Ziel Feldman’s HFZ Capital Group is looking to raise around $250 million in EB-5 funds for its latest High Line condo development at 518 West 18th Street.

The U.S. Immigration Fund, an EB-5 regional center, is handling the fundraising in two phases of more than $120 million each, and is currently raising cash under the first phase, CEO Nicholas Mastroianni told The Real Deal.

HFZ closed on the 36,000-square-foot site for $870 million – or about $1,100 per buildable square foot – in May. The firm funded the acquisition with a $830 million loan from a group including JPMorgan, BlackRock and SL Green Realty, and would need about $1 billion more to fund construction. Howard Michaels’ Carlton Group brokered the acquisition loan and is advising on the construction financing (which HFZ is not yet in the market for), according to sources.

The company plans to build two Bjarke Ingels-designed condominium towers rising 28 and 38 stories tall and totaling 850,000 square feet.

HFZ joins a growing line of developers who have tapped into the EB-5 visa program as a cheap source of funds for luxury condo projects. Silverstein Properties raised EB-5 funds for 30 Park Place, as did Fisher Brothers and Steve Witkoff for 111 Murray Street and Michael Shvo, Bizzi & Partners and Howard Lorber for 125 Greenwich Street. EB-5 investors have also contributed around $600 million in funds for Related Companies and Oxford Property Group’s Hudson Yards mixed-use development.

Congress recently renewed the controversial program, which gives foreign nationals green cards in return for investing in authorized projects, for another year.

With a total cost of around $2 billion, 518 West 18th Street is one of the largest and most expensive condo projects in the city. In comparison, Vornado Realty Trust’s 220 Central Park South and Macklowe Properties and CIM Group’s 432 Park Avenue reportedly cost $1.5 billion and $1.3 billion to build (including land), respectively – although 518 West 18th Street is far cheaper than its Midtown peers on a per-square-foot basis.

HFZ declined to comment for this article. Whether it can secure financing beyond EB-5 funds for this project will be an important indication of lenders’ sentiment on the luxury condo market.

As sales velocity and prices fall, several banks have become reluctant to lend on new construction. On the surface, then, getting lenders to finance hundreds of new condos seems like a hard sell.

But Feldman argued last year that the market he is looking to tap into on West 18th Street – smaller apartments averaging between $4 and $8 million – is not nearly as saturated as the very high end. He is also banking on the continued appeal of the neighborhood around the High Line. “Show me comps anywhere in the area that are over 140 feet [high] and don’t achieve anything with a big three in front of it,” he told The Real Deal in May.

And while some developers are having a hard time raising funds for condo developments, sources said that developers with a long track record — and Feldman would fall into that group — are still attractive to lenders. “Developers with top reputations and enormous financial strength will continue to find lending windows open for projects that are underwritten appropriately for the realities of current supply-demand metrics,” said Scott Singer, president of capital markets brokerage Singer & Bassuk Organization.

Source: HFZ seeks 0M from EB-5 investors for High Line condos