Prodigy, Korman nix condo plans at 234 East 46th Street
UN tower to operate as extended-stay hotel instead
Mere months after launching sales at Manhattan’s first crowdfunded condo tower, Prodigy Network and Korman Communities backtracked on their plans and will now operate the building as an extended-stay hotel, Prodigy’s founder Rodrigo Nino told The Real Deal.
Prodigy had originally planned to run the 82,000-square-foot building at 234 East 46th Street, dubbed AKA United Nations, as an extended stay hotel when it bought a majority stake in September 2014. Korman is Prodigy’s partner on the project and operates the building. In September, the owners switched strategy and launched condo sales at the tower.
In December, Prodigy and Korman abandoned those plans. They refinanced the property with a $81 million loan from CIBC, according to public records, and brought in a foreign institution as an equity investor. This means the 100-plus investors who bought a total of $12 million in equity in the building through Prodigy’s crowdfunding platform are now paid back, likely along with a hefty profit. The new financing values the property at around $125 million, up from around $100 million two years ago.
Nino said the change in strategy had nothing to do with weak demand for condos. Instead, he claimed, an unexpectedly cheap refinancing offer made keeping the property as rentals more profitable. “When we opened the property, the demand for that type of cash-flowing asset in New York enabled us to get financing that made the condo exit less attractive than recapitalizing the deal,” Nino said, adding that ditching the condo route also brought substantial tax savings.
In its July issue, The Real Deal profiled Nino and Prodigy.