EB5 Investors Magazine - Page 87

Welcome International Developers to the EB-5 Project Marketplace by Victor Shum The classic EB-5 Immigrant Investor Program scenario involves a U.S. company forming a new commercial enterprise (NCE), which then finances a U.S.-based job creating entity (JCE) where American jobs will be created using funds from EB-5 immigrant investors as part of its capital stack. But now let’s alter the circumstances just a bit. Instead of a U.S. developer managing an EB-5 project to create jobs, imagine that an international developer owns or operates the EB-5 project in the United States, and utilizes foreign EB-5 investor funds to finance it. The project still creates the same amount of American jobs per each immigrant who invests, and the EB-5 investors and their families are subject to the same program requirements as any other immigrant in the EB-5 category. “Over the past few years, international developers have entered the United States market and launched development projects that incorporate EB-5 funding as part of the project’s capital stack.” The latter scenario is becoming a distinct reality in the EB-5 program. Over the past few years, international developers have entered the United States market and launched development projects that incorporate EB-5 funding as part of the project’s capital stack. This past February, Shanghai-based Greenland Group broke ground on its mixed-use Metropolis project in downtown Los Angeles.1 And in Oakland, the Brooklyn Basin Project is a more recently announced joint venture between Signature Development Group of Oakland and Zarsion Holdings Group Co. Ltd of Beijing, China – both with EB-5 offerings. Not coincidentally, most Chinese developers enter the U.S. market as the financial partner in joint ventures with established American developers.2 This is due primarily to the fact that the Chinese developers recognize the disparities between commercial real estate development in China versus the United States, and have wisely looked to partner with experienced U.S. developers to execute the projects efficiently. As a result of this beneficial arrangement, many projects that have languished for years due to lack of funding are suddenly greenlighted for development. Communities that have long-suffered from a deficiency in domestic investment have the opportunity to become revitalized with foreign investor funds – only a small portion of which may expressly be from EB-5 investors. Judging by the number of trade missions made to China by local and state leaders seeking foreign direct investment for their communities, our elected officials would appear to agree. Continued on page 86 Yen, Brigham. “Chinese Developer Greenland Begins Construction on $1 Billion Metropolis Project in Downtown LA.” DTLA Rising. 16 Feb. 2014. Web. 2 Putzier, Konrad. “Developer Blazing a Trail Among Chinese Investors.” Real Estate Weekly. 12 Nov. 2014. Web. 1 WWW.EB5INVESTORS.COM 85