Nick Mastroianni’s U.S. Immigration Fund claims entities tied to Fortress Investment Group and L&L Holding Company wrongly transferred control of a 46-story tower in Times Square and are now personally on the hook for upwards of $890 million.
USIF on Wednesday filed a lawsuit against various Fortress entities and L&L, claiming that the developers violated terms of a mezzanine loan agreement when they transferred control of TSX Broadway to a group of lenders led by Goldman Sachs in 2024.
Under the loan agreement, the developers needed prior written consent from USIF before making such a move, according to the lawsuit. Failing that, the developers triggered a “bad boy” guarantee holding the Fortress and L&L entities personally liable for a $520 million loan, plus at least $370 million in interest and an unspecified amount of damages, the complaint alleges.
A spokesperson for Fortress said the firm believes the lawsuit is “without merit.” L&L and Goldman declined to comment.
USIF, which pooled funds raised through the cash-for-visas EB-5 program to provide the mezzanine loan, claims that the borrowers have failed to make interest payments since May 2023.
The developers received a $1.1 billion construction loan from Goldman in 2018. The mixed-used building at 1568 Broadway was completed in 2024. It features a Hilton-branded Tempo hotel, 75,000 square feet of retail space and the Palace Theatre.
When Fortress and L&L failed to repay their mezzanine loan by its July 2023 maturity date, USIF indicated that it would either sell the debt or bring on a new partner.
The lawsuit alleges that USIF was “lulled and misled” into thinking that as the developers struggled to repay their debt, they were trying to restructure the project’s entire financing package.
Instead, the developers were quietly working to hand the keys to Goldman to avoid foreclosure and tens of millions of dollars in transfer taxes, which would have otherwise kicked in.
The developers and Goldman inked an amendment to their loan agreement in December 2023 that added provisions allowing the lender to move forward with a deed or assignment in lieu of foreclosure of the property. They also signed a management transition agreement permitting Goldman to name a new manager of the building.
That management agreement was held in escrow until it was released and became effective in August 2024, according to the lawsuit. USIF claims it was kept in the dark and simply provided redacted documents that hid the true nature of the amended loan agreement.
It’s unclear if Fortress and L&L have yet executed the deed-in-lieu documents. As for the management agreement, the lawsuit points to a Bloomberg story from 2024, which reported that after failing to repay the senior lender, a consortium of lenders led by Goldman took control of the building and named SL Green Realty as manager.
USIF alleges, citing intel from a “former senior officer of Fortress,” that the deal with Goldman was “designed and implemented in order to deprive [USIF] of their bargained-for rights.”
Fortress is involved with USIF in other projects. The company is part of a joint venture developing the remaining sites at Pacific Park in Brooklyn, though they, alongside Greenland USA, do not have an active role in managing the project.
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