A Renzo Piano-designed luxury condominium at 100 Varick Street could become the first major New York development to get debt, equity and mezzanine financing all from China. The developers’ turn to the country comes as U.S. lenders increasingly shy away from funding luxury condo projects.
Bizzi & Partners Development, Halpern Real Estate Ventures and Aronov Development are raising EB-5 funds for their 115-unit, 320,000 square-foot luxury condo development in Soho, according to a press release from Wailian Overseas Consulting Group, a prominent Chinese EB-5 placement agency. The developers already secured a $320 million construction loan from Bank of China and a $135 million equity investment from Cindat, the U.S. subsidiary of Chinese investment firm Cinda Asset Management.
It wasn’t immediately clear how much money the developers are raising through the EB-5 program, which offers foreigners U.S. visas in return for investments. Bizzi & Partners declined to comment, while Halpern and Aronov did not respond to requests for comment.
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EB-5 investors typically provide mezzanine financing. If Bizzi and its partners manage to raise the funds, 100 Varick would become the first major New York development to get all three major layers of the capital stack – debt, mezzanine and equity – from Chinese sources. Presumably Bizzi, Aronov and Halpern hold equity stakes in the project, meaning it still won’t be entirely Chinese-funded.
Other New York condo projects have considerable investment from China. Vornado Realty Trust, for example, secured senior and mezzanine financing for its luxury development at 220 Central Park South from Bank of China, but not equity. RFR Realty and China Vanke’s condo development 100 East 53rd Street secured a $140 million equity investment from China Cinda and a $360 million construction loan from the Industrial and Commercial Bank of China, but to TRD‘s knowledge hasn’t raised any mezzanine financing from China.
Meanwhile, Chinese developers in New York tend to mix in domestic financing. Xinyuan Real Estate, for example, secured a $165 million construction loan from Fortress Investment Group for its Oosten condo development at 429 Kent Avenue in Williamsburg.
As The Real Deal recently reported, domestic lenders are increasingly shying away from financing luxury developments amid slowing condo sales and turbulence in global capital markets.
“Everyone’s a little worried,” Michael Stoler, a managing director at investment firm Madison Realty Capital, told TRD in February. “With anything at $2,500 (per square foot) or more, lenders are very cautious.”