Using the crowdfunding platform EarlyShares, Shelbourne Capital is launching an opportunity to invest in the conversion of the Quincy Hotel in Washington D.C. into Hotel RL, Red Lion’s boutique brand. Shelbourne is looking to raise $3,540,000 total, and is requiring a minimum investment of $25,000.
Joe Fox, CEO, Shelbourne Capital, says he thought investing in a hotel in a market like D.C. would be attractive to the crowdfunding community.
“We’ve, actually, been looking at it over the past year as far as trying to find the right group and the right deal to take into the crowdfunding channel,” Fox says. “We decided that Washington D.C. would be a good one, because it’s a very high profile asset in a high profile city.”
Including this property, Shelbourne Capital owns 15 hotels with Red Lion, Fox says. This acquisition presented the chance to test crowdfunding.
“We bought the asset, and we’re okay with it,” Fox says. “It’s really more of an experiment to see, if in fact, this platform would be successful raising capital for commercial real estate transactions.”
The property has already been converted to Hotel RL and is taking reservations. Additionally, Red Lion’s operational and marketing systems are at play.
Hotel RL is a full-service, 99-room property targeting the “millennial mindset,” and is located in D.C.’s Golden Triangle. Plans for the property include a nearly $3 million overhaul of the lobby and common areas; employing a marketing program that targets high-rated transient to help increase the hotel’s daily average rate; enhancing operational efficiency and profit margins; and increasing wallet by “fully utilizing and re-tenanting the Mackay’s restaurant with a higher paying tenant” that better serves the RL brand.
This jury is still out on whether the experiment will be successful, Fox says.
“It’s a big deal for individual investors, because, quite frankly, a lot of these investors would have no access to someone like me to invest through,” Fox says. “They might be able to get into a fund through their broker, but proprietary deals…that they can feel, see, and touch that are right before them. That’s unique. Certainly, deals have gotten done before, but I’m saying crowdfunding, in general, is a very new phenomena for investing and specifically real estate investing.”