New York's Times Square is still a fave with foreign investors
US is trying to draw foreign investors with visas in exchange for job creation
New York: Times Square hasn't lost its cachet with foreign investors.
TSX Broadway, a $2.5 billion mixed-use project in the heart of Manhattan, has attracted more than $100 million in the past week from foreign investors who back real estate developments in return for US visas, according to a person familiar with the matter.
The new capital comes after developers of the project at 1568 Broadway - which includes retail space, a hotel and an elevated stage for live events - modified their loan documents with senior lender Goldman Sachs Group Inc. to allow for an additional $250 million in EB-5 loans.
"The project continues to elicit excitement from investors and we are pleased to have the flexibility to raise additional capital and develop an even more dynamic and valuable property for all of our stakeholders," David Orowitz, managing director at L&L Holding Co., one of the lead partners in the TSX project, said.
Betting on a comeback
Commercial property investment has plummeted in Manhattan, with retail properties, offices and hotels battered by social distancing measures. Times Square in particular has taken a major hit from a pandemic that has curtailed travel, keeping the flood of tourists and office workers who typicality swamp the area at home.
TSX is at least two years from being completed. L&L Holding Co., along with partner Fortress Investment Group, are touting the project as the "future of Times Square" with more than 600 hotel rooms and the only permanent outdoor stage in the area.
Foreign funding
Goldman Sachs is a senior lender for TSX, providing a $1.1 billion construction loan in 2018. US Immigration Fund, which bundles EB-5 money from foreign investors, had already provided a mezzanine loan of $494 million two years ago for the project.
The programme helps foreign investors win access to visas in exchange for backing job-creating projects. It was a sleepy programme until the financial crisis, when developers looked overseas as traditional sources of domestic capital dried up.
EB-5 was meant to promote investment in rural areas, as well as urban locales with high unemployment. But gerrymandered districts allowed funding to flow to developments like Hudson Yards and an Extell Development Co. tower on Manhattan's Billionaire's Row.
The deals haven't always worked out for foreign investors, who can wait years to see a return on their capital. This summer, EB-5 investors who backed Hudson Yards called for arbitration to pressure developer Related Cos. into paying them back.