EB-5 is still A-OK, it seems.
Unnamed foreigners are using the federal program to invest $100 million into TSX Broadway, the $2.5 billion Times Square project led by L&L Holding, SoftBank-owned Fortress Investment Group and Maefield Development, Bloomberg reported.
Modified loan documents filed last week in cooperation with TSX Broadway’s senior lender, Goldman Sachs, allow for another $250 million in EB-5 money, which L&L managing director David Orowitz told Bloomberg would allow the developers to make the mixed-use project “more dynamic and valuable.”
He did not specify how the project, at 1568 Broadway, would be changed. The new $100 million represents roughly 4 percent of the project’s total costs.
L&L co-founders David Levinson and Robert Lapidus, and Fortress executives Peter Briger and Dean Dakolias, have personal investments in the 46-story project, which began construction in January 2019 and is expected to open in 2023.
Plans call for 75,000 square feet of retail, a 669-room hotel and a stage facing Times Square for live events.
EB-5 purportedly offers visas in exchange for investment in rural and high-unemployment areas, but liberally drawn districts make Times Square and other pricey locales eligible. The program became popular during the financial crisis when other sources of investment seized up, and may be coming back into favor after tailing off.
But investors sometimes sour on the program. More than 100 Chinese EB-5 investors in a Maefield skyscraper at 701 Seventh Avenue sued in 2018 to stop their money from being redeployed into TSX Broadway.
Chinese EB-5 investors in Hudson Yards have also been at odds with that megaproject’s developer, Related Companies. Thirty people who had put in $500,000 apiece — but failed to check the fine print — demanded arbitration in August, two months after Related announced that it would stop paying distributions on EB-5 investments in the project.
[Bloomberg] — Erik Engquist