CrowdFunding to lift 23-story NYC Hotel

 

A real estate developer has kicked off a crowdfunding project at 17 John St. downtown. Photo: CoStar Group

A real estate developer has kicked off a crowdfunding project at 17 John St. downtown.
Photo: CoStar Group

BY JOE ANUTA ,  New York real estate developer has kicked off a crowdfunding project at 17 John St. downtown, where he hopes to convert an existing apartment building into an extended stay hotel.

Rodrigo Nino’s Prodigy Network will start crowd funding for the project next week, where investors can buy equity in the project at $100,000 a pop. The novel use of crowdfunding takes advantage of investing regulations that were relaxed by the Securities and Exchange Commission just two months ago.

“Thanks to the connectivity of the Internet age, this provides a model for people who want to have more control where their money is,” Mr. Nino said.

Prodigy put an $8.5 million down payment on the building last week, and along with traditional financing through a bank, hopes to raise $31 million through crowdfunding to close on the property before beginning renovations. The crowd-funded money will be handled by a third-party fiduciary, according to Mr. Nino.

The ultimate goal is to renovate the existing 15-story brick apartment building and add an eight-story glass tower to the top of the structure. The project will be designed by Dutch architect Winka Dubbeldam, founder of the New York firm Archi-tectonics.

The project is planned as a 23-story extended-stay hotel, which Prodigy said is designed to meet demand generated by the World Trade Center buildings nearing completion less than two blocks to the west. As those buildings fill up he is betting that his property will increase in value, giving investors a return on their money.

Crowdfunding for large projects like 17 John St. was opened up to smaller investors in last September, when the commission both lowered the asset requirements to become what is known as an accredited investor, and also allowed companies like Prodigy freedom to advertise investment opportunities, something which was previously prohibited.

Critics of the move say the new regulations open up investment neophytes to potential heavy losses, but Mr. Nino contends that it allows smaller, accredited investors to stop relying on third-party portfolios and instead opens up opportunities for larger returns.

He has already pursued a similar model at another downtown building called AKA Wall Street, which is currently under construction.

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