Competition for EB-5 Financing is Strong.
Demand for EB-5 financing among U.S. real estate developers is at record high levels, and demand for high quality EB-5 investments in China remains strong. Marketing agents in China and elsewhere are looking for the “best” EB-5 projects, meaning those that will be viewed by potential investors as the ones with the best chance for approval by USCIS and the best chance for the investors to receive a return of their investment after the investors receive their permanent green cards, in about five years from the date of their investment. At the same time, U.S. real estate developers are looking for the “best” marketing agents in China, meaning those who have a good track record of selling other EB-5 Projects, are direct and honest in communicating with the developer, and charge competitive fees for their services.
Most U.S. real estate developers have heard a great deal about EB-5 financing over the past five years. Those who are new to the market have a number of questions on how the EB-5 financing market works, how to structure a successful EB-5 offering, and how to find the right marketing agents to sell their EB-5 offering. Those developers who have some experience with EB-5 financing want to know what is selling in the EB-5 market now in China and how they can find good marketing agents in China to sell their EB-5 investment offerings. Here are some of the answers we provide to these questions:
What are the basic requirements for projects to obtain EB-5 Financing?
For those new to the EB-5 financing market, here is a thumbnail description: The EB-5 investor visa program allows non-U.S. persons to invest at least $500,000 or $1,000,000 in a business that is expected to create at least 10 new permanent jobs per investor, and to obtain a conditional visa upon review and approval by the United States Citizenship and Immigration Service (“USCIS”). EB-5 investments can be pooled to raise any amount of funds necessary to finance a project, provided that enough new jobs can be created to support the amount of financing being raised. Because the requirement is that new jobs be created, it is almost always the case that EB-5 financing is used for the development of new businesses, such as building new hotels or multi-family projects or major renovations of old buildings. EB-5 financing cannot generally be used to buy existing businesses, because the existing jobs cannot be counted toward the new job requirement. Due to USCIS policies, jobs of employees of tenants that lease space in a building cannot usually be counted toward the job creation requirement, which means that development of office and retail projects are generally not a good fit for EB-5 financing, other than in large projects seeking to raise a small percentage of EB-5 financing. Continue reading →