October 14, 2015
The EB-5 program is a federal program that allows foreign investors to invest in projects that create a minimum number of United States jobs in exchange for receipt of a green card for themselves and certain of their family members. The current minimum investment is $500,000.
This is an extraordinarily popular way for real estate developers to raise money because the rates charged by EB-5 lending are less than those charged by traditional investors. According to the real estate investment firm AMPAR, more than $100 billion dollars have been invested in the US real estate market through the EB-5 program since its inception. While the program is open to investors from countries around the world, 80% of the investors have come from China. Five countries have accounted for better than half of those dollars: Canada, China, Mexico, India, and the United Kingdom.
The Program was established in 1990 and received a relatively quiet response. Since 2011, however, the popularity of the EB-5 program has skyrocketed. In 2011, only 1,885 visas were issued but by fiscal year end in 2013, that number had jumped to 8,564, a 354 percent increase. In 2014, the 10,000 allotted visas were already claimed by mid-year. For this year, all 10,000 visas were claimed by May 1.
The EB-5 program has recently received a lot of publicity. Notwithstanding the virtues of this program, not all of the publicity has been positive. The program was set to expire on September 30, 2015, but has been temporarily extended until December 11, 2015. There has been much speculation as to what will happen to the program. The consensus view is that the program will be continued, but that the criteria for participating in the program will be toughened. For example, the above mentioned $500,000 requirement is expected to be increased to at least $800,000 and the job creation requirements also may be toughened. Of course, no one knows for sure what will happen to the EB-5 program. We will provide an update on the EB-5 program when more information is available.
 |
Jack Wilk is the Managing Partner of the firm and has practiced tax, corporate and real estate law for more than 30 years. He has advised clients on hundreds of corporate and real estate transactions and has worked on many EB5 deals. If you're interested in learning more about the program, Jack would be happy to speak with you. He can be reached at: 212-981-2333 or via email at jwilk@wilkauslander.com |