When will the first round of Atlantic Yards EB-5 investors be paid back? It's been (at least) seven years

Given discussion of EB-5 investors in various projects who want to get their money back, well, what about the first round of Atlantic Yards EB-5 investors, the 456 people, mostly from China (plus a small number from South Korea), who invested $500,000 each around 2010/2011?

The deadline seems to be approaching, if it hasn't already been surpassed. As I wrote in December 2011, the maturity date was the fifth anniversary of the final advance of loan funds, with a potential two-year extension, as indicated in the screenshot below.

When was the final advance of loan funds? Unclear. 

The loan agreement was dated 10/5/10 and amended 5/27/11, as indicated in the screenshot below. It's unclear if that amendment--or any later, undisclosed, amendment--changed the timetable.

If the final advance of loan funds was in 2010, well, that's more than seven years. But maybe it was slightly later.

The Atlantic Yards funding was officially announced 7/15/11, by the New York City Regional Center (NYCRC), the private middleman firm authorized to raise such funds (and reap fees and profits while doing so). No repayment has been announced.

It will be seven years since then, as of this weekend. According to a 6/21/18 press release from the NYCRC, among the 15 "examples of completed projects utilizing EB-5 capital from NYCRC-managed funds" was "Key components of the Atlantic Yards redevelopment in Brooklyn."

Size of the loan, collateral sites

Note that the original plan was for $249 million in funding, which later became $228 million, for reasons never publicly explained. That was divided into mortgages associated with multiple project site lots as collateral:

• $24,736,928 = B12
• $26,908,623 = B11 [now 550 Vanderbilt]
• $47,995,002 = B13/B14 [B14 has been severed, now 535 Carlton]
• $60,322,442 = B4
• $68,037,005 = B1

That raises some interesting questions. It's unclear whether either of those two buildings are delivering revenue to pay back the investors. 

Moreover, the B1 site is no longer in play, and the collateral--at least for now--is iffy: developer Greenland Forest City Partners wants to shift the "entitlement" across the street to Site 5, currently home to Modell's and P.C. Richard. 

While it's likely that Empire State Development, the state authority overseeing/shepherding Atlantic Yards/Pacific Park, will agree, nothing has been approved.

Questions about the loan

Because the law "requires that investments remain 'at risk' in an active project until all of that project’s investors’ visas are approved," as the Real Deal noted, that may mean that the investors money must be redeployed into other projects.

Are all the visas approved? Unclear. On 7/29/14, the NYCRC announced that federal authorities had issued the first I-829 petition approvals to EB-5 investors in Atlantic Yards. That removes the conditional status and deems the investor to be a lawful permanent resident of the United States. But there's been no announcement of how many investors were covered.

As I've written, the process is legal but questionable: if the immigrant investors' money simply went to pay back a short-term, high-interest land loan, why should it have qualified as a "job-creating investment" in the first place? 

As I wrote, evidence from city property records suggested that the large majority of the cheaper capital was used to replace that existing loan from Gramercy Capital rather than be used, as Forest City Ratner officials once said, to build a railyard and other infrastructure.

Forest City, the project's original developer, got a low-interest loan--likely 4-5%, as the city had advertised for similar endeavors. It was an interest-only loan, if consistent with other NYCRC fundraising, so that implies modest annual payments. (For $228 million, 5% a year means $11.4 million.)

In this case, among the immigrant investors, the majority, from China, get no interest. Instead they got cards. The NYCRC kept the spread--though it also apparently used some of that to grease the pipeline from migration agents in China.

What next?

Should Forest City (now, Greenland Forest City?) not pay back the loan in seven years, those immigrant investors would presumably have to recoup their investment by selling those development rights. That would presumably be a very unwieldy process. I suspect many would rather just get their money back.

Other projects with funds raised by the NYCRC have been paid back. For example, a $60 million round of fundraising for the Brooklyn Navy Yard, announced in May 2010, was repaid by December 2016. Also at the Navy Yard, a $65 million round of fundraising for Steiner Studios, announced in September 2010, was repaid in July 2017.

As noted, the Atlantic Yards funding was officially announced in July 2011. Stay tuned for some seven-year updates. Or some questionable silence.