In addition to municipal bonds, EB-5 investors can deploy capital into preferred equity real estate or mezzanine loans.
Capital Redeployment Policy for EB-5 Investment
A representative from CanAm Enterprises stated that EB-5 capital redeployment is currently one of the primary concerns for investors seeking U.S. permanent residency. Redeployment involves reinvesting all or part of the capital after the initial EB-5 investment has been repaid or resolved. According to the U.S. Citizenship and Immigration Services (USCIS) Policy Manual, immigrant investors must maintain their capital “at risk” until they are issued a visa and receive a green card.
The manual also provides guidance on types of investments that meet the agency’s criteria, such as redeploying capital into real estate projects or newly issued municipal bonds, such as those for infrastructure spending. However, many argue that the investment categories remain limited and do not yet provide favorable conditions for investors.
With over 30 years of experience in the investment immigration field, CanAm Enterprises has researched low-risk redeployment solutions to meet the growing needs of its clients.
“CanAm does not present EB-5 projects to its investors as redeployment investments. We only offer investment solutions that provide returns and low risk for EB-5 investors who have met the job creation requirements but need to redeploy capital in compliance with USCIS regulations,” affirmed Mr. Tom Rosenfeld, President & CEO of CanAm Enterprises.
The CanAm representative also committed to maintaining reasonable EB-5 loan terms and predictable maturity dates without “locking” investors into long-term commitments or multi-year extensions with high risk. Redeployment solutions are applied depending on the investor’s liquidity needs, desired capital returns, and risk tolerance.
Accordingly, in addition to investing in municipal bonds, EB-5 investors can funnel capital into preferred equity real estate or mezzanine loans for qualified real estate developers.
Municipal Bonds
Municipal bonds are issued by local governments, territories, or their agencies. They are typically used to fund public projects, including schools, airports, roads, utilities, and other infrastructure repairs. Interest income generated from municipal bonds is generally exempt from federal taxes.
According to the CanAm representative, municipal bonds typically offer lower yields compared to traditional real estate investments. However, they carry less risk and offer higher liquidity because they can be easily sold to investors on the secondary market.
This type of investment is suitable for low-risk investors who are willing to accept relatively lower returns for immediate liquidation, or those who only need to redeploy capital for a short period, potentially less than two years.
Mezzanine Loans for Qualified Real Estate Developers
CanAm’s redeployment solution expects to provide investment opportunities in mezzanine loans for qualified real estate developers seeking short- to medium-term capital (approximately 3-5 years) in addition to their senior debt and equity.
In a real estate development financial structure, a mezzanine loan is subordinate to the senior construction loan in the order of payment priority. This means that once the developer has paid operating expenses and senior debt, revenue must be used to repay the mezzanine loan before equity investors can receive any profit distribution.
Mezzanine loans are suitable for investors facing a medium- to long-term redeployment period and who have a moderate risk tolerance. The advantage of this solution is that the investment can generate periodic cash interest throughout the investment term, has a fixed duration, and the investment amount is typically secured by a preferred equity interest in a special purpose entity, specifically the project owner.
Preferred Equity Real Estate (PERE) Investment
According to CanAm, the majority of PERE investments utilize commercial real estate assets—office, industrial, retail, multi-family, and specialized assets such as hotels. Depending on the asset type and investment strategy, PERE projects can generate high returns but also come with risks.
PERE investments require a long-term capital commitment (5-7 years) with very little liquidity throughout the investment term. Clients must accept the illiquidity of the asset as a trade-off for higher expected returns.
“While there may be small cash distributions during the investment phase once the project is operational, the investment principal plus the majority of the profits will be distributed to investors upon exit, usually through the sale or refinancing of the asset,” the company representative said, adding: “CanAm’s PERE projects offer high risk-adjusted returns, focusing on geographic areas and assets where the company has information, operational, and other competitive advantages.”
According to the official, PERE investment is suitable for investors seeking higher returns or those who need to redeploy for more than five years and do not require liquidity. This instrument can serve investors who wish to invest additional EB-5 capital to generate further income in the U.S. PERE investment plays an important role in an investor’s portfolio by providing diversification, reducing volatility, and potentially offering higher after-tax returns.
As a leading Regional Center, CanAm has developed an investor-focused EB-5 reinvestment platform that prioritizes the specific financial and immigration goals and needs of each client. Each investor has different objectives regarding redeployment timeframes, expected returns, and risk tolerance.
The CanAm representative stated that they expect to provide 2-3 investment options for each investor needing to redeploy capital and will require them to select one. For those investors who decide not to pursue a green card, the company will offer them the opportunity to withdraw their application and receive a capital refund.
“CanAm Enterprises always puts investors first, and this philosophy applies to our redeployment methodology as well. CanAm will always provide redeployment options that comply with USCIS requirements and preserve redeployed capital to the highest extent possible,” emphasized the President and CEO of CanAm Enterprises.
