With the resurgence of real estate development since the end of the Great Recession, the EB-5 investor visa program has emerged as an attractive, low-cost alternative capital source. These investments – typically in the form of mezzanine financing – are indeed attractive to developers, with interest rates often more than 10% lower than more traditional forms of subordinate financings; often as low as 3-5% per annum.
However, as the EB-5 industry has matured, and come under closer scrutiny from Federal regulators, the period of time required to successfully complete an EB-5 capital raise has increased dramatically. As a result, there is often a gap in the capital stack in the short run, which needs to be filled by bridge capital.
Although our attorneys have handled a number of transactions which have included investments through the EB-5 program in the capital stack, as a Pure Play in Real Estate Law, we have created a niche in this area as we have decided to focus on those aspects of the EB-5 program that are most germane to our leading Real Estate Finance and Development and Land Use practices. These include:
- Representing senior lenders in loan transactions where the mezzanine portion of the debt stack consists of EB-5 funds
- Advising lenders and institutional investors of the unique risks associated with raising capital through the EB-5 program – including suggesting appropriate protections and alternatives in scenarios where the EB-5 capital is ultimately not approved for the project or encounters significant delays
- Representing providers of bridge capital to projects where EB-5 funds are contemplated, but will not fill the hole in the capital stack in a timely manner
Given our extensive experience in finance and development transactions, we are able to partner with our outside immigration counsel to provide seamless representation on behalf of our clients and provide comprehensive representation in these aspects of EB-5 financing.