What do Marriott, Hilton Worldwide, Hyatt, Starwood Hotels & Resorts, American Life Insurance Company and Jay Peak Ski Resort know that you don’t know? They have discovered a way to access substantial amounts of equity financing for a project’s “capital stack” at very low cost — 3 percent to 4 percent annual interest. They have used the capital to build wind farms, ski resorts, film production studios, the Staples Center in L.A., mixed-use real estate developments, nursing and assisted living facilities, hospitals, medical research facilities, manufacturing facilities, and large infrastructure and construction projects, including bridges. How is this possible? Immigrant investment. These companies and many others have successfully raised significant portions of their required financings from immigrant investors under the EB-5 program administered by the U.S. Bureau of Citizenship and Immigration Services (USCIS). Through this law, which has been in place for more than 20 years, immigrant investors and their families can invest $500,000 in severely economically depressed areas, known as Targeted Employment Areas (TEAs), or $1 million elsewhere in the U.S. As long as the immigration investors’ paperwork checks out and the investment produces at least 10 new jobs during their two-year conditional residency period, their residency status becomes permanent and green cards are awarded. A Dutch family of four that took advantage of the EB-5 program was recently featured on the front page of the Washington Post. In return for their $500,000 investment in the Marriott Marquis Hotel, being built in Washington, D.C., the entire family will be entitled to stay in the U.S. permanently. Their two college-aged children can also attend U.S. universities. While the family will receive only a very modest return on investment (likely in the 2 percent to 3 percent range, according to the Post), their goals, like so many other immigrant investors in the EB-5 program, are centered more on U.S. citizenship than on ROI. While USCIS caps the number of visas awarded at 10,000 per year, the EB-5 program has never reached that level of interest. In 2011, the visas awarded topped out 3,463 in 2011; the total was roughly the same last year.
Posted on: Mon, 22 Jul 2013 07:18:44 +0000
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