« More details on the curious valuation of future AY development sites for potential immigrant investors | Main | FCR, according to Wall Street Journal, has gotten $249M commitment in EB-5 funds; video of project pitch shows more lies, Markowitz mugging for camera »
February 2, 2011
Help Fund a Project, and Get a Green Card
Once-Obscure U.S. Program Provides Alternative Financing for Developers, but New Flood of Interest Raises Concerns
The Wall Street Journal
by Eliot Brown
With bank financing for new construction in short supply, real-estate developers are turning to a federal program that grants green cards to foreign nationals who invest at least $500,000 in a project.
The new attention has turned a once-obscure alternative source of funds into a viable route toward development. Use of the 20-year-old program nearly doubled last year, to 1,995 investor applicants in the fiscal year ended last September from 1,031 in the prior year.
In 2006, when the economy was still roaring, there were just 486 applicants, according to the U.S. Citizenship and Immigration Services. The program is named EB-5 because it represents a fifth category of employment-based immigration.
...But amid the downturn, real-estate developers in particular have flocked to it. Perhaps the highest profile user is New York's Forest City Ratner, which is tapping the program for its Nets basketball arena under construction in Brooklyn, part of a larger residential project.
The developers, who have said they are looking to help refinance a loan and build out infrastructure, in recent weeks received final commitments for $249 million from 498 investors, according to people familiar with the effort. Such a sum, which comes at a lower cost than traditional financing, would have been difficult to receive from a bank or other standard lender.
NoLandGrab: If Bruce Ratner has indeed secured commitments, he has pulled off yet another in a series of successful Atlantic Yards-related scams.
Posted by eric at February 2, 2011 11:09 AM