After nearly 40 years, Rehoboth’s Sandcastle Motel sold

The Sandcastle Motel in Rehoboth Beach has changed hands. According to Sussex County property records, the property sold Nov. 29 for $13.2 million to Newport, Del.-based Rehoboth Hotel LLC.

Lifelong Rehoboth resident Don Derrickson, a former Rehoboth Beach commissioner, opened the motel in 1986. The property has an address of 123 Second St., but it’s a corner lot sharing the same Rehoboth Avenue block as the Rehoboth Beach Volunteer Fire Company and Rehoboth Beach City Hall. The property became family-owned in 2007, when ownership was transferred to Five D Limited Liability Company – a partnership among Derrickson, wife Dianne, and sons Regan, Spencer and Bryan. The sons opened Conch Island, the Key West-themed restaurant/bar on the Rehoboth Avenue-facing side of the property, in 2010. 

The impending sale has been in the public sphere for a few weeks. In a Nov. 20 post on Conch Island’s Facebook page, Bryan announced the property was in the final stages of being sold.

“Unbeknownst to us,” said Bryan, “the rest of the partners entered into an agreement to sell the entire Sandcastle property – this included the leased space that is Conch Island.”

In an interview Dec. 7, Bryan confirmed the property had been sold, but he said his only concern right now is finding a permanent location for Conch Island within Rehoboth Beach.

While looking for that location, Conch Island has secured a temporary space in Henlopen Junction off Rehoboth Avenue Extended, said Bryan. The space is currently occupied by Ocn Blu, which opened in early 2020 and has announced its last day of business is Saturday, Dec. 11.

Conch Island will host a two-day closing party for the Sandcastle Motel location Friday and Saturday, Feb. 25 and 26.

“We figure a party that big will take two nights,” said Bryan in his post. “So with tears in our eyes we thank each and every one of you for all of the love, support, friendship and memories over the past 12 years, and we look forward to making new ones with the new locations.”

What the future holds for the Sandcastle/Conch Island property is still unknown. The address listed for Rehoboth Hotel is 405 E. Marsh Ln., Newport, Del. That’s the same address as developer Harvey, Hannah & Associates, which built the Hyatt Place in Dewey Beach. The company announced about a year ago it was also bringing Hyatt-branded hotels to Lewes and Kent Narrows, Md.

Representatives from Harvey, Hannah could not be reached for comment.