A government program which grants EB-5 visas to foreigners who invest $1,000,000 in an American business (or at least $500,000 in a 'targeted employment area', for example a high unemployment or rural area), has become an increasingly popular source of financing for hotel developers in New York City and across the country. For example, when Marriott International opened a new hotel in downtown Seattle in 2008, the company's developers didn't sell bonds, take out a mortgage or tap other traditional forms of financing.
Instead, they raised the bulk of the money for the $88 million project from international investors in exchange for visas. Since that deal, the company has endorsed 14 projects that use EB-5 financing, including the downtown Milwaukee Marriott, a Courtyard Marriott in Midtown Manhattan and a $168 million hotel near the Staples Center in Los Angeles. Other hotel developers are also following suit. Developers for Hilton Worldwide, Hyatt Hotels and Starwood Hotels & Resorts Worldwide have turned to EB-5 financing over the last 18 months.
In addition, hotel mogul Sam Nazarian's Park Avenue South hotel (at 444 Park Avenue South) and Texas-based Felcor Lodging Trust's $230 million redevelopment of the Knickerbocker Hotel (located at 1466 Broadway), are both relying heavily on the program for funding. As these well-known hoteliers have jumped on board, they have helped improve the credibility of the program, which has been around since 1990. In the aftermath of the 2008 financial crisis, small hotel developers started flocking to it.
The government program offers inexpensive capital in an otherwise tight credit ridden market. EB-5 investors frequently accept returns of less than 4%, where interest rates on debt can range from 6% to 10% and equity partners want 20% returns. To date, the government has issued roughly 3,000 temporary visas through the program, up from 640 in 2008. Most have gone to Chinese immigrants, with a number handed out to investors in Britain, India, the Netherlands and South Korea.
New York's Central Park West continues to attract Hollywood
Actor David Duchovny, who is best known for his leading role in the 'X Files' and who more recently starred in the Showtime series 'Californication', is in contract to purchase an apartment inside the Ardsley, an exclusive Central Park West co-op. The Ardsley, located at 92nd Street, has a mixed record when it comes to accepting celebrities. Barbra Streisand once had a penthouse there, but Mariah Carey was rejected by the board when she tried to buy Streisand's apartment in 1999.
The apartment that Duchovny is vying for is a 19th-floor corner unit that has views of the reservoir in Central Park, a fireplace and a terrace. The three-bedroom, three-bathroom unit is listed for $6.25 million by Jennifer Callahan and Kirk Henckels of Stribling & Associates. The unit last sold in 2001 for $3.25 million. This is it for today, dear readers. I am available at rava@ravarealty.com to answer your questions and provide you with more information on New York City and U.S. real estate.
• Riccardo Ravasini is a real estate maven and has been an active agent in New York since 2008. He grew up in Italy where he studied business and finance in Milan before moving to New York. He enjoys assisting people in the search for the perfect rental apartment, as well as international investors looking for investment properties. Contact him at rava@ravarealty.com.
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