Delshah seeks $50M in EB-5 funds for Morningside Heights rental project

Michael Shah’s firm paid $112M for 30 Morningside Drive

30 Morningside Drive and Michael Shah
30 Morningside Drive and Michael Shah

Michael Shah tapped the Israeli bond market to help finance his acquisition of a former hospital site in Morningside Heights earlier this year. Now, he’s turning to Chinese investors to fund the conversion of that property into 205 rental apartments.

Shah’s Delshah Capital is looking to raise $49.5 million through the EB-5 visa program — the controversial immigration program that grants foreign investors a U.S. green card in exchange for an investment of $500,000 or more. Delshah is working with Advantage America New York Regional Center to line up investors for 30 Morningside Drive, which Shah said has a total construction budget of $255 million.

Delshah bought the site in June for $111.5 million from Mount Sinai St. Luke’s Hospital.

Plans call for carving out apartments at the five adjacent Beaux-Arts buildings, located one block south of Columbia University and overlooking Morningside Park.

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In January 2016, Delshah raised more than $102 million on the Tel Aviv Stock Exchange, about $20 million of which went into the acquisition of 30 Morningside Drive. Delshah also invested $20 million of its own equity, and landed loans totaling $77.5 million from Bank of the Ozarks and Square Mile Capital Management.

In October, the city’s Landmarks Preservation Commission held a public hearing on Shah’s project. Shah said he expects the full green light in January. When that happens, Shah will actively market the project for a construction loan. He said he’s seeking $140 million to $170 million. The EB-5 money, which will be structured as preferred equity, will follow. The balance of the construction costs will be the developer’s equity.

Earlier this month, Congress extended the EB-5 program, which had been set to end Dec. 9. As a result of the extension, which keeps the program alive through April, Shah said, “We’re anticipating having a big re-entry into the market after Chinese New Year.”

He said he plans to travel to China early next year to market the Morningside Heights project, as well as the Dorian, Delshah’s luxury condo development at 221 West 17th Street in Chelsea.