Ronald R. Fieldstone, Partner
(305) 428-4521
[email protected]
Julian Montero, Partner
(305) 428-4546
[email protected]
The Power of
Collaboration.
Saul Ewing Arnstein & Lehr LLP is a combination of Saul
Ewing LLP and Arnstein & Lehr LLP, a firm with 400-plus
attorneys and 16 offices stretching down the East Coast from
Boston to Miami and extending into the Midwest by way of
Chicago and Minneapolis.
The Firm represents a number of Regional Centers, real
estate developers and EB-5 foreign investors. Members of
the Firm’s EB-5 Practice handle the preparation of private
placement memoranda and ancillary documents (which
account for over $8 billion of EB-5 funds spread over
300+ projects) and conduct project immigration and EB-5
compliance reviews, as well as file hundreds of I-526, I-829
and I-924 petitions.
Roger Bernstein, Partner
(305) 428-4506
[email protected]
Jay M. Rosen, Partner
(305) 428-4526
[email protected]
Rohit Kapuira, Partner
(312) 876-6653
[email protected]
Amy Link, Counsel
(305) 428-4507
[email protected]
161 North Clark Street
Suite 4200
Chicago, IL 60601
(312) 876-7100
saul.com
a doubt, the first investment step is crucial. Often, it
is the determining factor whether the selected project
will create the requisite jobs. Nevertheless, in addition
to obtaining permanent residency, investors have two
additional objectives when making their EB-5 investment:
Preservation of their capital
•
Return on their capital
The required attention on redeployment strategy has
become especially impor tant with the amendments
announced last year, July 24, 2020, and post-November
21, 2019 because now both the minimum investment
amounts (from $500,000 and $1 million to $900,000 and
$1.8 million, respectively) and processing times have
risen sharply.20 21 As a result, investors are now hoping
to receive not only their capital back but an additional
i nve s t m e n t r e t u r n , i n l i n e w i t h
other similar risk investments, as
well. The success of these t wo
other objectives largely depends
on a well -thought redeployment
strategy.
Regulations demand that regional
centers reinvest/redeploy capital
into new similar risk projects. This
activity can reduce regulatory risk.
However, while doing that, it leaves
the EB -5 investor powerless. As
mentioned above, going into the
Among other things, they check:
• the loan-to-value ratios of the EB-5 loan and the
senior loan
• the geography of the project to make sure that it
fits the new definition of TEA
• the developer’s experience in new development
projects and access to requisite capital so that
the developer’s interests align with that of the EB5
investors.
• the availability of a sound lender who conducted
rigorous due diligence and concluded that the
project was viable
• the developer’s track record of the number of I-526
approvals, I-829 approvals, and conditional green
cards obtained, as well as the record of capital,
returned.
Cynthia V. Gomez, Associate
(305) 428-4514
[email protected]
Southeast Financial
Center 200 S. Biscayne
Blvd. Suite 3600
Miami, FL 33131
(305) 428-4500
•
original EB-5 investment, the investor conducts a very
rigorous due diligence study.
After completion, sale, or refinance of the project, unless
the investors file their removal of conditions application,
the NCE can neither place idle funds in escrow nor return
the same to the investors. They need to redeploy. At
this point, if the NCE redeploys those funds to another
substantially riskier project, the initial credit analysis of
the initial project becomes a futile exercise.
B r o ke r - d e a l e r s c o u l d e n c o u r a g e r e g i o n a l c e n te r s
to employ a redeployment strategy that favors
diversification and increase the likelihood of capital
preser vation. In many instances, the NCE’s redeploy
the funds during the sustainment period without the
obligation to share the additional income they earn with
the investor. Broker-dealer involvement at the project
selection stage would help investors become aware of
these conditions of their investment. Broker- dealers
could confirm that the PPM contains details of the
reinvestment policy, such as the profit-sharing aspect of
any future redeployment activity.
Before affecting redeployment, broker- dealers would
also ensure that the regional centers know their notice or
consent requirements. They could also advise regional
centers to employ best practices
by:
"When a regional center
seeks consent from
the investors, those
investors could get an
unbiased opinion from
the broker-dealers on the
redeployment strategy"
• get ting the investors
i nvo l ve d i n t h e d e c i s i o n -
making process by giving
them reinvestment options
to choose from even if the
documents do not obligate
them to seek consent from
them,
• providing independent
verification of the
soundness of these options,
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