City Connections aims to become an EB-5 macher

Resi brokerage wants to be regional center targeting small developers seeking foreign capital
By E.B. Solomont | February 11, 2015 01:37PM

In a bid to establish itself as a conduit for small New York developers wanting to tap into foreign capital, David Schlamm’s City Connections Realty has applied to become a regional center for the wildly popular EB-5 visa program.

The regional center designation is given to sponsors of the EB-5 program, which awards a visa to foreigners who invest $500,000 in the U.S. economy. The program has become a go-to source for real estate capital in recent years, and while major developers have used the program, it’s remained elusive for smaller players.

“We’re not going to be looking after the big, big deals,” Schlamm told The Real Deal. Rather, he’s looking for “smaller deals for people who are building assisted living, maybe affordable housing.”

To do so, Schlamm partnered with broker Min Chan, an immigration lawyer who joined his firm last year and, he said, brought the idea of becoming a regional center to him.

“The EB-5 program has been heavily leveraged in New York City, but not necessarily by the small developers,” said Chan, who still maintains her law practice, Chan Law Firm, which handles EB-5 cases. “It’s a good alternative financing vehicle for them. In terms of Chinese investors, I’m not kidding if I say it’s unlimited.”

Major New York developers have made headlines in recent years for raising capital via the EB-5 program for massive development projects here. Related Companies raised about $600 million to finance part of the Hudson Yards project, while Forest City Ratner has raised more than $475 million for projects near the Barclays Center.

Developers looking to tap foreign capital must go through a regional center, or become one themselves. Related has its own regional center, as does Extell Development and the Lightstone Group.

Opening an EB-5 regional center can cost around $200,000 and Schlamm and Chan are equal partners in the venture. Chan said regional centers typically collect $50,000 to $60,000 per investor to manage their investment and help identify projects. (Centers also can charge developers a fee.)

“There’s also no guarantee you get granted one,” Schlamm said. “But we’re pretty confident we will.”