A new economy: EB-5 signals investment in people, not projects
at November 22nd, 2013
By Paul Braungart, Regional Capital Group
Commercial real estate develop- ment is increasingly turning to EB-5 programs and investors to spearhead projects across the nation, due to the continued lack of traditional funding. What this means for the United States is tremendous economic opportunity – a resurgence of not only hope, but confirmation, that the commercial real estate market is not only recovering, but positioning to thrive.
One better, the impact EB-5 carries for the enrichment of the most important element in any project – the human factor – is significant. The EB-5 program is a rare commodity in the world of investments, appealing to investors as a path to U.S. residency, and to en trepreneurs as a truly powerful opportunity for foreign investment. EB-5 is a tremendous business catalyst that, when used knowledge- ably, can yield incredible results.
While national re- ports find an increase in consumer optimism, in both commercial and residential sectors, the first signs of economic regrowth are not enough for traditional investors to begin new projects. EB-5 provides a very flexible low cost of capital for real estate projects that create jobs. There is a tremendous flow of capital into regional centers with $2.4 billion invested in 2012 and $5 billion projected in 2013. It is an alternative source of funding not provided by typical sources and can be structured to supplement traditional institutional debt. EB-5 can be in the form of senior or subordinate debt.
EB-5 is an alternative financing option for qualified, job creating projects focused on construction and investments in commercial real estate, healthcare, hospitality, recreation, and manufacturing sec- tors. Investors seek a green card and recovery of their principal. Safety of the investment is the key investor criteria along with the track record of the principals and viability of the business plan.
During 2013, Regional Capital Group was instrumental in launching New Jersey EB-5 Regional Center. Launched in March 2013, New Jersey EB-5 Regional Center is designated by the U.S. Citizenship and Immigration Services (USCIS) as a qualifying participant (Regional Center) in the Immi- grant Investor Program. The Regional Center will focus on promoting economic growth and job creation through capital investment opportunities.
As we move into an invigorated landscape in commercial lending, the EB-5 program has the potential to create hundreds of thousands of jobs for American workers at no cost to taxpayers. This amazingly innovative economic development platform will play a critical role in keeping the American economy strong, robust and competitive with the many other nations around the world who actively court investors and their capital. There are great opportunities as the EB-5 landscape matures and program participants find increasingly more creative applications for EB-5 capital.
Paul Braungart is founder and presi- dent of Regional Capital Group.