hollywood billionaire

Chapter 528 Only in this way can one survive

“I have no doubt that you can write a check for $3 million, Mr. Han…”

To Han Yi's slight surprise, Gary Barnett didn't seem particularly surprised or delighted upon hearing this.

“But the problem I’m facing now is that I have to pay $2.35 million in cash by next week.”

“You’ve misunderstood, Mr. Barnett.”

Han Yi was taken aback, then smiled at Gary with a relaxed expression, a smile that seemed somewhat obscure to the latter.

So they thought I couldn't come up with the 300 million US dollars anytime soon.

Actually, it's not fair to blame Gary Barnett for making an empirical error. After all, among all the wealthy people he's met, those who could produce $300 million in cash within a week are few and far between, if you could count them on one hand.

Their wealth is dispersed across the globe in various ways. After all, holding large amounts of cash is inefficient, as inflation erodes its value over time. Estates, yachts, private jets, bonds, private equity, hedge funds, paintings, jewelry, watches, and even cryptocurrencies are all examples of how they diversify their wealth through a wide range of investment tools.

When they urgently need cash, wealthy individuals typically obtain a customized loan by mortgaging their asset portfolios through financial institutions. This allows them to obtain liquidity without having to sell their investments.

As long as the return on investment exceeds the interest rate on loans, this is a game that can continue.

However, even the fastest financial services take time to complete. Withdrawing ten or even tens of millions of dollars in a short period might not be a problem for the extremely wealthy, given that they have that much cash in their accounts and always have several activated loan lines readily available…

But three hundred million dollars.

300, 000, 000.00.

This is a completely different concept.

“I know that not many people have $3 million in bank accounts. Financial institutions may have it, family trusts may have it, but it’s definitely not in an individual account.”

Han Yi took a leisurely sip of water, smacked his lips, and then spoke.

“But I am not one of them, Mr. Barnett.”

“When I say I have three hundred million dollars, I mean I have three hundred million dollars in cash in my bank account.”

"If we can reach an agreement, you will receive $2.35 million in Extell's bank account next week as repayment to Blackstone."

Does Han Yi have $300 million in cash in his bank account?
No.

But can he mobilize $2.35 million in cash within a week to help Extell overcome its difficulties?
of course.

There is still $8664 million left in the CEP-III investment fund managed by The Carlyle Group.

The $1.5 million prize awarded for purchasing Klimt's "Portrait of Adele Bloch-Bauer II" also lies intact in the memo.

These two sums alone are enough for Gary Barnett to repay the $2.35 million loan from Blackstone.

As for the remaining 6500 million?
Although he only has $4393.9 million left in his cash account, don't forget that he can also withdraw $1.33 million from his Chase Wealth Management account next March.

If we can help Extell weather the storm next week, the subsequent payments only need to be in place before June 2017. There's no rush, and we can make it in time.

“Mr. Barnett, let me explain it to you in detail.”

“If we can reach an agreement, you will receive a 10% earnest money deposit, or $3000 million, on the day the contract is signed. You can immediately wire this money to Blackstone Group to show that you are indeed willing to repay it.”

"Then, the remaining $2.35 million will arrive at least 24 hours before the December 17 deadline, giving you ample time to complete your ACH on that bank business day."

"Finally, I will pay the remaining 65 million by the end of March, after all the legal documents and equity transfer have been completed."

What do you think of this transaction structure?

"Are you... serious?" After hearing Han Yi's suggestion, Gary Barnett frowned and tapped the table twice with his fingertips.

“Of course I hope you don’t take this as a joke.” Han Yi raised an eyebrow. “If you don’t believe what I’m saying now… then how about this: Extell continues negotiations on the bridge loan, and if you don’t see $3000 million in your account within 24 hours of signing the agreement, then immediately accept the bridge loan to resolve the issue. This way, you won’t default. Even better, if that happens, you can sue me for breach of contract.”

“I’m not saying I don’t believe you, Mr. Han. Of course I believe you have the ability to come up with three hundred million dollars.” Gary Barnett licked his lips, which were dry no matter how much water he drank that night, and were getting drier and drier. “I said this when I first went to Tel Aviv this year, and I will say it to you as well… I won’t tell you ‘everything will be fine, don’t worry,’ I will only tell you ‘this project is risky, and I can’t guarantee anything.’”

“My Israeli partners were very critical of me for saying those things to the investors. They said I was adding fuel to the fire. They said that sometimes, it’s not the information itself that matters, but how you package it and tell it to bondholders. They said I was too pessimistic. But I told them, no. It’s not pessimism, it’s caution first. I want people to know what the real risks are and where they are, not to completely ignore the facts just to get funding.”

“I admire you for doing this, Mr. Barnett. It reflects your character.”

Does this truly reflect Gary Barnett's character?
In a way, perhaps it is.

However, on the other hand, this is not entirely true.

Gary simply wanted to plaster a disclaimer on his forehead, printing it in large, bold, and black font so all investors could see it. That way, if the Central Park Tower project stalled and had to file for bankruptcy reorganization, at least the Israeli investors wouldn't feel cheated and hire retired Mossad agents to plant a seed in his temple.

"This is not a matter of character, but a matter of responsibility and integrity as a real estate developer located in the center of the world."

Gary Barnett cut a large piece of duck liver and spread it evenly on the brioche bread that Han Yi had given him, and said.

“It’s been a few months since that trip, and am I more optimistic now? Yes. The reason is obvious—since August, I’ve secured over a billion dollars in financing for two real estate projects being developed simultaneously. For One Manhattan Plaza, I got a $300 million mezzanine loan from Scott-Recler’s RXR Realty, and a $500 million construction loan from a European consortium led by Deutsche Bank and Natixis…”

“One Manhattan Plaza,” Han Yi interrupted Gary’s narration, asking with interest about this real estate project he was unfamiliar with, “In downtown?”

"Right next to Chinatown...not far from the Financial District, overlooking Brooklyn Heights."

"Office building?"

"apartment."

"Oh." Han Yi's interest immediately waned. He wasn't nearly as optimistic about the Lower City as he was about Billionaire Street. Moreover, in his view, the area near Wall Street wasn't really suitable for building overly high-end residential buildings. Building a skyscraper there, taking advantage of the prime office space, and selling it at a high price while commercial real estate was still booming in the last two years would be a better option.

apartment?

forget it.

“You continue, Mr. Barnett.”

“You are already aware of the situation with CPT. While SMI’s involvement cannot completely solve the problem, it at least gives investors hope for a solution. When I returned to Israel in September, I said the same thing: the situation at Central Park Tower has greatly improved. I know you may not see this yet, but I believe that by this time next year, I will have regained your trust.”

"Then they kicked you out of the meeting room."

“Yes, that’s what most investors did. But a small number of bond buyers expressed their support for me, saying, ‘We believe in you, Gary, not only because you’re one of us, but also because you were building One57 when Lehman Brothers went bankrupt in 2008. I believe that as long as there is wealth in this world, you will find a way to find it.’”

"That's a high level of recognition."

"Yes, I am very honored to hear this compliment."

Gary Barnett continued to add foie gras to the bread, layer after layer, spreading it thickly and thoroughly.

“But this time, my task is even more challenging: 1MS is facing a financing gap of nearly $200 million, while CPT needs to raise $1 billion in construction loans. It’s no exaggeration to say that this will be one of the largest loans issued to New York developers in this round of lending by Wall Street. Moreover, I have to find funds in an environment where lenders are turning their doors to borrowers.”

"In short, Mr. Han, this Gary Barnett in front of you is playing a high-stakes real estate Tetris game. To win, I not only need to raise the funds, but also to invest them in the right places at the right time."

"My success—or failure—will set the tone for market trends in the coming months."

"So this is a big deal. Even if I accept your investment and repay the Blackstone loan, if we can't raise more money within six months, we'll still have to end this and declare bankruptcy. At that point, you won't be able to recover most of the funds. Because no matter how strict our contract was, I won't have enough funds and assets to repay you. SMI and other previous lenders are lining up ahead of you."

“Thank you for your reminder and concern, Mr. Barnett.” Han Yi’s tone was gentle yet firm. “I know the situation you are facing, but I don’t think it’s a big problem.”

“Sir, that’s a billion dollars.” Gary Barnett finally stopped spreading duck liver on the bread and looked up at Han Yi.

"Any number that can be typed into a calculator is not considered an astronomical number."

"Some calculators can't print out one billion dollars."

“Well, I can do it.” Han Yi spread his hands and then closed them again. “Of course, I’m not saying I’ll go out and find loan institutions to raise funds and do your job for you. You should still fight for the survival of this building, that’s only natural. I’m just saying that if there is a real shortage of funds, I have the ability to help.”

"Wow, Mr. Han..."

Gary Barnett's lips moved, and he hesitated for a long time, unsure how to answer.

He still had some doubts about whether Han Yi could come up with three hundred million US dollars. Under these circumstances, it was even more of a pipe dream to convince him that Han Yi could step in and help him solve more funding problems in the future.

“I want to thank you for your utmost trust in our vision and project. Beyond that, I really don’t know what else to say right now.”

Having spent most of the year seeking financing and loans, and dealing with lenders every day, Gary Barnett knew very well that this flattered and submissive posture could better help him achieve his goals at crucial moments.

After all, most people want to feel a sense of superiority and power in front of him, the developer who is building the world's tallest apartment building. This is a kind of recognition and honor that is more powerful than simply having money.

You should say: What are the terms of your investment?

"What are the terms of your investment, Mr. Han?" Gary readily agreed.

"Of the initial $2.35 million, $1.5 million will be transferred to Extell as an equity investment. I want the same annual interest rate as SMI, 4.5%, and the same developer fee sharing as them, 30%. But I don't need put options, I don't need you to repurchase my shares if you can't find more loans, and I don't need priority repayment."

"The remaining 8500 million will be wired through my joint venture with Carlyle Group as a loan. The interest rate is 7%, which is 1% lower than the rate Blackstone Group offered you. The initial term is two years, and the extension can be negotiated."

"What's the catch?"

If something is too good to be true, there must be a trap behind it – this is an ironclad rule that Gary Barnett firmly believes in.

“With a total equity investment of $2.15 million, I also want a 20% stake.”

“SMI invested $3 million, which is only 20%.”

“Different times, different scenarios, different conditions should lead to different outcomes.” Han Yi’s tone was quite firm. “Mr. Barnett, before SMI joined, you owned 87% of the Central Park Tower project. After they joined, you still hold 67%. To ensure the value of the remaining 47%, giving up 20% of the shares is reasonable. Otherwise, after December 17th, your equity valuation may not be so attractive. Not at all.”

"I need……"

Gary Barnett pondered for a moment before stroking his chin and slowly replying.

“I need SMI’s approval before I commit to anything.”

“It’s 8:51 p.m. East Coast time, Mr. Barnett, which is 8:51 a.m. Beijing time the next day.” Han Yi smiled. “I suggest you give them a call after dinner. I’m sure they would be very happy to approve and bless this deal, because it will at least keep the project going until 2017.”

“I will.” Gary Barnett glanced at the brioche bread in his hand, his previously tense shoulders relaxed completely, and he let out a long sigh of relief, stuffing half a piece of bread and almost all of the duck liver into his mouth.

He then wiped his hands with a napkin, palms slightly upward, and stretched them out towards Han Yi.

“You took a really big bite, Mr. Barnet,” Han Yi said with a smile, teasing him.

“It’s this big mouthful of food that’s what kept me alive, Mr. Han. Only this way can I live.” Gary tilted his head back and gulped down a mouthful of sweet white wine, then shoved the bread down his throat, grinning broadly without a care for his image.

“I understand and respect that.” With that, Han Yi turned his head and gestured to Corey McIntosh, who was not far away.

"Now that we've finished our appetizers, how about we move on to the next course?"

"That would be a more natural, more relaxing, and less stressful dish for your heart."

(End of this chapter)