Overseas investors in Lennar Urban’s massive redevelopment of the former Hunters Point Shipyard — most of them Chinese nationals tapping a pay-to-play immigration program — over six months pumped $77 million into the project.
The eye-popping results from the first two tranches of funds raised from December to May by a politically well-connected entity called the San Francisco Bay Area Regional Center offer a tangible sign of Asian investors’ interest the Bay Area. What’s more, said Ginny Fang, the center’s CEO, the reaction undergirds a third fund of $96 million that the center hopes to close by the end of February.
“Fundraising was faster than we thought,” Fang said about the first two funds.
The third fund, which officials started marketing in September, had an initial waiting list of 60 people, Fang said, mostly friends and family of investors in the first two funds.
“San Francisco sells really well,” Fang said.
Former San Francisco Mayor Willie Brown and his partners won approval in fall 2011 from the U.S. Citizenship and Immigration Services to operate a “regional center” that serves as a sort of middleman linking Lennar’s nearly $8 billion development and foreign investors.
The center uses a federal program, called EB-5, designed to trade investments of as little as $500,000 in job-creating projects for green cards. The cards, permitting permanent residency, often are sought by Chinese families who want a better education for their children, cleaner air or a hedge against political turbulence at home.
EB-5 centers are an increasingly used tool for raising capital, especially in California, but critics have raised concerns of fraud, domestically and abroad.
At the same time, the Bay Area has been raising its profile in order to tap the wealth created by China’s relatively booming economy. Signs of those efforts, including San Francisco’s ChinaSF program, have seen glimpses of success here and there, but a much ballyhooed boom in Chinese investment has been slow to appear.
The Lennar project may be a turning point.
Of the 54 investors in the San Francisco Bay Area Regional Center’s $27 million first fund and the 100 investors in the $50 million second fund, most are from China. Others hail from Taiwan, Russia, India, the United Kingdom, France, Indonesia, Vietnam and Malaysia.
The first fund was spent by Lennar on infrastructure for the 75-acre first phase of its Hunters Point project, the largest redevelopment project in the city since after the 1906 earthquake. The second fund helped launch construction of 247 homes on the first four blocks.
The third fund is destined for more market-rate housing, affordable housing and infrastructure.
Homes in the project will cost an average of $600,000, officials said, with starting prices ranging from $500,000 to upwards of $900,000.
Lennar expects to open a home sales center late in the first quarter or early in the second quarter of 2014.
Overall, the Shipyard redevelopment plan calls for 12,000 housing units to be built on 770 acres over the next 20 years, including a 60-unit rental project on which Amcal Multi-Housing and Young Community Builders started work this summer.
The project also includes a research and development campus and 350 acres of parkland.