While others hesitate, Henry Liebman picks up pace
COMMERCIAL REAL ESTATE: Liebman’s Empire
-PUGET SOUND BUSINESS JOURNAL DECEMBER 2-8,2011-
BY JEANNEL LANG JONES
STAFF WRITER
Henry Liebman, in his office adorned
with a painter’s view of the Seattle Sodo district he helped reinvent,
has dramatically picked up the pace of property development during the
real estate downturn. The money comes from foreigners seeking permanent
U.S. residency under the green card investor program.
To build a real estate empire through boom times and busts, you can be a tech billionaire like Paul Allen.
Or you can tap the money from overseas. That’s how Henry Liebman did it.
Henry Who?
Starting with just a fraction of Allen’s fortune, Liebman has
parlayed foreigners’ cash into a 50-acre Seattle real estate empire that
now rivals Allen’s 56-acre Vulcan Inc. holdings in size.
And the nation’s real estate meltdown has only speeded Liebman’s pace as CEO of Seattle’s American Life Inc.
Liebman, in fact, has been so successful at bringing in foreign money
— nearly $700 million, from more than 1,000 overseas investors — that
he’s inspiring copycats around the country.
“I’m not claiming it’s rocket science,” Liebman said, “but it does take some skill and application.”
The story of how an obscure Seattle immigration lawyer became a land
baron shows the value of a global outlook, a zeal for reading the fine
print, an eye for opportunity and a willingness to endure controversy.
Fifteen years ago, Liebman used his knowledge of immigration law to set up American Life under a federal program that grants U.S. residency green cards to foreigners
who invest at least $1 million in property developments or businesses
that create 10 or more jobs (or, if investing in economically depressed
areas, $500,000).
Wielding the opportunity more skillfully than most, Liebman has
marketed developments in Seattle’s Sodo district and nine other areas
around the state and nation to the affluent classes of Europe and South
Korea, and more recently, fast-developing countries such as China.
American Life’s website is in five languages.
Most of those who invest, Liebman said, seek U.S. residency to obtain a better education for their children.
Liebman is not the only one tapping the green card program, known as
“EB-5” after the section of U.S. immigration law that established the
program in 1990. The foreign investments have swelled since the U.S.
real estate slump began in 2007, during which the number of projects
around the country rose eightfold, to more than 200, and the cash from
abroad sometimes supplied a rare infusion of heat in frozen markets.
“The biggest thing fueling the growth of the program has been the capital crisis in the United States,” said EB-5 expert Stephen Yale-Loehr, an immigration lawyer at the Ithaca, N.Y., law firm Miller Mayer and professor at Cornell Law School.
Each development that qualifies for green card investments must be
approved by U.S. Citizenship & Immigration Services as promoting
economic growth in a specified geographic area. Companies set up to
channel the investments are known as “regional centers.”
But the program’s hot recent growth is not necessarily a good thing;
some projects have gone belly-up, leaving hapless investors with neither
their principal nor a green card for their trouble.
“Everybody and his brother has a regional center. It’s like an
epidemic,” Liebman said. But he cautioned, “It’s not so easy finding
deals.”
Liebman’s American Life is one of the oldest and largest operators in
the program. In the past four years, according to Liebman, the firm has
more than tripled the number of immigrants it has brought to the United
States (to about 1,000, from 303), while the amount invested in its
projects has swelled to nearly $700 million, from about $150 million.
American Life has 2.3 million square feet of commercial property
under managment in Seattle. As American Life has mushroomed, Liebman’s
staff has doubled in size, to 30, including those skilled in
construction, property management and accounting.
In addition to Seattle, American Life expanded with new regional
centers in Everett, Tacoma and Lakewood. The company also now operates
in Southern California, Atlanta, Miami and Buffalo, N.Y.
In Washington state, American Life has been joined by seven other
EB-5 foreign investment companies (see sidebar, page 20), whose projects
run the gamut from vegetable farming, wind farms and water-park hotels,
to aerospace and biotech. One Seattle-based participant, Washington
Regional Center LLC, has even bought $47.7 million in state bonds with
money from nearly 100 investors — mostly Chinese — to help pay for
replacing the SR 520 floating bridge.
Other projects around the nation are often in alternative energy, but
they can range from restoring wetlands habitat to investing in tech
start-ups.
Because the EB-5 program is intended to create jobs, federal
immigration officials are trying to speed up the process by hiring more
people to process applications for regional centers and the special
visas. They are also setting up a team of consultants to work with
regional center operators to make their projects more successful.
It’s not easy to succeed, said Cornell’s Yale-Loehr, who counts Liebman as one of the best in the program.
“Of the 200 exisiting regional centers,” he said, “maybe only 10 percent are truly successful.”
Regional center operators need to know how to market their projects
overseas. They also need to secure the investment in a timely fashion
and generate the required jobs within a set time frame.
“To set that up on an ongoing basis is very difficult,” Yale-Loehr said.
Liebman has learned a lot about the fickle nature of the real estate game over the years.
Fickle industry
“One humbling thing,” he said, “is you can come up with a concept and
design a project for a particular class of tenants and, invariably,
that is not what happens. The marketplace speaks to you and you have to
adjust.
“You have to have the confidence,” he added, “that even if you do not know who will come, somebody will come.”
Seattle’s Sodo neighborhood south of downtown has long been a
low-density industrial, wholesale and warehouse hodgepodge dominated by
the kind of businesses Liebman describes as “metal-benders.”
American Life has had a big impact on the area as it renovated about three dozen aging industrial buildings.
Foreign investment allowed Liebman to take on riskier-than-normal
projects in an unproven part of town, and to build them with cash rather
than going into debt.
While it’s not so difficult to get a loan when you’re building for a
specific signed tenant in an established neighborhood, Liebman said, to
build a speculative project without a tenant “and to take a chance not
just on that building, but on building the neighborhood around it — it
needs more patient money from the lender.”
Signs of Liebman’s influence in Sodo aren’t hard to find. Across from
Safeco Field, the $155 million Home Plate Plaza will add nearly 300,000
square feet of rentable space to the neighborhood when the pair of
office buildings is completed in 2013. Nearby, American Life wrapped up
construction in May on the $55 million Stadium Innovation Center, adding
173,000 square feet of retail, commercial and light industrial space —
with Elliott Bay views from decks on three floors.
Two miles to the south, near the old Rainier Brewery, American Life
recently started construction of the $33 million Urban Work Lofts and
Storage phase II, another mixed-use complex whose offerings will include
865 self-storage units.
Liebman’s projects have helped attract companies such as
AllRecipes.com to the Sodo neighborhood. More recently, he’s seen
nightclubs move into the buildings along First Avenue South, replacing
some of the home-furnishings companies that still populate the district.
Critics complain Liebman’s projects have driven up property values
and driven out the manufacturing businesses that used to thrive in Sodo.
Moreover, they point out the lack of sidewalks and bus service to match
Sodo’s redevelopment.
“Who pays for these infrastructure changes?” asked Dave Gering,
executive director of the Manufacturing Industrial Council of Seattle.
“If you think this is the future garden spot of Seattle, the facts on
the ground will tell you it’s not.”
Liebman says the changing nature of Sodo is the result of market forces. Some say he is the market.
Without Liebman, “there would have been a whole lot of nothingness” in Sodo, said Mike Perringer, president of the Sodo Business Association.
Liebman has taken old buildings and turned them into something modern
and useful, said Perringer. These changes likely would have occurred
anyway, but Liebman sped up the renovation of the neighborhood,
Perringer said.
The redevelopment of Sodo is inevitable, Liebman believes, now that
Seattle’s South Lake Union — once a similar bastion of small industrial
businesses — is so built out.
“This is the only spot left,” Liebman said.
Then, too, the teardown of the Alaskan Way Viaduct is changing
traffic patterns, routing more traffic through Sodo and making it harder
for 53-foot-long trucks to pick up and deliver goods to the area’s
remaining industrial businesses.
In coming years, the development of the most northern portion of the Century
Link Field parking lot will bring hundreds of new residents to
Pioneer Square. They will need services such as a big grocery store,
said Liebman.
He would like to see an even wider range of projects allowed in Sodo,
but says he won’t be at the forefront of advocating for change any
longer.
“I’ve broken my pick on this for a long time,” Liebman said. “I can’t
be the leader for this. Other people have to see it. I have so much
land, I can make the case but it would be seen as self-serving.”
But he added — with a bit of a twinkle in his eye, “I can be right, and be self-serving.”
Liebman’s expansion of American Life has been particularly rapid in
recent years. He has moved beyond renovating aging industrial buildings,
to building hotels such as the Courtyard by Marriott hotel in Seattle’s
Pioneer Square.
The green card program is set to expire next year, Liebman expects it
will again be renewed, but he and other participants would like the
program made permanent.
“It would make it a lot easier to invest in and would increase the amount of money coming into this country,” Liebman said.
The University of Puget Sound law graduate puzzles a bit about the turn his life has taken since he started American Life.
“I never had an inclination this would happen to me. I was a lawyer. I
did OK. All of the sudden I was thrust into this position,” Liebman
said. “Now people from all over the country call me.
“That’s a change that’s been pretty interesting and fun,” he added. “I wouldn’t be doing it if it wasn’t fun.”
JLJ@BIZJOURNALS.COM | 206.876.5426
Jeanne Lang Jones covers retail and real estate for the Puget Sound Business Journal.
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