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EB-5 Project Stracture

 “What is the normal structure of an EB-5 project?”

is a popular query from our EB-5 experts. As a consequence of our involvement in several EB-5 projects, we’ve accumulated a wealth of knowledge that we’d want to make available to the public. For EB-5 project developers, we’ve also included a customizable mezzanine debt template that may be adapted to fit your project’s financial structure.

This essay is not intended to serve as legal advice, and you should consult with an attorney before making any choices about your business structure.

Participants in an EB-5 Project’s Management Team

Identifying the parties involved in a transaction and determining their respective roles is the first stage in project structuring discussions. It’s important to consider the influence of different parties playing different roles in a transaction, as this can have a significant impact on the outcome.


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In a nutshell, the following people are involved in an EB-5 deal:

One of the project’s backers (a real estate developer or, for an operating business, the project owner)

A financial backer (often the same as the project sponsor)

The manager of the regional center’s EB-5 money

A common EB-5 investment vehicle is a limited partnership or limited liability company (LLC), in which investors are limited partners or members and the EB-5 fund management is the general partner or managing member.

Advisers to a project

Attorney at law for immigration and securities

Bank/escrow service advisers, business plan writers, economists

You can see the many parties participating in EB-5 deals below, their duties, their connection to the project and its sponsor, as well as how they are involved in each phase of the process.

A comparison of normal and EB-5-specific real estate development projects is depicted in this graph.

A successful commercial and legal framework for the project is laid out in this diagram, which details the roles and obligations of all parties involved.

Create your own EB-5 project structure with our editable PowerPoint diagrams and roles framework, available for free download.

Making the Right EB-5 Project Structuring Decisions

Another important consideration is whether or not EB-5 will serve as a loan or an equity investment in the capital stack. Investors in the EB-5 program will always be involved as equity owners, whether they own shares in the project directly or through the EB-5 fund (often called the new commercial enterprise or NCE). A loan can be made to the development business (the job-creating organization or JCE) or an equity investment into the project can be made by the National Center for Economic Development (NCE). For the most part, debt investments are preferred since they are more predictable and secure for investors, and they provide a clear exit strategy.

For example, a senior, second, or mezzanine loan can be structured as a debt instrument from the NCE into JCE. Each of these types of debt instruments has different priority and covenants attached to it. Equity may be set up in a number of other ways as well. Deal-specific structure decisions must be made according to the demands of the project, the intended audience of investors, and the relative importance of EB-5 funding in relation to other sources of funding. Some of these crucial decisions can be helped by an expert securities attorney, who can make sure the idea is lawfully constructed and marketable to investors.

When it comes to structuring the EB-5 investment, most Immiggreat members give the following advice on how to use stock and debt.


Investors are becoming increasingly involved.

In smaller transactions when EB-5 investors are actively involved in the management and/or expect considerable profits, this structure is commonly employed.

A more equity-style investment is required in some markets. Most Chinese investors want to keep their money safe rather than make money through the stock market. It’s possible that classic stock arrangements might do better in other markets.

There may have been some equity agreements done before the loan model became more popular.


There is less of an active role for investors.

In the minds of investors, this structure is more secure than other options. The primary goals of the average EB-5 investor are the acquisition of a green card and the preservation of invested funds.

In many cases, collateral is used to secure debt instruments, giving them precedence over any ownership in a project.

Since debt instruments have a maturity date, there is a clear way out.

Standard terms, covenants, and duties are possible because of the loan structure.

For example, EB-5 funds are entitled to a variety of rights in the development of projects.

Importance of Key Roles and Responsibilities in EB-5 Project Structure

After the deal’s structure has been established, the team may begin determining the roles and duties of the parties.

The following organizational chart can be used as a jumping-off point for brainstorming about a project’s structure. Using a mezzanine loan transaction structure as an example, however this may be customized for any project. NEW EB-5 Transaction 01 CROPPED NEXT


Each Entity Plays a Crucial Role.

Each entity’s primary responsibilities are outlined below, with each entity numbered according to its place on the organizational structure.

When it comes to major developers, this may be their company’s well-known brand name. The (2) holding company for the project may or may not be owned by this firm. If the project’s true owner, a holding company, is managed by a sponsor parent, that parent will be the manager of that holding company. To protect the parent company from many initiatives, these organizations are often maintained distinct. For instance, if a holding company goes bankrupt, the sponsor parent will not also go bankrupt. A bankruptcy may put the sponsor parent’s whole portfolio at risk if the holding firm and the sponsor parent were one and the same. Protecting projects and investors by separating them into independent organizations provides a more coordinated approach across several projects for a single parent company.

“Project Sponsor,” sometimes known as “Holding Firm,” refers to this company. A developer or project’s owner can be found here. EB-5 borrower (3) is owned by this corporation. It’s common for developers to give shares to a project via this firm.

(#3) EB-5 borrower: This is a “mid-co” or “upstream borrower” in a mezzanine financing arrangement. The EB-5 money will be borrowed from the (6) EB-5 fund by this company, which was created particularly for the project. This means that the mezzanine loan is structurally subordinated to any senior debt that may exist in the company. This means that each new EB-5 borrower will be established for each new contract.

Individual EB-5 investors own equity shares in the (6) EB-5 fund, which is where their money goes. The EB-5 fund is formed by combining the interests of these investors.

The (#5) EB-5 fund manager is responsible for the financial management of the (6) EB-5 fund. A limited partnership would allow the EB-5 fund manager to be the EB-5 fund’s fifth general partner. Similar to this, if the EB-5 fund is an LLC, the controlling member or director of the LLC would be the EB-5 fund management. A fund manager for the EB-5 program may or may not be linked with the (10) regional center or the (7) development firm. In most cases, the EB-5 fund management has a duty of care to the EB-5 fund’s investors, therefore any link with the development business must be declared and any conflicts of interest waived by the fund’s four EB-5 investors.

Investment in the project’s development business is made possible by contributions from the EB-5 fund (#6), which is comprised of (4) EB-5 investors. As part of the limited partnership, each limited partner is required to acquire partnership interests from the fund’s EB-5 investors. In an LLC, each EB-5 investor buys stock shares to become a member of the LLC, which in turn gives them voting rights. Limited partners’ engagement might range from a bare minimum to full voting privileges. (3) The EB-5 borrower receives either a loan or an equity investment from the EB-5 fund.

The firm that owns the project assets directly (land, building, etc.) and is generally the borrower of the senior construction loan is known as the development company (#7). Due to its ownership of the project’s assets and its ability to provide collateral, the development firm is often the one to arrange a loan.

There is usually a senior bank or lender in mezzanine loan transactions. It is likely that this lender may register a mortgage on the property in order to get first dibs on the (7) development company’s (project assets) assets. As part of the inter-creditor agreement, senior banks or lenders and the (six) EB-5 funds often describe their respective roles and responsibilities about the project.

These people are responsible for overseeing the project’s development. (#9) Typically, this is the manager of the (7) development firm, who is responsible for overseeing all aspects of the project, including construction, landscaping, and so on.

The (6) EB-5 fund has an administrative arrangement with the regional center. (#10) The (5) EB-5 Fund manager may or may not be linked with the regional center. Rather than one of ownership, the ties to the EB-5 fund are more like those of service. The (7) development company may or may not own the regional center in various cases. Any possible conflicts of interest should be detected and properly disclosed to investors in such cases. Investors.

From an immigration and financial risk viewpoint, structuring an EB-5 project is a difficult undertaking that requires assistance from a team of experts with current market data. This page serves as a starting point for learning about the EB-5 process’s primary stakeholders and structure decisions. Immiggreat team is here to answer any of your EB-5 project queries.



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