When it comes to the uncertainty related to the long-term investment and capital prospect of senior housing facility development, there are typically two issues involved. The first is the significant unknowns related to the extent that the U.S. Federal Reserve Bank will continue to hold down interest rates. The second issue is the now uncertain fate of U.S. Congressional Legislation related to the EB-5 Investment and Visa Program, which has been and remains a viable source of senior housing development based projects.
The EB-5 program was originally created in 1990 by Congress “as a way to stimulate the economy, create jobs and increase capital investment from foreign investors [and] most projects are mandated to be developed in designated TEAs or rural areas, but a larger investment of $1 million from foreign citizens can overcome this barrier.” Within senior housing, EB-5 financing is frequently used in conjunction with bridge loans, which allows projects to be pre-funded without delay, given a large pool of foreign investors hungry for U.S. senior housing development.
Developers can repay debt with EB-5 financing while getting projects underway faster. As one analyst has noted, both the pending decision of the U.S. Federal Reserve Bank with respect to interest rates and the future of the EB-5 Investment and Visa Program remain closely watched issues from senior housing real estate investors. This is the case where, “the EB-5 Regional Center Program allows foreign citizens to qualify for a U.S. residency visa if they make a significant development investment of at least $500,000 for a project that creates or preserves at least 10 jobs for U.S. workers [and] the program has become increasingly popular over the years in senior housing as well as for other types of projects, with many aimed at targeted employment areas (TEA), where unemployment rates are significantly higher than the national average.”
The total investment, capital and economic value of the EB-5 Investment and Visa Program cannot be understated, especially where, “In the last six years, almost $12 billion of foreign investment has come into U.S. projects [and] the $12 billion has gone into improving projects, with 98% or 95% in targeted employment areas (TEAs), in rural areas or areas that have had employment problems.” As such, any changes to the program will be on the radar of prospective senior housing developers and investors.
Senior Housing providers are at a pivotal moment in time. Cambridge Realty Capital is versed in a variety of investments in the senior housing market. Our experience and expertise make us a leader in the investment world.