hollywood billionaire

Chapter 527 There Will Always Be Bread
“It’s…”

Gary Barnett touched his nose, and before he could say anything, he shook his head and laughed helplessly.

"It's pretty fucking bad, man."

As soon as the words “Fucking” and “man” were uttered, Han Yi immediately realized that Gary had—at least on this topic—dropped his unnecessary defenses and truly entered a mode of open communication, ready to confide in him, his lifeline.

“Blackstone thinks I’ve taken a bite out of a piece of meat I can’t chew, and they’re not giving me any more time… I mean, why would they do this? If I don’t pay off their loan by December 17th, they can enjoy up to 14% interest and drain my bank account. And if I continue to default for more than 6 months, they can take legal action against me and seize everything Extell has built, including this building… of course, the unsold portion.”

“Investors in Tel Aviv hated me; they saw me as a fraudster about to be exposed and doomed to fail. Even with interest rates at 16%, it seemed no one could sell the Central Park Tower bonds to anyone. Everyone seemed convinced the project had to stop. Extell would have to declare bankruptcy and seek restructuring.”

“You know what? The last time I went to Israel, those people I called friends, and who also called me friends, physically attacked me. They shoved me, humiliated me, and said that if I dared to come to Tel Aviv to ask for more money, they would shoot me in the head and kill me.”

“Yeesh.” Han Yi frowned. “That’s a bit too much.”

“I don’t blame them,” Gary sighed softly. “Any investor would have overreacted to the expected loss of three hundred million dollars.”

"And what about the investors from China?" Han Yi asked, quite interested in the topic. "How do they view this situation?"

“Oh, Shanghai is much better than Tel Aviv.” Gary raised his hands and eyebrows. “Some EB-5 investors don’t care at all… no, they don’t even know, because some people don’t read the real estate news here. And the Chinese investors who read this article have all called to express their concerns. They don’t expect to get their $50 back; most don’t mind losing that money. They just want the project to continue so they can keep their green cards.”

"As for SMI... they called too, and everything was very friendly, without any arguments or complaints. They just gently reminded me that even if Blackstone were willing to generously extend the $2.35 million to next year, Extell would still need to secure a loan of approximately $1 billion by May 2017, or they could exercise a put option to force Extell to repay its equity investment in SMI and the interest. Like Blackstone, they are very interested in seizing the collateral for this deal—again, everything Extell has built, including this building."

"The unsold portion," Han Yi said, raising his index finger and then pointing it down onto the table, jokingly adding, "not including this apartment."

"Haha, that's for sure." Gary chuckled twice.

“I come from China, so I know very well that Chinese investors won’t intimidate you, threaten you, or blackmail you. Instead, they will say the nicest and sweetest things to you and then tighten their grip around your neck.”

At this point, Han Yi stopped talking and waited for the waiter to serve them the second course.

"Mr. Barnett, Mr. Han, today we present to you another classic signature dish of Per Se – Hudson Valley Murad Duck Liver. As the name suggests, this foie gras is made from Murad ducks, a specialty of the Hudson Valley. As you may know, in French tradition, duck liver and foie gras are collectively known as Foie Gras, but duck liver is actually more popular in France due to its richer and more complex flavor. Our head chef, Mr. Thomas Keller, has specially selected the finest duck liver and, through exquisite processing techniques, has achieved a delicate, silky texture and a profound range of flavors."

Sandra Poulsen introduced herself in an orderly and unhurried manner.

"The chef's ingenuity is evident in the pairings: the foie gras is cleverly shaped like a traditional French pastry, garnished with the refreshing tartness of purple cherry radish and Granny Smith green apple, the nutty aroma of Pearson Farm pecans, and a touch of Greek yogurt to balance the richness. Also served are six carefully selected salt crystals from around the world. You are encouraged to try different combinations to experience how they can enhance and elevate the myriad flavors of the foie gras."

"Of course, the most classic pairing is the warm, crispy butter brioche bread on the side. Spread the duck liver lightly on the bread, and the warmth of the bread and the aroma of the butter will bring out the richness and aroma of the duck liver to the fullest extent."

“Mr. Barnett, if you prefer a traditional and classic pairing, we highly recommend a 2010 sweet white wine from Château d'Yquem in the Sauternes region of France. Its rich aroma of honey and fruit and its noble sweetness will perfectly complement the richness of the foie gras, cutting through the greasiness and bringing a wonderful taste experience,” Michel Kuffler suggested from the side.

“That sounds like a perfect combination.” Gary Barnett, whose mind was completely elsewhere, smirked and replied succinctly, “Please.”

“Of course, Mr. Barnett.” After showing Han Yi and Gary Barnett the all-gold bottle, Michel Kuffler poured Gary a glass of wine, then bowed slightly and, together with Sandra Poulsen, took two steps back from the table where important matters were being discussed.

“Try the foie gras first, Mr. Barnett. I’m really looking forward to this dish.” Han Yi reached out, broke the brioche bread in two, and began to spread the foie gras and accompanying side dishes on it with a knife. “I’ve read TASE’s documents. It is said that SMI, which invested $300 million, can get 30% of the development costs.”

TASE, or the Tel Aviv Stock Exchange. In order to publicly issue bonds there, Extellb must disclose in a timely manner the details of each of its equity investors and their partnerships.

Of course, it wasn't Han Yi who read the TASE file, but Antoine-Gachet, who helped him write the briefing.

"correct."

Development costs are fees charged by developers during real estate development to cover various hard costs, soft costs, financing costs, and other expenses. Typically, development costs are calculated as a percentage of the total construction cost of the real estate project, generally between 2% and 5%.

In short, this 2% to 5% is the most stable return for real estate developers. For every $100 raised, $2 to $5 can be pocketed immediately.

SMI, which invested $300 million to form a joint venture with Extell and nominally entered the market as a joint developer, naturally wouldn't let go of this revenue.

What percentage of the total cost of the Central Park Tower project was development expenses?

“3%,” Gary Barnett licked his lips and answered in a low voice.

"The total cost is projected to be $29 billion, right?"

“The entire project requires a total of $29 billion in capital, but the total construction cost is $20 billion,” Gary Barnett corrected. “So it’s 3% of $20 billion.”

"That's 30% of $6000 million. As long as the project is completed smoothly, we can get a guaranteed fee of $1800 million."

"Yes."

“In addition, SMI also requested an annual interest rate of 4.5%, payable monthly. That is…” Han Yi raised his eyelids and quickly made a rough estimate in his mind, “$1350 million per year, more than $100 million per month.” “To be precise, it is $112.5 million.”

"If you complete all the construction work as planned by the end of 2019, you will also need to pay $4050 million in interest to SMI."

"uh-huh."

“That’s… 19.5% of $3 million.” Han Yi opened the calculator on his phone and started typing. “In the joint statement between Extell and SMI, you stated that SMI invested as preferred stock and expected to receive a return of 20% to 30% annually during the project’s implementation. So… even if sales are very strong and all units are sold within three years of the building’s completion—which I highly doubt—they will still get at least 80% of the return, which is $2.4 million.”

"2.4 million, plus 4050 million... After the project ends, even with the shortest possible timeframe, SMI can recoup $4.605 million. According to Extell's forecast—which now seems very optimistic—the total sales of the entire building could reach $44 billion. Subtracting the total investment of $29 billion, that leaves a pre-tax profit of $15 billion, and then deducting taxes... Mr. Barnett, I don't know if this calculation is accurate. But can I speculate that through a $3 million investment, SMI currently holds approximately 20% preferred equity in Central Park Tower?"

“I cannot disclose our investment structure to outsiders.” Gary picked up the silver fork, then put it down again, hesitated for a moment, and then replied, “But this guess is not far off, Mr. Han.”

“Great… Hmmm, really great.”

The first one is great because of the maximum honesty towards Gary Barnett, and the second one is great because of the delicious food that has just been put into his mouth.

The warm brioche bread has a perfectly crispy exterior, while the inside remains fluffy and soft, with the aroma of butter spreading in your mouth as you chew. But the most amazing part is the thick layer of foie gras—it melts almost instantly upon touching the tongue, sliding down your throat like a perfectly ironed piece of fine silk.

The texture of this foie gras is beyond imagination: silky, rich, and creamy, without a trace of unpleasant graininess. Initially, there's a rich, full-bodied aroma of liver, with complex flavors reminiscent of nuts and caramel; then, the refreshing tartness of green apple subtly emerges, cleverly balancing the richness; finally, the toasty aroma of pecans unfolds slowly in the background, adding a solid framework to the overall flavor.

"Mr. Barnett, you should try some too."

"It certainly has a unique flavor."

Without pairing it with brioche bread, a distracted Gary Barnett simply cut off a small piece of duck liver and shoved it into his mouth.

The flavor was lingering and rich, with a hint of sweet dried fruit and the aroma of oil. He took a sip of water, trying to cleanse his taste buds, but found that the unique, almost cloyingly delicious aftertaste of the foie gras still lingered.

“Mr. Barnett, this was a good deal for you and them at first. But like this foie gras, the first bite makes it seem like the most delicious thing in the world, but without Brioche to balance it out, you soon just feel the fat bursting in your mouth, which is a very heavy burden for anyone.”

Han Yi's analogy was not complicated, and Gary immediately understood its deeper meaning.

“But I don’t have any brioche in front of me, Mr. Han.” To show his situation, Gary Barnett dramatically picked up his brioche from his plate and threw it into his half-empty glass.

“There was a lot of bread in front of me, but the restaurant staff doubted my ability to pay, so they took the bread away from me and threw it in the trash.”

“I have three months to figure out how to repay the $2.35 million, but nobody in the world believes I can repay on time, including myself.”

“They kicked me out of Israel, and when I returned to Manhattan, I found that Wall Street had closed every door to me. No bank was willing to lend me money at normal interest rates anymore; they all wanted to trample me to pieces on my dying body.”

"That's why you mentioned that bridge loan." Han Yi curled his lip. "What interest rate did they give you?"

“11%.” Gary couldn’t help but laugh as he said this. “Can you imagine? Borrowing 11% bridge financing to prevent the original loan from rising from 8% to 14%.”

"They want you to choose a bottle of poison to drink."

“Exactly.” Gary’s tone was strangely mixed with resentment, ruthlessness, and dejection. “What else can you do? The rich always win.”

“There’s no need to be so pessimistic, Mr. Barnett.”

Han Yi glanced at Gary and secretly found it somewhat amusing.

A gambler with big eyes and a small belly complained that the bookmaker hadn't lent him enough money.

interesting.

Perhaps only a gambler with this kind of personality can succeed in the unpredictable real estate development industry.

"There will always be bread, and there will always be restaurants. Old restaurants may be lively, delicious, and popular, but newly opened restaurants will also have some new dishes worth trying."

As he spoke, Han Yi placed the other half of his brioche from his bread plate in front of Gary Barnett.

“This is the bread I’m giving you, Mr. Garnett.”

"Three hundred million US dollars in cash to get rid of your pain and troubles."

(End of this chapter)