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August 10, 2011
Immigrant investors helping foot bill for NYC projects
Real Estate Weekly
by Daniel Geiger
A type of transaction that permits foreigners to invest in the United States in exchange for residency rights has caught on as a popular financing mechanism for real estate and development deals in the city.
The EB-5 Immigrant Investor Program, as the vehicle is called, has been used on a number of recent real estate projects in the city, including the just signed $180 million deal to redevelop the George Washington Bridge Bus Terminal.
...About $250 million of EB-5 money is also being used on the construction of the Net Arena in the Atlantic Yards in Brooklyn.
The pipeline of funds, much of which comes from China, has helped pay for projects that would otherwise be difficult to finance or would have to borrow the money at higher interest rates.
...The participants typically earn a relatively low rate of return on their money, which allows the developers of the projects being funded a low cost of financing.
Most EB-5 investors aren’t in it for the profits but because they will receive a green card if the deal delivers the promised number of jobs.
NoLandGrab: In the case of Atlantic Yards, the EB-5 investments aren't going to create any jobs, as Forest City will be using the money to restructure debt. And most EB-5 investors "aren't in it for the profits" because there are no profits; they're buying green cards, plain and simple. So why doesn't the State Department just auction them to the highest bidders?
Posted by eric at August 10, 2011 5:51 PM