Representatives of Calverton Aviation and Technology told Riverhead Town Board members Thursday that they have adequate money to buy and develop property at the Enterprise Park at Calverton.
But as has been the case in the past, CAT declined to show the town specific financial statements.
Triple Five Group’s Chairman, Nader Ghermezian, his son Justin, who is managing member of Triple Five Real Estate I LLC, and Chris Kent, the attorney for CAT, attended Thursday’s work session at the request of the Town Board.
“CAT is ready, willing and able to close upon the purchase of the property and initiate all of its applications to redevelop the site,” Mr. Kent said.
Nader Ghermezian, who at times in the past has become animated speaking to the Town Board, expressed frustration in the delays and the continued “monkey wrench.”
“We have done everything and anything that the agreement requires of us at this time,” he said. “And 20 years this land is sitting down there and nothing has happened. Enough is enough.”
The board asked to see updated financial information from CAT in light of numerous reports that Triple Five Group, which owns 75% of CAT, has had financial problems.
The $40 million sale of the more than 1,600 acres of town-owned land to CAT dates back to 2018 and has remained stalled at the state level as the town awaits permits to subdivide the property.
CAT provided the Town Board with a letter from accounting firm Grant Thornton LLP confirming that “Triple Five and its affiliates have in excess” of $40 million as of May 31 for the acquisition of the property.
Frank Isler, the outside counsel hired by Riverhead Town on the CAT purchase, confirmed to board members that he has been shown a letter from a bank indicating it will provide CAT with a construction loan of up to $120 million for the development of the first phase of the CAT project. He declined to identify the bank, citing the confidentiality of the letter.
Mr. Kent said the bank requests the letter to remain confidential because a closing on the sale is not imminent and that the bank wants to prevent other lenders from potentially trying to offer better financial terms.
“So in essence, the letter was vetted?” Supervisor Yvette Aguiar asked.
“The letter was vetted,” Mr. Kent replied.
Mr. Kent said that once the property is sold, it will revert back to the tax rolls and its owners will pay a substantial annual payment in taxes to the town and school district.
“The town also will be the home of several large national and international companies that will establish a corporate presence in the Town of Riverhead,” he said.
Mr. Kent said now is the time to move forward with the deal.
“Low interest rates and economic incentives are currently available,” he said.
Councilman Tim Hubbard asked about Daniel Preston’s current role in CAT. Mr. Kent said Mr. Preston, the owner of Luminati Aerospace, remains a 25% member of CAT but he has no voting power and he has no financial commitment to the project. CAT intends to us Mr. Preston’s connections and knowledge to attract development at the site.
“Companies that may be interested in doing things that he was interested in doing,” Mr. Kent said.
Asked directly from Mr. Hubbard about a potential casino on the EPCAL property, Mr. Kent said Triple Five has no interest in a casino.
Mr. Hubbard said it’s been reported that Triple Five has a $500 million debt load, and that the Ghermezian family’s net worth went from $2.5 billion to about $650 million.
Mr. Ghermezian said that information is inaccurate. He said Triple Five Group consists of over 100 companies which are all single and separate entities.
He said they did that so problems in one company won’t effect the others.
“We don’t put all of our eggs in one basket,” he said.
He said they have done industrial projects before and are involved in 75 different industries.
Mr. Ghermezian said they own Community Federal Savings in New York, and they own businesses in oil, hotels, engineering and high tech, in addition to shopping centers and entertainment ventures.
He said that Triple Five saw the trend changing from traditional retail to distribution retail, which requires large industrial buildings and warehouses, and moved to diversify their business.
He said they do believe malls will do well as they rebound from the pandemic fallout.
Mr. Ghermezian said “the mall is open, it’s operating and it’s doing well.”
He added that they envision “a Silicon Valley of the East Coast” and that the EPCAL development will create “thousands of high paying jobs.”
“We want to be part of the community and we want to make sure that this project helps the younger generation” to stay in the town, he said.
Mr. Hubbard asked if CAT planned to seek benefits through the Riverhead Industrial Development Agency. Mr. Kent said they would.
Councilwoman Catherine Kent said recent reports about Triple Five’s financial problems with the American Dream shopping center and entertainment facility in New Jersey are “disturbing.”
She cited reports that the company lost $64 million last year on the New Jersey project, and recently was in default on a $1.6 billion loan, among others.
She said the final estimate for Phase 1 of the EPCAL project will likely be more in the $200 million range.
Ms. Kent said the town doesn’t know if the financial commitments on which CAT was declared to be a qualified and eligible by the Town Board three years ago are still willing to finance the project.
“You can see my concern on relying on third party letters of interest,” she said.
She believes the town should have access to Triple Five Group’s financial statements.
“Having a letter that we cannot view is not satisfactory to me,” she said.
Mr. Kent said CAT has lived up to all its obligations under the 2018 agreement with the town.
“You’re not going to hold lenders to commitment letters for three years,” he said.