EB-5 is a growing and acceptable financing methodology as part of the capital stack in many U.S. projects, with real estate assets remaining the primary focus for investment of such capital. As other projects seek to take advantage of this opportunity to attract capital, the question arises as to whether government bond financed projects are suitable investments for EB-5 capital. In a typical structure, the EB-5 investor invests in a specially formed entity that, in turn, buys the governmental entity’s bonds; the bonds finance an eligible project and the investor’s money is traced to project costs. Of course, the risk of loss as a result of a default on the bonds also flows through to the EB-5 investor.
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