ADIA's Tom Arnold calls visa program a "cheap ticket" to US citizenship
Two of the largest foreign investors in New York City real estate are at odds over the value of EB-5 investment, a funding vehicle popular among developers that provides foreign investors a path to U.S. citizenship.
Tom Arnold, head of real estate in the Americas for the Abu Dhabi Investment Authority, warned against falling into “quick assumptions” about the program’s benefits, calling it a “cheap ticket” to American citizenship.
“This EB-5 thing is really controversial,” Arnold, whose employer has invested more than $2 billion in Manhattan real estate according to Real Capital Analytics, said at a Wednesday conference hosted by the ULI New York. “It’s up there with abortion and global warming.”
On the other side of the ring (and stage), Dean Shapiro, the senior vice president for U.S. investments at Canadian pension-fund investor Oxford Properties Group, praised EB-5 as a highly effective funding mechanism for high-profile projects. Oxford is a partner in Related Companies’ Hudson Yards project, which has raised more than $600 million in EB-5 financing.
“It’s not uncomplicated,” conceded Shapiro. “Some would say it’s been used for a purpose that was not the original intention… but the reality is for many years it was underutilized.”
The EB-5 program, which gives foreign investors a green card in exchange for a $500,000 investment in the U.S. economy, came under fire last year amid concerns that the program favored urban projects and was rife with corruption. After months of negotiations over legislative changes, Congress extended the program in December for one year with no changes.
In the run-up to December’s vote in Congress to extend the program, Related, along with other developers such as CIM Group, Silverstein Properties and Forest City Ratner, lobbied heavily to keep the program intact.
But ADIA’s Arnold put it this way: “The joke on America is it’s the cheapest ticket in the world,” he said, referring to the relatively low threshold for obtaining an EB-5 visa compared to countries like Austria, where a similar program costs investors 5 million Euros.
“We sell [citizenship] in America for a modest investment with the idea that it’s going to put capital in places where it otherwise wouldn’t go,” he said. “So I guess no one would invest in Hudson Yards if we didn’t have an EB-5 program.”