New York City developers have long used the government’s EB-5 program, which grants overseas investors green cards in exchange for financing real estate projects, to source cheap debt from foreign markets. And not only is the trend picking up, but developers are trying to cut out the middleman.
For example, both Silverstein Properties and the Related Companies are currently in the process of requesting approval from U.S. Citizenship and Immigration Services to open their own in-house EB-5 regional centers instead of using state-sponsored sites.
“More developers who are handling large projects are looking to utilize this source of financing,” Steven Polivy, the head of the law firm Akerman Senterfitt’s New York City real estate practice, told Crain’s. Polivy added that he estimates there are roughly a dozen regional centers currently operating in New York and he expects that number to double over the next six months.
Silverstein is planning to raise EB-5 funds for their $1 billion residential and hotel tower at 30 Park Place, a spokesperson told Crain’s. And Related is planning to use an in-house EB-5 center to help fundraise for its massive Hudson Yards project.
“Developers are getting senior construction financing from traditional sources like banks and then using EB-5 to supplement that,” Polivy said. “Normally a mezzanine loan in today’s market is about 15 percent but you can get the same capital from EB-5 and pay a 5 percent return.” [Crain’s] – Christopher Cameron