EB-5 Program Helps Foreigners Gain U.S. Visas
Author: Commercial Real Estate Direct.com | Vol.6 Issue 49, December 9th, 2011
The EB-5 program issued 3,706 visas this year through Sept. 12, which was 3.6 times the number it issued for all of 2007, according to the program’s overseer, the U.S. Citizenship and Immigration Services, or USCIS.
This year’s tally so far is 97 percent greater than it was for all of last year, but down 12 percent from 2009, the program’s busiest year.
Investors’ funds are typically invested through regional service centers, operated by developers who often use them for their own projects. They also conduct operations through third parties who know the EB-5 process, which would include local lawyers and consultants, some of whom raise money for investments.
Some foreign investors are so interested in getting their U.S. citizenships that they have been accepting annualized rates of return of 1 percent or less on their investments and no guarantee about how much of their investment would be returned after a developed project is sold. The project terms typically stipulate that the investors will be paid off when it is sold or its developer gets fresh financing for it.
“For EB-5 investors, the rate of return is not the key issue; the key is the Green Card and the strategy for exiting the investment,” said H. Ronald Klasko, of the Philadelphia law firm Klasko, Rulon, Stock & Seltzer, an immigration law specialist that advises developers on qualifying projects for EB-5 funding.
“These people are not investing in real estate as much as they are investing in the American Dream, because $500,000 is not a high price for citizenship for their families,” added Fred Burgess, president of Exclusive Visas, a Weston, Fla., firm that also advises on registering projects for EB-5.
EB-5 investors can provide equity or debt financing and usually cash out of their deals after five years. Terms of the investment returns are set by the developers, and must be outlined in detail in prospectuses that developers or their agents provide in marketing efforts that typically take place in the investors’ home countries.
EB-5 funds can be co-invested with financing from other sources. And there’s no limit to how much of a project could be financed with EB-5 money.
American Life Inc., a Seattle developer, initially used EB-5 to fund only 50 percent of the costs of its projects in the 1990s, but since 2008 has used it to fund all of its projects. Henry Liebman, founder and chief executive, said the firm’s most recent EB-5 deals provided foreign investors 70 percent of the rental stream from the projects and 70 percent of the proceeds from their sale.
American Life has used the program to fund all or parts of 44 projects with a combined cost of about $750 million in its local market area and plans to use it to expand into markets nationwide.