially different from such illustrative data depending on numerous factors. No representations or warranties whatsoever are made by Driftwood or its affiliates and/orsubsidiaries as to the future profitability of an investment, investment vehicle or the results of making an investment.
(1). The total number of overnight visitors staying in paid accommodations to Florida’s Space Coast via the Brightline train per year are projected to be in 1, 5, and 10-year estimates based on 10% Brightline ridership projection of passengers who may disembark at the Space Coast, whether for overnight stays or day visits.
Anticipated operational cost savings and synergies with two sets of adjacent properties
Expected pricing power, leverage and economies of scale
(1). As completed and based on November 2023 market inventory.
Due to zoning, entitlements, community “buy-in” and other development complexities, assemblage of a site for a large-scale beach resort in Florida is extremely difficult.
Many existing assets are regarded as “trophy” assets and highly sought after, which leads to future buyers willing to accept lower cap rates.
The state of Florida is in the process of passing a house bill to cap all commercial development in the South beaches of Melbourne Beach. If this is to pass, it would further augment the beachfront barriers to entry for all new hotels in this area.
We believe that environmental, density, and height restrictions along with a lack of available acreage to build a resort mitigates the risk of future developments.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
1550 N. Atlantic Ave, Cocoa Beach, FL 32931
$10M (~$34K/ key) spent on transformational renovation that positions the Hilton as the current market leader
Six food & beverage outlets covering all day parts
Well utilized, versatile function and event space
| Opening Date/Renovated | 1986 / 2023 |
| Brand / Management | Hilton Worldwide – Hilton / DHM |
| Guestrooms | 295 |
| Gross Land | 8+ Acres |
| Food & Beverage | Salt Restaurant Breakfast Buffet, Cool Beans Grab-and-Go; Gilberto’s Gelato and Creamery; Longboards Tiki Beach Grille Pool Bar; Castaways Beach Bar; and Waves Craft Bar Kitchen featuring locally sourced seafood and produce for dinner |
| Beach | 300 linear feet of beach frontage |
| Resort Amenities | Outdoor pool deck; bicycles, umbrellas and beach chairs available to rent; beach volleyball courts; surfing lessons; business center; self and valet parking; fitness center |
| Renovation | 2016: $5M ($17k/key) upgrades to lobby and meeting space 2023: $10M ($30k/key) full renovation of guestrooms and guest bathrooms |
| Meeting & Event Space | 21,678 SF total event space |
| Parking | 459 self & valet parking |
Hilton Cocoa Beach Oceanfront
Cocoa Beach — 502 Keys
1 Radisson Resort @ The Port
Cape Canaveral — 177 Keys
2 Beachside Hotel and Suites Cocoa Beach
Cocoa Beach — 133 Keys
3 Hilton Garden Inn Cocoa Beach
Cocoa Beach — 274 Keys
5 Courtyard Cocoa Beach Cape Canaveral
Cocoa Beach — 177 Keys
The competitive set above shows properties we believe are comparable based on similar amenities, key count, and location, as well as the hotel brand and class. This is not an all-encompassing list of properties in the area.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
2605 N. Hwy A1A, Melbourne, FL 32903
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 adjacent element by Westin Melbourne opening in 2024
| Opening Date | 1979 (north tower), 1982 (south tower) / 2019 |
| Brand / Management | IHG Hotels & Resorts – Crowne Plaza / DHM |
| Guestrooms | 290 |
| Gross Land | 9.9 Acres net of element subdivided parcel |
| Food & Beverage | Longboards Oceanfront Grille serves breakfast, lunch, dinner, dessert in the indoor dining room and oceanfront deck; the marketplace grab-and-go serving Starbucks Coffee; gelato shop |
| Beach | 400 linear feet of beach frontage |
| Meeting & Event Space | 20,000 SF total event space |
| Parking | 323 self & valet parking |
Crowne Plaza Melbourne Oceanfront
Melbourne Beach — 502 Keys
1 Hilton Melbourne
Melbourne — 446 Keys
2 Hilton Melbourne Beach Oceanfront
Melbourne — 133 Keys
3 Courtyard Melbourne West
West Melbourne — 274 Keys
4 DoubleTree Suites by Hilton Melbourne Beach Oceanfront
Melbourne — 177 Keys
5 Radisson Suite Hotel Oceanfront
Melbourne — 177 Keys
The competitive set above shows properties we believe are comparable based on similar amenities, key count, and location, as well as the hotel brand and class. This is not an all-encompassing list of properties in the area.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
2655 N. Hwy A1A, Melbourne, FL 32903
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 significant market share
Only Marriott-branded beachfront extended stay hotel in 160 miles of oceanfront, from Daytona Beach to Juno Beach
Opportunity for operational cost savings and synergies with adjacent Crowne Plaza Melbourne
| Opening Date | 2024 |
| Brand / Management | Marriott International – element by Westin / DHM |
| Guestrooms | 130 |
| Gross Land | 2.6 Acres |
| Food & Beverage | Bar and Lounge Pool Deck |
| Amenities | Expansive 2nd floor pool deck with bar and lounge; cabana rentals; market sundry shop; lobby lounge; Rise and Relax F&B offering; fire pit; bicycle rentals; direct beach access; fitness center |
| Meeting & Event Space | 525 SF total event space |
| Parking | 175 self parking |
(1). The target returns presented on this slide are hypothetical in nature, are based on a number of assumptions, do not reflect actual investment results, and are not any guarantee of future results. In addition, a specific investor’s actual performance may be materially different from such illustrative data depending on numerous factors. There are certain limitations inherent in hypothetical results like those portrayed on this slide. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they do not reflect trading in actual client accounts and do not reflect the impact that material economic and market factors may have had on the decision-making associated with actually managing client funds. Unlike an actual performance record, hypothetical performance results do not represent actual trading. The information contained on this slide is intended only for qualified investors who are knowledgeable about investments and the associated risks. No representations or warranties whatsoever are made by Driftwood Capital, LLC or any other person or entity as to the future profitability of investment outcomes or the results of making an investment. All information provided is for informational purposes only and should not be deemed as advice in relation to legal, taxation, or investment matters. Potential investors should conduct their own due diligence and consult financial advisors before investing. Past performance is not a guarantee of future results.
Element Melbourne Oceanfront
Melbourne Beach — 502 Keys
1 Hilton Melbourne Rialto Place
Melbourne — 446 Keys
2 DoubleTree Suites Melbourne Beach Oceanfront
Melbourne — 133 Keys
3 Radisson Suite Hotel Oceanfront
Melbourne — 274 Keys
4 Hilton Melbourne Beach Oceanfront
Melbourne — 177 Keys
5 Courtyard Cocoa Beach Cape Canaveral
Cocoa Beach — 156 Keys
The competitive set above shows properties we believe are comparable based on similar amenities, key count, and location, as well as the hotel brand and class. This is not an all-encompassing list of properties in the area.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
1300 N. Atlantic Ave, Cocoa Beach, FL 32931
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 to the Westin's construction lender.
Updated construction costs of market-tested GMP (Gross Maximum Price) in September 2023.
| Projected Opening Date | 2027 |
| Brand / Management | Marriott International – Westin / DHM |
| Projected Guestrooms | 502 guestrooms including 69 suites |
| Gross Land | 15.7 Acres |
| Food & Beverage | 11 F&B Venues |
| Projected Resort Amenities | Indoor kids club; kids pool & playground; resort market; surf/wave pool; Topgolf swing suites; resort pool; cabanas; fire pits; tennis; basketball; pickle ball; pool tables; bocce ball; ping pong tables; bicycle rentals; fitness center |
| Projected Meeting & Event Space | 123K + SF of indoor and outdoor meeting & event space: 43.2K SF conference center; 8.5K SF of flexible indoor meeting & event space; 72K SF of flexible outdoor meeting & event space |
| Projected Spa | 10 treatment rooms, outdoor courtyard & plunge pools, salon |
| Parking Structure | 800 self & valet parking |
(1). The target returns presented on this slide are hypothetical in nature, are based on a number of assumptions, do not reflect actual investment results, and are not any guarantee of future results. In addition, a specific investor’s actual performance may be materially different from such illustrative data depending on numerous factors. There are certain limitations inherent in hypothetical results like those portrayed on this slide. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they do not reflect trading in actual client accounts and do not reflect the impact that material economic and market factors may have had on the decision-making associated with actually managing client funds. Unlike an actual performance record, hypothetical performance results do not represent actual trading. The information contained on this slide is intended only for qualified investors who are knowledgeable about investments and the associated risks. No representations or warranties whatsoever are made by Driftwood Capital, LLC or any other person or entity as to the future profitability of investment outcomes or the results of making an investment. All information provided is for informational purposes only and should not be deemed as advice in relation to legal, taxation, or investment matters. Potential investors should conduct their own due diligence and consult financial advisors before investing. Past performance is not a guarantee of future results.
Westin Cocoa Beach Resort
Cocoa Beach — 502 Keys
1 The Diplomat Beach Resort
Hollywood — 446 Keys
2 Margaritaville Hollywood Beach Resort
Hollywood — 133 Keys
3 Westin Fort Lauderdale Beach Resort
Fort Lauderdale — 274 Keys
4 Marriott Harbor Beach Resort & Spa
Fort Lauderdale — 177 Keys
5 The Boca Raton
Boca Raton — 133 Keys
6 The Breakers
Palm Beach — 274 Keys
7 JW Marriott Marco Island Beach Resort
Marco Island — 177 Keys
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 strategic location that may leverage Marriott’s reservation network of more than 141M affiliated members worldwide. (1)
Westin Cocoa Beach Resort
Cocoa Beach — 502 Keys
1 Ritz-Carlton
Amelia Island — 446 Keys
2 Delta
Daytona Beach — 133 Keys
3 Marriott
Hutchinson Island — 274 Keys
4 Marriott
Palm Beach/Singer Island — 177 Keys
(1). Marriott.com
Sponsor believes that due to the absence of upper upscale hotels in the Space Coast, there is a leakage of at least 3.2M room nights to the Orlando market, and essentially zero capture of demand from the 32.9M (3) room nights generated by the Orlando market.
This potentially presents an interesting opportunity, considering the size and scope of the Resort which which may be able to capture a portion of the immense demand that currently exists.
1. Projected Internally (Consists of Cocoa Beach Visitors, Rocket Launches, Kennedy Space Center, MLB Airport, Port Canaveral and Brevard Zoo)
2. 2022 STR Historical Data
3. 2022 STR Historical Data
The report indicates that the property’s value upon opening in 2026 is $464 million, which is equivalent to ~$924K per key.
This appraisal underscores the value created by the development, showing a $52M increase when compared to the expected development costs.
(1). 2023 appraisal report for the to-be-developed Westin Cocoa Beach Resort and Spa by HVS, a third-party hotel valuation.
Efficiency of time, the buyout process can take 2-3 months after signing, this approach allows us to hit the ground running on site.
Potential mitigated risk on long lead construction material orders. We may be able to start shop drawings and order materials earlier using this approach.
Potential mitigated risk, before we start, we may have 90% of the subcontracts committed reducing the risk of cost fluctuations.
Driftwood may keep any buyout savings, typically buyout saving first go towards the GC contingency. This approach means it may go towards owner contingency.
Ability to bring in key subcontractors early to opine on Value Engineering options.
We are excited to start this project off proactively with KAST Construction - a strong well established partner as our general contractor.
Cash flow available for preferred interest and other fund expenses
| $ in Millions | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|---|
| NOI | $8.1 | $13.1 | $19.2 | $34.1 | $47.6 | $42.7 |
| Refinancings (net cash) | $0.0 | $29.6 | $0.0 | $0.0 | $151.1 | $0.0 |
| Exit (net cash) | $0.0 | $0.0 | $0.0 | $0.0 | $52.6 | $485.8 |
| Debt Service | ($5.2) | ($7.3) | ($10.8) | ($11.6) | ($15.2) | ($22.1) |
| Fund Expenses | ($0.1) | ($0.1) | ($3.9) | ($5.1) | ($5.1) | ($5.1) |
| Asset Free Cash Flow | $2.9 | $35.3 | $4.5 | $17.4 | $230.9 | $513.4 |
| Cap Rate | Sale Price | Price/Key | Sale Date | Beachfront | |
|---|---|---|---|---|---|
| Four Seasons Resort Orlando at Walt Disney | 4.70% | $610M | $1,373,874 | 2021 | No |
| DUA Miami, Autograph Collection (Formerly SLS) | 4.90% | $54M | $431,452 | 2023 | No |
| The Confidante Miami Beach | 5.00% | $232M | $684,366 | 2022 | Yes |
| The Ritz-Carlton Key Biscayne, Miami | 5.50% | $380M | $891,713 | 2022 | Yes |
| Hawks Cay Resort | 5.50% | $201M | $1,135,971 | 2022 | Yes |
| Henderson Beach Resort | 6.40% | $113M | $661,765 | 2021 | Yes |
| Sagamore South Beach | 6.50% | $63M | $617,647 | 2016 | Yes |
| The Inn On Fifth Naples | 6.73% | $107M | $898,856 | 2022 | No |
| LaPlaya Beach & Golf Resort | 7.01% | $186M | $981,481 | 2015 | Yes |
| SLS South Beach Miami | 7.20% | $125M | $892,857 | 2015 | Yes |
| Westin Cocoa Beach Resort & Spa | 6.50% | $734M | $1,500,000 | Yes |
| Cap Rate | Sale Price | Price/Key | Sale Date | Beachfront | |
|---|---|---|---|---|---|
| Pullman Miami Airport Hotel | 3.75% | $49M | $173,132 | 2019 | No |
| Tribute Portfolio Royal Palm South Beach | 3.88% | $210M | $534,715 | 2019 | Yes |
| The Vinoy Resort & Golf Club, Autograph | 3.90% | $185M | $511,050 | 2018 | No |
| Bentley Hotel | 4.73% | $28M | $651,163 | 2019 | Yes |
| Hyatt Regency Coconut Point Resort & Spa | 5.00% | $255M | $560,657 | 2018 | Yes |
| Margaritaville Hollywood Beach Resort | 5.30% | $270M | $731,707 | 2021 | Yes |
| Marriott Sawgrass Golf Resort & Spa | 5.50% | $247M | $480,223 | 2022 | No |
| Fort Lauderdale Marriott Pompano Beach Resort | 5.70% | $53M | $239,726 | 2018 | Yes |
| Baker's Cay Resort Key Largo, Curio Collection by Hilton | 6.20% | $200M | $1,000,000 | 2021 | Yes |
| Hotel Colonnade Coral Gables, Autograph | 6.51% | $63M | $401,274 | 2023 | No |
| Westin Fort Lauderdale Beach Resort | 7.10% | $149M | $344,111 | 2014 | Yes |
| Westin Cocoa Beach Resort & Spa | 7.75% | $187M | $633,000 | Yes | |
| Westin Cocoa Beach Resort & Spa | 8.50% | $99M | $342,000 | Yes | |
| Westin Cocoa Beach Resort & Spa | 7.00% | $90M | $700,000 | Yes |
All information set forth on this page is subject to change. Nothing herein should form the basis for any investment decision. No assurance can be given that actual returns will meet or exceed the targeted returns (including that they may be materially lower than the targeted returns) or that actual results will otherwise meet expectations or objectives. The target returns presented on this slide are hypothetical in nature, are based on a number of assumptions, do not reflect actual investment results, and are not any guarantee of future results. In addition, a specific investor’s actual performance may be materially different from such illustrative data depending on numerous factors. There are certain limitations inherent in hypothetical results like those portrayed on this slide. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they do not reflect trading in actual client accounts and do not reflect the impact that material economic and market factors may have had on the decision-making associated with actually managing client funds. Unlike an actual performance record, hypothetical performance results do not represent actual trading. The information contained on this slide is intended only for qualified investors who are knowledgeable about investments and the associated risks. No representations or warranties whatsoever are made by Driftwood Capital, LLC or any other person or entity as to the future profitability of investment outcomes or the results of making an investment. All information provided is for informational purposes only and should not be deemed as advice in relation to legal, taxation, or investment matters. Potential investors should conduct their own due diligence and consult financial advisors before investing. Past performance is not a guarantee of future results.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue Drivers | |||||||||
| ROOMS SOLD | 131,926 | 137,799 | 139,255 | 142,919 | 144,752 | 145,148 | 144,752 | 144,752 | 144,752 |
| OCCUPANCY RATE | 72.00% | 75.00% | 76.00% | 78.00% | 79.00% | 79.00% | 79.00% | 79.00% | 79.00% |
| AVERAGE DAILY RATE | $455.00 | $509.60 | $552.92 | $586.09 | $603.67 | $621.78 | $640.44 | $659.65 | $679.44 |
| REVPAR | $327.60 | $382.20 | $420.22 | $457.15 | $476.90 | $491.21 | $505.95 | $521.12 | $536.76 |
| Banquet PSF | $345.00 | $424.35 | $466.79 | $476.12 | $485.64 | $495.36 | $505.26 | $515.37 | $525.68 |
| F&B Revenue POR | $25.00 | $26.00 | $26.52 | $27.05 | $27.59 | $28.14 | $28.71 | $29.28 | $29.87 |
| % Growth | 4.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | |
| Resort Fee | $20.00 | $20.60 | $21.22 | $21.85 | $22.40 | $22.96 | $23.53 | $24.12 | $24.73 |
| % Growth | 3.0% | 3.0% | 3.0% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | |
|---|---|---|---|---|---|---|
| Revenue Drivers | ||||||
| ROOMS SOLD | 14,859 | 34,828 | 35,588 | 37,960 | 38,064 | 37,960 |
| OCCUPANCY RATE | 61.78% | 73.40% | 75.00% | 80.00% | 80.00% | 80.00% |
| AVERAGE DAILY RATE | $201.50 | $240.35 | $253.80 | $274.10 | $287.81 | $296.44 |
| REVPAR | $124.49 | $176.42 | $190.35 | $219.28 | $230.25 | $237.15 |
| F&B Revenue | $38 | $55 | $56 | $58 | $59 | $60 |
| % Growth | 2.0% | 2.0% | 2.0% | 2.0% |
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue Drivers | |||||||||
| ROOMS SOLD | 87,102 | 85,784 | 89,673 | 78,869 | 83,419 | 86,432 | 89,673 | 89,673 | 89,919 |
| OCCUPANCY RATE | 80.40% | 79.40% | 83.00% | 73.00% | 77.00% | 80.00% | 83.00% | 83.00% | 83.00% |
| AVERAGE DAILY RATE | $223.23 | $237.43 | $248.87 | $258.82 | $266.59 | $274.58 | $282.82 | $291.31 | $300.05 |
| REVPAR | $179.48 | $188.52 | $206.56 | $188.94 | $205.27 | $219.67 | $234.74 | $241.78 | $249.04 |
| F&B Revenue POR | $83.38 | $92.62 | $97.25 | $102.11 | $107.22 | $112.58 | $118.21 | $124.12 | $130.32 |
| % Growth | 11.1% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | |
| Other Revenue POR | $7.10 | $7.81 | $8.04 | $8.28 | $8.49 | $8.70 | $8.92 | $9.14 | $9.37 |
| % Growth | 9.9% | 3.0% | 3.0% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | |
|---|---|---|---|---|---|---|---|---|
| Revenue Drivers | ||||||||
| ROOMS SOLD | 58,535 | 60,017 | 65,627 | 68,803 | 68,991 | 68,803 | 68,803 | 68,803 |
| OCCUPANCY RATE | 55.30% | 56.70% | 62.00% | 65.00% | 65.00% | 65.00% | 65.00% | 65.00% |
| AVERAGE DAILY RATE | $181.04 | $185.82 | $190.84 | $190.84 | $196.57 | $202.46 | $208.54 | $214.79 |
| REVPAR | $100.12 | $105.36 | $118.32 | $124.05 | $127.77 | $131.60 | $135.55 | $139.62 |
| F&B Revenue POR | $72.01 | $73.90 | $76.85 | $79.93 | $83.13 | $86.45 | $89.91 | $93.51 |
| % Growth | 2.6% | 4.0% | 4.0% | 4.0% | 4.0% | 4.0% | 4.0% | |
| Other Revenue POR | $14.46 | $15.17 | $15.62 | $16.09 | $16.49 | $16.90 | $17.33 | $17.76 |
| % Growth | 4.9% | 3.0% | 3.0% | 2.5% | 2.5% | 2.5% | 2.5% |
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
The following summary is by its nature incomplete and is qualified in its entirety by reference to the detailed provisions of the Fund’s Limited Partnership Agreement. Prospective investors are strongly urged to read the Fund’s PPM and its exhibits, including the Limited Partnership Agreement and the Subscription Application, carefully and in their entirety and to review such materials and consult with their own investment, tax, legal and financial advisors prior to making an investment decision. Terms capitalized but not defined herein shall have the meaning assigned to them in the PPM.
Driftwood Florida Space Coast Portfolio, LP (the “Fund”), a newly-formed Delaware limited partnership.
The Fund is seeking up to $334,100,000 of common and limited partnership (the “Common Interests” and “Preferred Interests”, respectively) interests in the Fund to acquire, own, develop and manage the four franchise hotel properties described herein (the “Portfolio Investments”). There can be no assurance that the Fund will be able to achieve its investment objectives or targeted returns.
The Fund’s term will expire on the sixth anniversary of the Initial Closing Date; provided, that the General Partner may, in its sole discretion, extend the term of the Fund for up to three additional one-year periods.
Up to $334,100,000, with the Preferred Interests consisting of no more than 40% of the Fund’s equity.
An initial closing for $65,895,392 of Common Interests and $66,452,131 of Preferred Interests took place on September 16, 2024 (the “Initial Closing Date”). The Fund is now holding additional closings at its convenience with the current anticipated closing being ~$97.5 million.
The General Partner intends to raise approximately $97,557,317 million in this Follow-On Offering to, among other things, repay financing, redeem roll-over Limited Partners and pay deferred fees.
DFSCP GP, LLC, a Delaware limited liability company will serve as the general partner of the Fund (the “General Partner”). The General Partner will have full and exclusive management authority over the Fund’s Portfolio Investments, dispositions and other affairs of the Fund. The General Partner may delegate administrative and general management functions to service providers.
The Fund will engage Driftwood Capital, LLC, a Delaware limited liability company (“Driftwood Capital”), or its affiliate, to provide certain asset management and administrative services to the Fund (the “Manager”). The Manager is an affiliate of the General Partner.
The Preferred Interests will earn a preferred return of 12% per annum (the “Preferred Return”). Any Preferred Return not timely paid to the holders of Preferred Interests will accrue and compound annually and all unpaid Preferred Return must be paid prior to any distributions being made to the holders of the Common Interests.
Subject to a minimum Preferred Return as described in the Limited Partnership Agreement and provided that all due and unpaid Preferred Return has first been distributed, the General Partner may cause the Fund to utilize available cash to redeem any or all Preferred Interests at their original value.
A $9,100,000 Preferred Return Reserve was funded at the Initial Closing, with additional amounts expected to fund the Preferred Return Reserve at subsequent closings.
The General Partner and/or its affiliates have made aggregate Capital Contributions to the Fund on the Initial Closing Date of $94,300,000, primarily effected through elections to receive Interests in the Fund as a portion of its consideration in connection with the simultaneous Transactions (as defined in the PPM). The Interests held by the General Partner and/or its affiliates may be redeemed subject to General Partner’s and/or its affiliates’ minimum investment amount of approximately $33,410,000 and available cash for such redemptions. The Interests held by the General Partner and/or its affiliates may be subject to a discounted Management Fee or Carried Interest (as each term is defined in the PPM). Additionally, Carlos J. Rodriguez, Sr., the Chief Executive Officer of the General Partner, already committed $10,000,000 in the Fund.
Carolina Financial Securities, LLC and Carofin, LLC (“CFS” and “Carofin”, respectively) have been engaged as non-exclusive placement agents for the Interests of the Fund. As compensation for such services, CFS shall receive a placement fee equal to three percent of the gross proceeds received by the Fund from purchases of Common Interests and two percent of the gross proceeds received by the Fund from purchases of Common Interests. CFS may pay up to 50% of such fees to Carofin for its assistance in the placement of the Offering.
Each prospective investor shall fully review the PPM, Limited Partnership Agreement, and other relevant documents for other provisions governing this investment, which relate to, but are not limited to: transactions between affiliates of the General Partner and other with a financial interest in this transaction; capital commitments and defaults thereunder; Term; Continuation Fund; Emergency Expenses; Advisory Committee; Managers of the General Partner; Leverage; Distributions; Organizational Expenses; Fund Expenses; General Partner Expenses; Valuation; Reporting; Transfers and Withdrawals; Required Withdrawal; Amendments and Side Letters; Acceptance or Rejection by General Partner; Meetings of the Partners; Removal of the General Partner; Limited Partner Consent; Exculpation and Indemnification; Certain Tax Matters; ERISA; Risks and Conflicts; Counsel; Independent Accountant; Subscription Matters; and Additional Information.
Driftwood Development Partners, LP, a Delaware limited partnership and an affiliate of the General Partner (“DDP”), is currently the developer of the project known as the Westin Cocoa Beach Resort & Spa. Driftwood Hospitality Management II, LLC, a Delaware limited liability company and an affiliate of the General Partner, is currently the property manager (the “Property Manager”) for each of the hotel properties comprising the Fund’s Portfolio Investments pursuant to customary property management agreements (each, a “Property Management Agreement”) with each respective entity that is the direct owner of each respective hotel property (each such direct owner of a hotel property, a “Hotel SPE”).
Hospitality Project Advisors, LLC, a Florida limited liability company (the “Project Manager”), or its affiliate may provide project management services in connection with franchise-mandated “property improvement plans” or other capital expenditure projects at hotel properties comprising the Fund’s Portfolio Investments pursuant to customary project management agreements (each, a “Project Management Agreement”) with a Hotel SPE.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
An investment in the Interests described in this Summary involves certain risks. You should carefully consider all of the following risk factors, in addition to all of the information contained in this Summary and the PPM prior to investing in the Interests. The risk factors described below are not the only ones facing the Fund and the Portfolio Investments. Additional risk factors not presently known or that are currently deemed immaterial may also impair the Fund’s business operations. The Fund’s business, financial condition, results of operations or prospects could be materially and adversely affected by any of these risks. If any of the following risks occur, the Fund’s business, financial condition or results of operations could be seriously harmed. In such case, an investor could lose all or part of its investment.
adverse changes in economic conditions or in the hospitality and tourism industry
the seasonal nature of the hospitality and tourism industries
significant competition for guests, employees and service providers
changes in consumer preferences
changes in operating costs
increases in costs due to inflation that may not be fully offset by price and fee increases
changes in tax and governmental regulations
the costs associated with complying with applicable laws and regulations
changes in local and general economic conditions
changes in the financial condition of buyers and sellers of property
changes in the availability of debt financing and refinancing
changes in interest rates, real estate taxes and operating and other expenses
changes in environmental, zoning and other applicable laws and regulations
changes in fiscal policies
changes in utility rates
development and improvement of competitive properties
The list of Risk Factors above is non-exhaustive and any potential investor should review the “Risk Factors” section of the PPM for additional risks and a discussion of all risks identified therein.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
These securities have not been registered with the Securities and Exchange Commission (the "“SEC” or the “Commission”), or with any state securities commission or any other regulatory authority. The securities are being offered in reliance upon an exemption from the registration requirement of federal and state securities laws and cannot be resold unless the securities are subsequently registered under such laws or unless an exemption from registration is available. Neither the SEC nor any other agency has passed on, recommended or endorsed the merits of this offering (this “Offering”) or the accuracy or adequacy of this Summary. Any representation to the contrary is unlawful.
These securities are offered through Carofin, LLC, Member of FINRA/SIPC. Carolina Financial Securities is an affiliate of Carofin and both Broker-Dealers are affiliates of Carolina Financial Group, LLC. Documents have been prepared by Carolina Financial Securities and have been reviewed and approved by the management of the Company. The information contained herein has not been independently verified and is dependent on information provided by the Company to Carolina Financial Securities, LLC.
Our firms seek to present vital capital with meaningful investment opportunities through the fundamental analysis of the businesses we seek to finance. Such analysis is usually conducted through a First Principles approach.
When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations we provide you. Here are some examples to help you understand what this means:
Proprietary Products: Our firms will often present investments that are only available through them, which may result in a higher placement fee. The Firms will receive the placement fee regardless of your investment performing as expected.
Difference in Fees: Our Firms will receive different fees based on whether any prospective investor purchases Common Interests or Preferred Interests. As such, any prospective investor shall carefully review the terms of these Interests when making an investment decision.
Our firms offer brokerage services to accredited investors, exclusively through the sale of private placements. the offerings we bring to market are carefully selected, and any recommendation you may receive from us will be limited to these offerings. Therefore, we may be unable to adequately compare the risks and benefits of the offerings we bring to offerings presented by other financial professionals. While our firms will often present new investments and discuss such an investment’s risks and benefits with you, the ultimate authority to make such investment rests solely with you.
Our firms do not hold any investor cash or securities, and securities offered by us often have no easily assessable market value, so our firms will not monitor the market value of your investment on an ongoing basis. The investments we present often require a minimum investment of $5,000 for equity offerings and $10,000 for debt offerings. Fees and costs may reduce any amount of money you make on your investments over time. Our firms are mostly compensated through placement fees, which are payable by the issuer, meaning that the firms will be compensated by receiving a percentage of the funds raised in an offering, regardless of the investment performing as expected. Such placement fee is usually between 3% and 7%. Given that different investments have different placement fees, we may often have a conflict of interest when presenting these investments to you. The Firms’ bankers are often compensated by receiving a percentage of the placement fee, and may have their own conflict of interest when presenting you with offerings they structure.
Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing in this document should be interpreted to state or imply that past results indicate future performance, nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided in this document. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be imped if it is sold. Please see the Private Placement Memorandum (PPM), and the complete list of contents of this Offering Package for a more detailed explanation of the securities Summary of Terms, Investor Suitability Standards, Confidentiality, Securities Matters and Risk Factors.
THE DESCRIPTION OF THE PROJECT HEREIN IS SUMMARY IN NATURE AND NO POTENTIAL INVESTOR SHALL MAKE AN INVESTMENT DECISION WITHOUT REVIEWING IN FULL THE PRIVATE PLACEMENT MEMORANDUM DESCRIBING THE TERMS AND RISKS IN MORE DETAIL. THE INFORMATION HEREIN IS FOR AUTHORIZED PARTIES ONLY AND NO PORTION OF THIS INFORMATION MAY BE REPRODUCED OR DISTRIBUTED IN ANY FORMAT NOR REFERENCED OR QUOTED WITHOUT THE EXPRESS WRITTEN APPROVAL OF DRIFTWOOD CAPITAL, LLC.
A Carofin representative will be in touch soon.
Carolina Financial Securities, LLC and Carofin, LLC (“CFS” and “Carofin”, respectively) are affiliated broker-dealers registered with the Securities and Exchange Commission and members of FINRA and SIPC. The fees and services broker-dealers offer differ across the industry and it is important for you to understand such differences.
Free and simple tools to research firms and financial professionals are available at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.
You will find certain pertinent questions you may ask us when first establishing a relationship listed as “conversation starters” below. We invite you to visit our Knowledge Base for educational materials on private investments.
Our firms offer brokerage services to accredited investors, exclusively through the sale of private placements. A private placement is an offering of securities that is exempt from registration with the Securities and Exchange Commission and carries significant risks, which may result in the loss of some or all of your investment. Such risks include, but are not limited to, the inability to sell your investment for cash, the lack of publicly available information on the company issuing the security, and no guarantees of returns or periodic payments.
Our firms carefully select the offerings they bring to market, and any recommendation you may receive from us will be limited to these offerings. Therefore, we may be unable to adequately compare the risks and benefits of the offerings we bring to offerings presented by other financial professionals. While our firms will often present new investments and discuss such investment’s risks and benefits with you, the ultimate authority to make such investment rests solely with you.
Our firms do not hold any investor cash or securities, and securities offered by us often have no easily assessable market value, so our firms will not monitor the market value of your investment on an ongoing basis. An affiliate of CFS and Carofin, CFG Financial Services, does, however, act as administrative agent for many offerings we bring to market. In this role, CFG Financial Services will monitor an issuer’s compliance with its obligations, make distributions of periodic payments, and, when necessary, intervene in the event that things are not going to plan. When this happens, CFG Financial Services is often compensated by part of the proceeds recovered in settlement or bankruptcy proceedings, which may reduce the return on your investment.
The investments we present often require a minimum investment of $5,000 for equity offerings and $10,000 for debt offerings.
Conversation Starters:You will pay fees and costs whether you make or lose money on your investments. Fees and costs may reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.
Our firms are mostly compensated through placement fees, which are payable by the issuer, meaning that the firms will be compensated by receiving a percentage of the funds raised in an offering, regardless of the investment performing as expected. Such placement fee is usually between 3% and 7%. Given that different investments have different placement fees, we may often have a conflict of interest when presenting these investments to you.
Given that our placement fees are payable by the issuer, the full amount of your investment will be used to purchase debt or equity securities, even though a certain amount of the proceeds may be immediately redirected by the issuer to CFS and Carofin as placement fees.
Conversation Starters:When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations we provide you. Here are some examples to help you understand what this means:
Proprietary Products: Our firms will often present investments that are only available though them, which may result in a higher placement fee.
Management Fees: Our firms will often present investments in which Carolina Financial Group, LLC an affiliate of CFS and Carofin, acts a manager of the company. CFG will often be compensated for such services.
Warrant Position: Our firms will often receive a warrant (an option to purchase an equity security in the future, for a defined price) for certain securities. Given that our firms, or other equity holders in the company, may have an investment time horizon that differs from yours, this may create a conflict of interest.
Equity Trust Company Relationship: Carofin and Equity Trust Company (“ETC”) have entered into an agreement by which Carofin exclusively promotes ETC’s services as IRA custodian, in exchange for the sharing of certain Carofin content by ETC. You can learn more about the services ETC offers, along with the fees associated with such services, at trustetc.com.
Conversation Starters:Our firms have different compensation structures.
CFS financial professionals, which are often the individuals working with the company to structure an appropriate security, receive a percentage of the placement fee received by CFS in the investments they structure. Therefore, these professionals have an interest in presenting you with the investments they have structured.
Carofin financial professionals, on the other hand, are the individuals responsible for understanding and presenting these investments to you. While Carofin professionals are compensated through discretionary bonuses, they may have an interest in presenting you with investments which may result in a higher placement fee to the firm overall.
Yes. You have access to a free and simple tool to research our firms and financial professionals at Investor.gov/CRS.
Conversation Starters:You may learn more about our brokerage services and request a copy of this relationship summary at Carofin.com. You may also contact us directly at 828.393.0088 or [email protected] to request up-to-date information and a copy of this relationship summary. We also encourage you to visit our Knowledge Base for additional educational information on private investments.
Conversation Starters:Form CRS – October 12th, 2020, Ver. 2.0
PRIVATE PLACEMENTS ARE HIGH RISK AND ILLIQUID INVESTMENTS. AS WITH OTHER INVESTMENTS, YOU CAN LOSE SOME OR ALL OF YOUR INVESTMENT.
Securities offered through Carofin, LLC. Carofin, LLC and Carolina Financial Securities, LLC are affiliated Broker-Dealers, Members of FINRA/SIPC, and subsidiaries of Carolina Financial Group, LLC. For more information on the services we offer and details associated with such services, please see our Customer Relationship Summary.
This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Craig Gilmore at 828.393.0088 x 520 and/or [email protected]
The information contained herein is for informational purposes only and is not intended for further distribution. The information does not constitute a complete description of any investment or investment performance. This webpage is in no way a solicitation nor is it an offer to sell securities nor is it advice or recommendation regarding any investment. The information is not directed to any person who is not believed to qualify under the definition of an Accredited Investor under the rules of Regulation D of the 1933 Securities and Exchange Act. No security listed on this webpage or otherwise offered through Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offers of sale.
Carolina Financial Securities and Carofin only offer one type of alternative investment, those sold as private placements. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided on this website. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be impaired if it is sold.
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