Strategies for
Redeploying EB-5
Capital
How redeployment investments can fulfill
investors immigration requirements while
producing solid returns with the help of
proper due diligence, detailed project
screening and advice from a registered
investment advisor.
By Christine Chen and Walter S. Gindin
T
he concept of redeploying, or reinvesting, capital
following the realization of the original EB -5
investment was already on the minds of many EB -5
stakeholders by the time that retrogression for Chinese
nationals was announced in May 2015. And while there
was ample discussion within the industry about what
redeployment would or should entail, it was not until
June 2017 when USCIS updated its policy manual that we
received formal guidance regarding both the capital at-
risk requirement of the EB-5 program and redeployment
of capital.
First, USCIS provided an important clarification that EB-5
capital is required to be sustained at-risk only during an
investor’s “sustainment period” – that is, the initial two
years of conditional lawful permanent residency – and
that an investor “does not need to maintain his or her
investment beyond the sustainment period.” Second,
USCIS introduced, and ar ticulated some criteria, for
effectuating the “further deployment” of capital, including
the re quire me nt that any suc h fur the r de ploy me nt
must continue to satisfy the capital at-risk requirement
consistent with the underlying EB-5 documents. USCIS
also provided t wo examples of permissible fur ther
deployment investments – an investment into another
construction project or new issue municipal bonds, such
as for infrastructure spending.
Unfortunately, USCIS has not provided any additional
written guidance or clarification on further deployment
beyond its initial pronouncements in the policy manual.
T he re is li t tle p rospe c t of time l y fe e dbac k on any
implemented further deployment strategy in the form
of favorable I - 829 petition adjudications, given that
I-829 petitions are taking more than 3 years to process.
Accordingly, the industry’s initial foray into redeployment
investments has not looked markedly different from
the undertaking of the original EB-5 investments. But
110 EB5 INVESTORS M AGAZINE
with more than two years having passed since USCIS
provided its guidance, it is time to closely examine the
current state of redeployment across the EB-5 landscape
and consider some alternatives and best practices.
REDEPLOYMENT CAN YIELD
RETURNS
T h e s tr u c tu r e of E B - 5 i nve s tm e n t s h as l o n g b e e n
p re mise d o n th e ne e d to p r ic e E B - 5 c api tal b e low
traditional bank financing to incentivize well-established
job creating businesses to accommodate the additional
oversight and reporting required by USCIS. And while
EB -5 investors are t ypically willing to accept lower
returns on their capital during the 5-7 years of the initial
EB-5 investment, fewer investors are willing to continue
to do so for another 5 -10 years during redeployment.
Frankly, there is no need to lock in capital for another
period of f ive or more years with minimal re turns.
Redeployment investments can be structured in ways
that provide investors with opportunities to invest in a
myriad of options that can yield market rate returns.
In practice, redeployment funds have been directed into
new issue municipal bonds, mezzanine loans, and/or
preferred equity real estate investments. Nevertheless,
it is possible to expand the menu of investment
options to include pooled capital redeployment funds
covering multiple projects to diversify investors’ market
exposure. So how does a regional center select the right
redeployment investment(s) for its EB-5 investors?
With dif ferent countries re trogressed for dif ferent
numbers of years, a single redeployment investment