L.A. nightclub and hotel guru Sam Nazarian has set his sights on the Midtown South submarket. As the Wall Street Journal reported recently, Mr. Nazarian will develop a boutique hotel at 444 Park Avenue South, along with his partner, New York-based Moin Development Corp.
Now The Mortgage Observer has learned that the financing for the project was arranged by HKS Capital Partners, in a mix of two types of financings—one of which, an EB-5, was a first for the firm.
“We actually secured the financing, which was a blend of a first mortgage from a conventional local bank in a construction facility and we paired it with an EB-5 financing structure,” said Ayush Kapahi, a partner at HKS who worked on the deal. The investors behind the EB-5 are Chinese, Mr. Kapahi said. “It just so happens that the Chinese are heavily, heavily the ones jumping on board at this point because it does require for a family to be able to invest $500,000 at a given time, so you need to have somewhat of a deep pocket in order to be able to pull off the investment.”
HKS provided close to $50 million for the project, which will allow for the redevelopment of the site and the start of construction on the planned 190-key hotel. Mr. Nazarian and Moin Development bought the site in August 2011 for $45 million.
“They already acquired it,” Mr. Kapahi pointed out. “This is the refinancing, restructuring and the construction component to get to a finished product.”
Mr. Kapahi declined to reveal the name of the lender involved in the transaction.
Asked about a timeframe for the construction, David Shenfeld, a vice president at Moin Development, said that it is already underway.
“We’ve been doing demo and asbestos removal,” Mr. Shenfeld said. “But we are starting to gut it next week.”