Yet another piece of the Prodigy Network’s crowdfunded portfolio is heading to foreclosure.
Vanbarton Group has initiated the UCC foreclosure auction process for a $36 million junior mezzanine loan at 17 John Street, according to marketing materials reviewed by The Real Deal. The property, a co-working/co-living facility known as the Assemblage John Street, was developed by Prodigy in partnership with Shorewood Real Estate Group. Vanbarton, a real estate investment and advisory firm, issued the loan in 2018.
Eastdil Secured is marketing the auction, which is scheduled for May 12, on behalf of Vanbarton. Eastdil declined to comment. Vanbarton did not immediately return a request for comment.
The auction announcement comes three weeks after Prodigy filed for Chapter 7 bankruptcy, and nearly a year after the crowdfunding network’s founder Rodrigo Niño died. The company is facing more than a dozen lawsuits filed by investors who reportedly poured more than $690 million into its investment platform.
A lawyer for Prodigy Network did not respond to a request for comment.
More than $50 million of equity for the Assemblage John Street development came from small-time investors who were lured by the promise of higher returns. According to the investor materials reviewed by The Real Deal, the project had struggled to break even for about a year after it opened in April 2018. The balance sheet finally turned positive in the second quarter of 2019, but income was still well below what was projected. The investor document cited oversupply in the local hotel market as part of the reason for the facility’s underwhelming performance.
Then the pandemic decimated many coworking and coliving operators, including the Assemblage. In addition to the John Street property, it had two other locations: NoMad House at 114 East 25th Street and Park Avenue South House at 331 Park Ave South. Both were co-developed by Prodigy and Shorewood, and last year, they were acquired by Arbor Realty Trust, who was a lender to those projects. The Assemblage and Shorewood did not respond to a request for comment.
In December, Vanbarton Group, as a mezzanine lender, took control of Prodigy’s AKA Wall Street, an extended-stay hotel at 84 William Street.