EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 - Page 11

businesses. When a U.S. business suffers because it must furlough employees, lose significant revenue, follow local or statewide stay-at-home orders, it may have difficulty even keeping the doors open. When an EB-5 business suffers these same effects and as a result is unable to create the jobs it has projected/promised in its business plan, there are wide-ranging immigration consequences for the foreign EB-5 investor. CHECK-INS WITH REGIONAL CENTERS HAVE GENERALLY BEEN POSITIVE Overall, most regional center projects have fared well. Repayments to investors continued as scheduled for EB-5 deals that were already matured and thus escaped some of the more severe effects of the pandemic. Most of the active regional center projects that centered on construction of office buildings with significant pre-leasing and infrastructure have handled the pandemic also. Many EB-5 regional center projects focus on commercial real estate. While Silicon Valley multi-family unit lease rates, for example, are down as much as 40%, commercial leases are usually five years or longer, so landlords can hold the line in terms of pricing. HOTELS HAVE HAD DIFFICULTIES, MAINLY DUE TO LOW OCCUPANCY The EB-5 regional center project type that experienced the most impact from the pandemic seems to be those in the hotel industry, but most have continued operating albeit at lower than projected occupancy. We have seen some hospitality and residential projects not doing nearly as well, however, resulting in closures and lawsuits. Many effects seem to be regional/geographic related, depending on the severity of local economic downturns. "When an EB-5 business suffers these same effects and as a result is unable to create the jobs it has projected/promised in its business plan, there are wide-ranging immigration consequences for the foreign EB-5 investor" According to one regional center, there has been improvement on this front, as leads have gotten more comfortable deciding to invest, even though some COVID-related uncertainty remains. Like most of us, many prospective EB-5 investors and their families have reached the point where they need to get moving on the things they want to do, even if the pandemic has not completely subsided. DIRECT EB-5 INVESTORS HAVE FELT THE EFFECTS THE MOST As for direct EB-5 investors, the causes and effects are similar to regional center project woes, but most direct Also, hotel statistics from the American Hotel & Lodging Association in November 2020, reflect that approximately 70% of hotels will not be able to last another six months without financial assistance. Banks may be able to provide three to six months forbearance, but that is all. Warmer markets will recover faster with leisure travel, while corporate and group markets that require convention travel will take more time recover due to the new reality of closing deals virtually without the need for business travel and face-to-face meetings. SALES OF NEW EB-5 PROJECTS WERE DOWN, BUT ARE PICKING UP The largest effect experienced by EB-5 regional centers seems to be new sales of projects. It was widely anticipated the 2020 Q1 would be slow, as the market adjusted to the new investment level and the pipeline of leads replenished itself after the investment rush of the previous November 2019 deadline. The uncertainty of the pandemic, combined with no deadline of any sort, significantly pushed back prospective investor clients’ ability to make decisions well into the second half of the year, and even that was a smaller pool of leads. EB5INVESTORS.COM 11