Nick Mastroianni’s EB-5 firm signals intent to foreclose on 125 Greenwich

Few buildings in New York City have had a more complicated and troubled construction history as 125 Greenwich.  Now the Downtown luxury residential tower – which has attracted some of the largest names in real estate – is facing a potential foreclosure proceeding.

Nick Mastroianni, whose U.S. Immigration Fund EB-5 firm provided a mezzanine loan on the project, sent preliminary paperwork this week to signal a foreclosure proceeding to the project’s developers, according to four people with knowledge of the project. Those people said that a foreclosure had not commenced.

The Rafael Viñoly-designed building topped out at 88 floors in March, marking a mild victory for those involved in a project that has faced public disputes as it rose out of the ground.  In 2014, developer Michael Shvo partnered with Bizzi & Partners, Howard Lorber’s New Valley and the late Howard Michaels to purchase the land from Fisher Brothers and Witkoff Group for $180 million.

The developers financed the purchase with a $240 million acquisition and pre-development loan backed by Singapore-based United Overseas Bank. But as the project stalled, the team brought in Mastroianni to provide a $194 million mezzanine loan on the project in 2017 through his USIF, which sources investments from overseas individuals looking to obtain a green card under the EB-5 visa program.

From there, it took almost two years to secure a $473 million construction loan, which ultimately closed in September last year following a series of lawsuits and infighting amongst the partners. That loan was led by a group of Asian lenders including United Overseas Bank and Chinese-government owned conglomerate China Cinda Asset Management.

One condition of the construction loan was that it would be released in tranches as the development team met certain sales benchmarks. But sales at the building have crawled, and the lenders have not released $195 million to the developers, according to one person.

Within the past six weeks, the borrowers considered an option to release the debt by selling a group of apartments to China Cindat (which is part-owned by China Cinda and is an equity partner in the project) thus satisfying the construction loan’s sales benchmark. But that effort was unsuccessful, according to multiple sources.

Without the necessary capital, the current equity partners on the project – a consortium of Davide Bizzi’s Bizzi & Partners, Howard Lorber’s New Valley, Carlton Group and China Cindat – defaulted on loan repayments at the start of June.

If Mastroianni goes forward with a foreclosure proceeding, those equity partners will lose $70 million, and China Cindat will additionally lose $60 million in preferred equity. The preliminary notice, which allows for a foreclosure proceeding to be brought under the Uniform Commercial Code, would take several weeks to be processed.

Representatives for New Valley and Bizzi & Partners and the lending consortium declined to comment. Mastroianni and China Cindat did not respond to a request for comment.

The project’s projected sellout is currently at $856 million, according to the state Attorney General’s office.