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If you only had $50k to $100k in your pocket and wanted invest in a hotel, chances are you'd only find one by playing SimTower on your iPad. (You'd also have a pretty giant pocket.) But crowdfunding is changing that by bringing more smaller investors into the mix.  Prodigy Network has four such crowdfunded hotel projects, says CEO Rodrigo Nino—extended-stay properties 17 John and AKA Wall Street in Manhattan's Financial District, as well as hotel components in Bogota, Colombia's BD Bacata and Aeropuerto Business Hub. AKA Wall Street netted 60 investors and $25M in equity, and now the JV of Prodigy Networks, Korman Communities, and Shorewood Real Estate Group will invest $40M to redevelop the property, which it bought last month for $110M. And 17 John just opened for funding with Real Estate Participations (REPs) going for $100k each, he says. Previously, investors with that type of profile were limited to buying residential condo units to rent out, only to find they were management intensive, unpredictable, and offered 3% to 4% returns at best. "As long as a third-party fiduciary is involved, investors in crowdfunded projects could see the same returns as an owner that put in $100M does."  Rodrigo says crowdfunding also benefits a hotel beyond the initial investment. Investors in a crowdfunded hotel project will stay there, hold their conferences and events there, and recommend it to everyone they know, as they want the hotel to be successful. They'll also likely be loyal to a specific hotel brand if it has locations elsewhere. (Above is AKA Wall Street; the brand is also found in DC, Philly, LA, and London.) While many investors are domestic, crowdfunding also offers a chance for international investors to stick a foot in prime markets and assets. "If you're from Argentina or Italy with $100k, that once limited you to buying a condo in Tampa," he says. Rodrigo is looking for projects in other major markets, like DC and Chicago. When not crowdfunding, you can find him spending time with his wife and three kids or running along Manhattan's West Side Highway. |
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NYC: A Landmark Reinvented Our NYC reporter recently visited GFI Capital Resources prez and GB Lodging co-founder Allen Gross, owner of 5 Beekman St, which has been boarded up for 20 years. The 130-year-old, Landmarked property is undergoing a $350M reinvention, including a 200k SF new tower, Allen tells us. (Hopefully he's called the Ghostbusters... just to be safe.) It'll deliver in July 2015 with 287 hotel rooms spread across the existing 150k SF Temple Court building and the first 19 floors of the new tower. Condos will start on the 20th floor of the new building. The project also will include 6,000 SF of indoor and outdoor event space and the kind of major-league restaurants that make for good client dinners. There isn't much in either of those categories in Downtown Manhattan, Allen says.  We can't show you the new look yet (Allen's a man of mystery until the property is ready), but we snapped the scaffolding surrounding the massive reconstruction. He tells us the hotel's design will be timeless, as if it's been a hotel since its delivery in 1881 (it was built as an imitation of London's old boys clubs). Along with the Four Seasons that broke ground this week a block away, it'll capitalize on weekend guests; 15 million annual visitors are projected Downtown, drawn in not just by the perennial Wall Street bull and the Statue of Liberty but by the WTC, 9/11 Museum, South Street Seaport, and the birth of Downtown retail.  The project is a career definer, Allen says, as he's been working Downtown since 1991 and has watched its transformation. So no wonder he got three paintings of 5 Beekman St for his birthday. His kids commissioned the painting behind him in the photo we snapped in his office at top. It's the view from the atrium, which had been boxed off for 45 years and offers skyward views of the Woolworth Building, Frank Gehry's 8 Spruce St, and 1 WTC. Meanwhile, the Ace Hotel GM and his wife commissioned the above painting. And while the artist was outside working on it, GFI hotel development head Eric Bass passed by and liked it so much he pre-ordered a lithograph, which hangs at Allen's home. All he was missing, Allen says, was a birthday cake in the shape of the building. |
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LA: Rebounding Market Equals Hot Deals |
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 On Dec. 19, we'll be holding our third annual SoCal Hospitality Summit, and our LA reporter caught up with two of our panelists beforehand. Sonnenblick Development chairman Bob Sonnenblick (looking festive at the Marina Del Rey boat parade) is breaking ground in Q2 on the USC Hyatt House, a $75M, 200-key hotel on the USC Medical Center campus. He's also building a $40M Hyatt Place inside the new terminal at Sacramento International Airport. And Bob's got other projects in the hopper, including a 330-room Loews in Cathedral City and a 335-room resort in Pinehurst, NC. He's actively looking for land for additional hotels, especially waterfront sites in the LA area. |
 CBRE SVP Rod Apodaca (snapped at last year's Summit) says the rebounding hotel market continues to show strong numbers, and it makes sense to invest in new construction. He's seeing development from LA County down to San Diego. Case in point: China's Shanghai Greenland is under construction on the Metropolis site in South Park, which it bought from IDS. In addition, Rod has a number of deals under contract from California to Arizona, including ultra-luxury product. Given high asking prices for land, he notes, the difficulty is finding available product. (We feel the same way when we lose the hotel pieces in Monopoly.) |
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CHICAGO: Lending Leaves Small Hotels BehindOlder Chicago-area hotels not planning a major reno or rebranding to keep up with new construction will struggle significantly, but hotel financing options $10M-and-under are tight due to a limited number of lenders that'll consider this asset class, says Thorofare Capital SVP Felix Gutnikov (right, at ICSC RECon with CEO Kevin Miller). Hotel owners are turning to the private capital markets for one- to three-year, short-term renovation money, but it's an easier get for regional operators versus mom and pops. Thorofare just closed an $11.5M loan in one week against a 242-room Sheraton in Lisle/Naperville (formerly a Wyndham) for new owner Vinayaka Hospitality Lisle, making the property a prime CMBS target next year once it's stabilized, he says. |
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