Skip to main content

Featured Post

Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

All of Nassau Coliseum's $100M debt is with EB-5 investors. They'll have to make some deal for the arena to re-open. But they might not get (all) their money back.

There's an interesting passage in Newsday editorial columnist Randi Marshall's 7/10/20 essay, Is this a way forward for the Coliseum?, regarding the negotiations between Nassau County, the arena owner, and the operator/leaseholder, Mikhail Prokhorov's Onexim Sports & Entertainment, which owes nearly $2.1 million in back rent.

The county believes the default notice will "encourage Onexim’s lender — a group known as Nassau Coliseum Funding 100, LLC — to come to the table and work with the county, Onexim, and Hub master developer Rechler on finding a way forward."

In other words, Onexim's entire $100 million debt--which is said to come due next year--is with 200 immigrant investors under the EB-5 program, bundled Nassau Coliseum Funding 100, an arm of the U.S. Immigration Fund, the largest--and one of the most controversial--regional centers, or loan pakcagers. (I'd previously assumed that was $90 million, as once announced.)

Writes Marshall:
Still, the county expects Mastroianni, and the consortium of EB-5 lenders who are awaiting their payments, will be key to making the deal that could bring the Islanders home next season — and to moving forward with the big-picture economic development Nassau needs.
Big unknowns

Here's the thing. Without a look at the offering plan and other documents regarding the EB-5 deal, we don't know whether there's an extension, or forbearance period for the debt. That could mean a limbo period.

After all, the immigrant investors accept little or no interest in exchange for the green cards, and the expectation that they will get their $500,000 back.

But the last thing those investors could do is take over the lease as active managers. They would have make a new deal with a new operator, likely--I'd guess--on less favorable terms, with a longer and/or diminished payment period. After all, the Coliseum isn't generating any revenue to pay them back.

The project web site suggests that all approvals are in place for the green cards. That would mean that immigration risk was overcome. However, the other component of EB-5 risk--investment risk--remains very, very real.

Comments