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UBS corrals mega-rich clients to bet on Times Square skyscraper

A major Times Square development has secured more than $780 million in new equity, including about $400 million from UBS’ ultrahigh-net-worth and family office clients.

Construction on the 46-story tower at 1568 Broadway known as TSX Broadway is set to begin in January.

Beyond the capital raised by UBS, Fortress Investment Group owner SoftBank Group is investing about $200 million, according to people familiar with the matter, who asked not to be identified because the information is private. Fortress is developing the project alongside L&L Holding and Maefield Development. L&L co-founders David Levinson and Rob Lapidus and Fortress executives Peter Briger and Dean Dakolias are personally investing in the project, the people said.

They “need to be thinking about guaranteed income streams” because there’s “not a lot of time for recovery,” an expert writes.
November 15
Pam Kelley is the Product Line Manager for Wolters Kluwer Tax and Accounting workflow solutions, including CCH Axcess Practice, CCH Axcess Workstream CCH Axcess iQ and CCH ProSystem fx Practice Management. She has been with Wolters Kluwer for almost 20 years, first as a business analyst, then product owner, before moving to product management earlier this year. Prior to working for Wolters Kluwer, Pam’s background includes working as Development Manager for another time, billing & workflow solution provider as well as Accounting Manager in private accounting.
November 15
Damon Russel is the Product Line Manager at Wolters Kluwer responsible for driving strategic development, sales and retention, and portfolio management of document management and client collaboration solutions for Tax and Accounting Professionals. He has over 10 years of experience delivering enterprise software solutions for Wolters Kluwer customers and their clients around the globe.
November 15

“We have seen a substantial increase in interest from our ultrahigh-net-worth and family office investors for direct, single-asset real estate investments like TSX Broadway, including potential deployment of billions of dollars of capital gains in opportunity-zone investments,” said Donato Giuseppi, head of direct investments in the Americas for UBS Wealth Management.

Buried in last year’s U.S. tax overhaul is a provision designed to encourage investment in low-income areas dubbed “opportunity zones,” enabling investors to defer, avoid or reduce capital-gains taxes.

Pedestrians walk near Vornado Realty Trust's 330-foot (100-meter) digital billboard, center, wrapped around the front of the Marriott Marquis Hotel, on Broadway between 45th and 46th streets in Times Square in New York, U.S., on Tuesday, Nov. 18, 2014. The eight-story tall sign, which will be leased by Google Inc. from Nov. 24 into January, is more than half an acre in area. Photographer: Michael Nagle/Bloomberg
Pedestrians walk near Vornado Realty Trust's 330-foot (100-meter) digital billboard, center, wrapped around the front of the Marriott Marquis Hotel, on Broadway between 45th and 46th streets in Times Square in New York, U.S., on Tuesday, Nov. 18, 2014. The eight-story tall sign, which will be leased by Google Inc. from Nov. 24 into January, is more than half an acre in area. Photographer: Michael Nagle/Bloomberg

Alan Felder, head of real estate, lodging and leisure in the Americas for UBS’ investment bank, said the firm’s ability to connect corporate clients seeking differentiated sources of capital with its network of ultrahigh-net-worth investors is a “win-win.”

The capital raised for TSX Broadway represents the largest direct real estate deal pursued by UBS on behalf of its clients, Giuseppi said. Earlier this year, the Zurich-based bank raised $38.5 million for a new W Hotel in Nashville, Tennessee. Direct real estate investments account for 17% of the average family office portfolio, according to UBS’ 2018 global family office report.

A person close to Fortress said it’s normal for the firm’s senior staff to invest personally alongside its fund investors. Representatives for L&L and SoftBank declined to comment.

“Our investors share our vision for leveraging Times Square’s unique value as the predominant global destination of retail and engagement,” Levinson, L&L’s chairman and CEO, said in a statement.

Goldman Sachs is providing a $1.13 billion construction loan for the project that includes the elevation and restoration of the Palace Theater, recently home to “SpongeBob SquarePants: The Broadway Musical.” It also will feature 18,000 square feet of LED advertising, 75,000 square feet of retail, an outdoor dining terrace and a 669-room luxury hotel.