How EB-5 Regs Will Affect Commercial Real Estate

Breaking New Ground

The new EB-5 regulations are the first alterations to the program since its inception in 1990, and the bar is set higher than ever before. The regulations were established by the Department of Homeland Security (DHS) and raise the minimum required monetary commitment in commercial real estate for foreign investors.

The new EB-5 regulations also include:

• An increase in minimum investments in targeted employment areas from $500,000 to $900,000
• An increase in standard minimum investment from $1 million to $1.8 million
• Investment amount increases every five years
• DHS-designated TEAs – state determinations are not accepted
• Clarified policies on permanent residency status

Potential investments that might have once qualified at a lower threshold will likely struggle for approval now. Some investors are looking at the ugly truth of having to double their investments just to meet the new EB-5 regulations.

Moving Forward

Unfortunately, the CRE Magic 8-Ball cannot predict the full ramifications of the new regulations. Some investors might be able to tread water if they filed an I-526 petition with U.S. Citizenship and Immigration Services, grandfathering their old investments into the new system.

On the sunny side, however, the new EB-5 regulations may create new opportunities for those investors who learn to play the hand they’ve been dealt. For example, fulfilling the number of jobs required for a project may actually be more manageable thanks to the higher investment amounts.

For more information on EB-5 or to learn about our investment services, reach out to us at 614-450-2404 or contact us online.