L&L, Fortress’ $3B Times Square development faces debt trouble

Nick Mastroianni’s USIF looks to sell $543M mezz loan on TSX Broadway

L&L Holding’s Robert Lapidus and USIF’s Nick Mastroianni with 1568 Broadway
L&L Holding’s Robert Lapidus and USIF’s Nick Mastroianni with 1568 Broadway (L&L Holding, Nicholas Mastroianni, Google Maps, Getty)

The $3 billion TSX Broadway development in Times Square — one of the Big Apple’s most ambitious projects of the past decade — is struggling under the weight of a half-billion-dollar loan.

L&L Holding and Fortress Investment Group failed to repay their $543 million mezzanine loan backing the 47-story hotel, LED billboard, performance space and retail project when it matured July 1, The Real Deal has learned.

The borrowers technically haven’t defaulted, according to a source familiar with the debt, as their lender, Nick Mastroianni’s U.S. Immigration Fund, has granted an extension. But the loan needs to be reworked, and Mastroianni’s EB-5 firm is now looking to either sell the debt outright or bring in a new partner.

A buyer would “have the opportunity to control any work-out or other resolution path,” according to marketing materials for the debt.

Representatives for L&L, Fortress and USIF did not respond to requests for comment. A Newmark team led by Jordan Roeschlaub, Adam Spies and Dustin Stolly is marketing the loan for sale. A representative for the brokers confirmed their role in the sale but declined to comment further.

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The 550,000-square-foot tower at 1568 Broadway has a capital stack totaling $2.7 billion. That most likely makes it the most valuable piece of real estate in New York to fall victim to the Federal Reserve board’s rate hikes — which, with a few exceptions, have wreaked havoc on anyone with a maturing loan.

The TSX project has been no small endeavor. It involved physically lifting the historic Place Theater 30 feet in the air above the street level to make way for new retail space. 

Earlier this month, rapper Post Malone helped celebrate the project’s new performance space with an 18-minute set. The property includes 24,000 square feet of LED signage and a 669-room Tempo hotel from Hilton, which is set to open later this year.

TSX Broadway is one of two mega hotel projects in Times Square. The other, the 452-room Times Square Edition hotel, was foreclosed on in 2021.

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