Itâs not a good week for gay real estate: First we told you about the alleged sale of Fire Island Pinesâ famed pavilion. Now it appears the Out NYC, New Yorkâs brand spanking new gay urban resort, is still looking for investors.
Our sister in gossip Michael Musto posted an email he was sent from someone invited to invest shortly before the hotelâs ribbon-cutting on March 1:
âNow that XL Nightclub is open and has exceeded expectations, with the hotel opening on March 1st, and recently an abundance of favorable press, a handful of our investors have increased their investment in recent weeks.
âAdditionally, we have had numerous unsolicited inquiries about investing that we have since our last round closed. Although we are fully funded, as a result of this wave of investor interest, the Sponsor (Ian) is willing to slightly reduce his large exposure at his cost for diversification reasons. I wanted to reach out to you once more to see if you have any renewed interest.
âInvestments in the project have ranged between $100K and $1MM. We are offering the exact same deal terms as last year (including a waived sponsor promote until you get all your money back) with an obvious much smaller amount of risk associated now that the project is fully funded and successful.
âNew investors will come in as preferred equity investors with a 10% preferred dividend plus a guarantee of all money back before the Sponsor gets any promote. Over the 8 years that we have projected out cash flow, we expect cash returns with low leverage to average in the teens.â
Weâre not real-estate mavens (please, we can barely afford the rent on our shoebox studio in North Siberia), but if youâre fully funded and doing gangbusters, why do you need to hustle for more investors?
We attended the Out NYCâs grand opening at the beginning of the month and, while we were impressed with the space overall, major portions of the hotel werenât completedâeven though it was already welcoming guests.
How about we take this to the next level?
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XL, the nightclub portion of Out NYC that opened earlier this year, has had some issues as well: While the weekend parties have been drawing massive crowds (and already spawning noise complaints), weekday events have been less successfulâleading to parties starting up and shuttering in a matter of a week or two.
We hope these are just growing pains for this daring venture.
Photo: JJ Keyes
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Les
While most can not afford to throw $100k at an investment you would be surprised
at how many of your readers can and will even if just to make an investment for a
cause. So your reporting probably just added a couple investors who hertofore
have been in the dark about the opportunity. They are not dumb. They will check it out.
CBRad
@Les: Yeah right. WHICH Queerty readers ?
Gay guy from New York
I’ve heard of a hotel being called an “Inn,” but never an “Out!”
Mike
@Les: I need angel investors for my business. Who are they? đ