Chinese investors looking for a US visa are helping push an urban renewal program that is bringing them together with Warren Buffett.
They are planning to turn a 13-story skyscraper in Rockford, Illinois, into a US$66 million hotel and convention center.
This is the latest example of how Chinese investors have been fueling a construction boom in the US via the EB-5 cash-for-immigration scheme, according to the Wall Street Journal.
A subsidiary of Berkshire Hathaway Inc., owned by Buffett, is in talks to provide equity for the Amerock building in this declining former industrial city.
The project includes a new train station, a sports center and a park.
The debt financing is expected to come from 92 foreign investors, mostly from China. By investing US$500,000 each, these foreigners hope to fulfill their American dream by obtaining US permanent residency.
Chinese nationals accounted for 85 percent of the EB-5 visas issued in fiscal 2014.
EB-5 investments have gone from small hotels and strip malls to projects run by mega developers.
Related Cos. said US$600 million from 1,200 Chinese families will help it build the foundation of three skyscrapers at Hudson Yards, New York’s biggest real-estate project in a generation.
In San Francisco, home builder Lennar Corp. has raised about US$200 million through the visa program for projects that include more than 12,000 housing units on a former naval shipyard.
In lower Manhattan, World Trade Center developer Larry Silverstein is trying to raise about US$250 million for a 937-foot Four Seasons hotel and condominium property.
“Every day we get information about several new EB-5 projects. It seems that there are more projects than clients,” said Forra Luo, owner of Canway Investment Consulting Service Co. in Shenzhen, in southern China.
It helps to have a celebrity associated with it.
Buffett is a trusted name in China. That works out to a deal that has many advantages for Buffett, including tax credits.
The Chinese investors will receive an annual interest rate of just 0.5 percent compared with the typical 5.5 percent a year for similar projects, according to Gary Gorman, chief executive of Gorman & Co., the developer of the Amerock project.
If the project fails to create the necessary jobs, they won’t get their visas.
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