While uncertainty in domestic and international markets has agitated traditional sources of capital for commercial real estate assets, a little-known source of foreign capital has been quietly growing in popularity with owners and developers nationwide. EB-5, a federal immigration and naturalization program, encourages foreign investment in the United States through the issuance of green cards for investment in qualified projects that produce permanent jobs. The program has raised hundreds of millions of dollars for investment in commercial real estate property types, including:

• Hospitality
• Medical and Assisted Living
• Manufacturing and Industrial

Foreign nationals with a net worth of $1 million or greater invest at least $500,000 in projects that create a minimum of 10 permanent, full time jobs. The $500,000 minimum investment amount applies only to projects in rural or economically distressed regions known as Targeted Employment Areas (TEAs), so EB-5 funding can be a viable capital source for projects which might otherwise struggle to secure financing due to their location. TEA distress-designation criteria bear significant overlap with those of New Markets Tax Credits-eligible regions; as a result, EB-5 funds are often used as a portion of the capital stack in NMTC developments. Typically, funds from several investors are pooled for each project.

While EB-5 is a promising alternative capital source, developers seeking EB-5 funding should prepare for a lengthy, rigorous process. For assistance, developers can turn to federally designated Regional Centers, organizations which source foreign investors to connect with domestic projects.

At Aries Capital, we have partnered with clients to creatively structure capital stacks with a variety of alternative capital sources. Our relationships with traditional and non-traditional lenders, including sources of EB-5 capital, allow us to arrange the best financing package for our clients’ projects. Contact usto discuss your financing options.