EB-5 overhaul on cards, says Greystone’s Allison Berman

Since she was a child, Allison Berman wanted to be a pediatrician, but when she began taking pre-med courses in college, it suddenly didn’t feel right any more.

After some contemplation, she decided to go to law school and to focus on real estate.

“My father was involved in real estate growing up and it was just what I knew and something real to me,” said Berman.
Now, the Westchester native is manager and general counsel of Greystone’s EB-5 program. After graduating from law school, she began working for Stroock Stroock & Lavan, and spent most of her career before joining Greystone in real estate finance and secured finance.

With Greystone for a little over a decade, she began working with the firm’s EB-5 group in 2015 when it was first launched. “It was almost a natural extension from all of our other businesses,” she said.

Allison Berman speaks at the REW Women’s Forum June 14

Greystone has divisions for lending, developing, and advising. As the company was advising large New York City developers on obtaining mortgage loans, mezzanine loans, and filling out their capital stack, they started getting questions on securing EB-5 money.

“When we looked around the industry, we didn’t see many groups with our expertise in lending and advising, and that’s when we decided to launch it and they asked me to head it up,” said Berman.

Berman said what sets Greystone’s EB-5 program apart from others is that all of the projects they work on have an affordable component within them. The next project that will be launched is an 80/20 building in Astoria, Queens. “It is something that is very important to Greystone,” said Berman.

The EB-5 program has been put in the national spotlight after recent reports on the Kushner Companies’ marketing to potential EB-5 investors in China caused controversy. The program has been set to expire three times but has been extended each time, with the next expiration set for September 30.

Berman expects the program to continue, but not without some big changes, specifically in regard to oversight. “There’s been fraud in EB-5 and there hasn’t been a lot of oversight, and frankly it’s a change Greystone welcomes,” she said. “One of the reasons we started our own is that we didn’t have a lot of confidence in other EB-5 groups in terms of skills and underwriting and spotting good projects. We’ve always looked to get more integrity measures into the program.”
She added that she expects there will be changes in the way targeted employment areas are looked at.

But despite the changes and the increased focus on the program, Berman expects EB-5 to continue to attract more investors. The strongest network is in China, where she estimates 80 to 82 percent of EB-5 investors come from, due to the strong network the country has built.

“They’ve studied, they understand EB-5 and people come to them and trust them and they know what a good project is and what works for their investors,” she said.

Berman’s group also has contacts in Vietnam, Brazil and the United Arab Emirates, countries where EB-5 is newer but is getting stronger.

“I expect other countries to grow, but China remains a very strong market,” she said. “It will also depend on changes that come into play with Congress. If they put the limits up too high, it might slow the market.”

Berman said Chinese investors are expecting the minimum investment amount to grow from $500,000 to $800,000.
“If it goes up to a million, I think it will take a while for the market to absorb,” she said.

Because the program is so popular in China, there is a delay in applications being processed. In the past, investors were able to put in an application and have everything completed in five years. That process is now approaching seven or eight years, said Berman. And unless Congress expands the number of visas given out each year — 10,000 currently — it will likely stall the Chinese market, she said.

When scoping EB-5 projects, Greystone looks for projects with strong developers with a lot of experience.

“People over in China investing, they think of the end game — will I get my money back and is this developer going to complete projects?” said Berman. “We want to work with product we are familiar with.

“I’m not going to raise EB-5 money for an infrastructure project we don’t know how to underwrite. We stick to what we know and what we do best, which is real estate multifamily and hotel expertise.”

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