EB-5 Financing Partnership
In partnership and through an affiliated entity, Davey Street Partners is acting as principal and general partner in the structuring and execution of EB-5 finance transactions in the Washington/Baltimore area.
The partnership raises capital for each project through syndication and acts in a fiduciary capacity on behalf of the syndicate to finance eligible real estate development projects in the Greater Washington-Baltimore area.
Proceeds are invested as first trust and mezzanine debt financing in large-scale, high-profile development projects with significant job creation including residential, retail, hospitality, office and mixed-use projects.
EB-5 funding is priced aggressively due to the nature of the investor's motivation -- to obtain permanent residency for themselves and their immediate family members who are under 21 and unmarried. Given this motivation, return requirements are very low affording the partnership the ability to offer financing at much lower interest rates and with more flexible funding terms when compared to conventional financing.
The amount of capital which can be raised is directly proportional to the direct and indirect job creation resulting from each project -- $500,000 per 10 jobs.
Overview of EB-5 Program
Obtaining permanent resident status (Green Card) in the United States conventionally, whether employment-based or family-based, is a long process filled with obstacles and visa backlogs.
In 1990, the United States Congress authorized and created the EB-5 Immigrant Investor Program which was intended to stimulate the U.S. economy through foreign capital investment tied to job creation.
In general, the program allows foreign investors (and their spouses and children under 21 and unmarried) to apply for permanent resident status provided they make a cash investment ($500,000 or $1,000,000) in a "new commercial enterprise" in the United States and prove, as a result of their investment, that they created 10 direct or indirect, full-time jobs for a consecutive, 24 month period following their investment and relocation to the US.
In other words, foreign investors applying for residency through this program can achieve permanent residency within 2-3 years of making their investment and can move here conditionally immediately following initial conditional approval of their visa -- approximately 6 months following application submission. The condition is that they demonstrate that 10 jobs were created as a result of their investment. Once the job creation is demonstrated, the condition is removed and the investor and their family enjoy permanent residency thereafter.
The EB-5 Regional Center Pilot Program
When the original EB-5 program was first authorized, the biggest flaw was the requirement that every entrepreneur must create 10 new, full-time and permanent jobs for a consecutive, 24 month period. In other words, the immigrant was required to provide payroll, tax and accounting records to USCIS proving that he directly employs 10 workers. If the Immigrant fails to prove the job creation, USCIS will terminate the visas under the immigrant's petition and remove the immigrant investor and family from the country. This impractical requirement rendered the program extremely difficult to utilize and it was therefore unpopular and unsuccessful. In an effort to remedy this program flaw, in 1992, Congress created the "EB5 Regional Center Pilot Program". By investing through a USCIS designated Regional Center, the immigrant can satisfy residency testing by showing both direct and indirect job creation resulting from their investment.
Currently, there is a reserve of 10,000 visas annually for the EB-5 program. Historically, the program has not utilized the entire allocation in any single year.