Extell turns to immigrant investor funding to support its International Gem Tower in the Diamond District
International Gem Tower, a long-gestating--and apparently, under-financed--tower in the Diamond District of Manhattan, on 47th Street between Fifth and Sixth Avenues.
It's established the Extell New York Regional Center, with federal approval. The web site is translated into Chinese, Spanish, and Russian, indicating the home languages of the likely investors. It's unclear how much money is sought, but it has begun to accelerate marketing efforts in China, hiring consultant Brian Su.
EB-5 investors, who invest in a job-creating project in exchange for green cards for themselves, must put up $1 million or only $500,000 if the project's located in a Targeted Employment Area (TEA), with 150% of the national unemployment rate.
Almost all investors seek projects that are in TEAs, so to draw such a TEA--a string of census tracts that includes the project site --likely will require some gerrymandering, as with the Atlantic Yards TEA.
The 34-story tower was approved in 2006, and the site was excavated, with a foundation poured, in 2009, the New York Times reported 5/19/09,
The web site, which seems stale, said the lower tower floors are supposed to be completed by first quarter 2012 (see graphic below), though a 3/31/11 press release stated, without acknowledging that the goalposts had moved, that "delivery is still expected 2nd half of 2012."
How can the project stay on schedule without construction financing? The FAQ answers:
The development is being funded through partner equity until financing is secured. Excavation and foundations are complete and as of August 2009 a crane has been delivered to the site and construction has commenced.
In recent weeks, Extell executed contracts to buy the steel and the glass curtain wall for the building, company executives said, and they plan to start vertical construction by March.Now another source of construction financing will be sought.
Should construction indeed begin—the building has previously moved slower than its developers have pledged—it would represent a risky and unusual move on a large, mostly speculative tower at a time when new construction of office buildings has virtually ground to a halt citywide.
Developers rarely build without loans to finance construction given the high costs and risks. Banks have been particularly cautious in making such loans in the past three years, requiring landlords to have tenants committed to lease major portions of buildings at healthy rents.