Extell seeking up to $200M in EB-5 funding for LES condo

Extell Development isn’t just giving Asian buyers the first crack at buying apartments at its forthcoming condominium in Lower Manhattan. The firm is eyeing Asian investment in the project, dubbed One Manhattan Square, through the EB-5 visa program.

The Gary Barnett-led firm is hoping to raise between $100 million and $200 million for the 815-unit project through the popular – and controversial – program, which offers foreign investors a U.S. green card in exchange for a $500,000 investment.

Marketing materials for One Manhattan Square that appeared on a Vietnamese website indicated the EB-5 funds could account for seven percent to 14 percent of the project’s total estimated cost of $1.4 billion.

The developer did not immediately return a call seeking comment.

Extell, which has its own in-house regional center, previously tapped EB-5 investors to raise $75 million for the International Gem Tower at 50 West 47th Street in 2011. More recently, Barnett seemed to temper his enthusiasm for EB-5 at an event hosted by the China General Chamber of Commerce in 2015.

“It’s not quite as simple as it seems,” he said, noting that investors’ “primary focus is to be able to get legal residency in the U.S., but they absolutely want to get paid back.”

Perhaps Barnett now hopes to attract EB-5 investors who will back One Manhattan Square, and even consider living there. Extell launched marketing for the condo tower in Asia, giving buyers in China, Malaysia and Singapore first dibs on the units.

One Manhattan Square, located at 252 South Street, is one of Extell’s largest developments to date and will rise 80 stories and hold 815 units. Extell bought the site, a former Pathmark, in 2013 for a reported $175 million, which included a $47 million buyback of Pathmark’s lease.

Last year, the developer obtained a $150 million bridge loan for One Manhattan Square from Deutsche Bank, and Extell was reportedly in talks with the bank for an $888 million construction loan, according to published reports.

This month, Scott Rechler’s RXR Realty offered $463 million in financing for three Extell projects, including the South Street condo, in exchange for preferred equity stakes in the projects.

Extell has faced a few speed bumps with the project.

In January, the developer dropped One Manhattan Square’s total sellout price by $207.3 million to $1.87 billion. “We’re going to be very conservative here,” Barnett told The Real Deal at the time. Prices at the development, which is expected to be complete in 2019, will start around $1 million.

In February, the Department of Buildings temporarily halted work at the tower, after residents of an adjacent building complained that construction at One Manhattan Square was causing cracks in her walls.