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How it all began
Ekins and McCarthy’s partnership dates back to a friendship
developed as undergraduates. The two remained in touch as
careers and education took them in different directions, even
internationally, before their professional paths crossed again:
McCarthy worked with the Governor of Washington in the
Executive Policy Office, and Ekins was managing family trusts
in commercial real estate. Then, in their mid-to-late 30s, the
two started American Dream Fund, and the company opened
its first regional center in Los Angeles in 2009. More regional
centers quickly followed—one in Las Vegas in 2010, another
in Portland in 2011, and the most recent in Orlando in 2012.
Like many in the EB-5 industry, their paths to careers in
EB-5 were not entirely linear, though their previous professional experiences have contributed to the success of ADF.
Ekins originally pursued a career in international business; he
previously lived in China and Taiwan, operating manufacturing
facilities and managing international exports. McCarthy earned
graduate degrees in both engineering and law and, following a
career in government, relocated to southern California, where
he co-founded McAdam & McCarthy. It was their combination
of McCarthy’s legal prowess and EB-5 knowledge, and Ekins’s
experience living in Asia and working in real estate, which led
them to EB-5 success. Perfectly poised for EB-5, Ekins and
McCarthy embraced the opportunity to use the program to
help fund one of the biggest projects in the industry to date.
A key strategy in the SLS deal was conducting due diligence
beyond the minimum required for I-526 petitions. ADF used
3rd party verification to do their own economic reports, and
ensure that the project was EB-5 appropriate. This was necessary not only to gauge the probability of the project’s EB-5
and financial success, but also to market the project to foreign
investors, who want to make sure the project is right for them
before signing away such a large investment.
However, Ekins and McCarthy also acknowledge that they do
not have to perform due diligence all on their own. By working
with the trusted brand names of Stockbridge and JP Morgan
on the SLS project, they can also rely on the due diligence of
other players. These big names are not only just as invested
in the SLS’s potential success, but also have a lot of practice
conducting due diligence and can be trusted as a reliable source.
ADF was initially attracted to the project because of
Stockbridge’s involvement with retirement funds. Ekins and
McCarthy felt that this showed a mutual understanding of these
investments as having a defining effect on people’s lives. Ekins
and McCarthy say that they “do lose sleep over the idea that
someone is entrusting [them] with their immigration status.”
Stockbridge’s history with retirement funds signaled to Ekins
and McCarthy that the group knew how to handle accounts
motivated by more than just profit, and ADF felt they had a
strong commitment to the EB-5 investor. This not only gave
ADF confidence in the project, but they also knew that it would
make it more marketable to investors.
Heading up the SLS EB-5 raise
ADF’s involvement in the SLS hotel began when Stockbridge
approached the duo with the project and an interest in using
EB-5 funds. Stockbridge had researched the EB-5 program, was
interested in using the financing method, and wanted to find
the appropriate team to head the EB-5 raise. The company was
looking for the regional center that would best represent the
project and be able to manage the raise on the EB-5 side. Ekins
and McCarthy agreed to this particular project only after thorough due diligence, and a background check of Stockbridge’s
long track record, financial resources, credibility, and history
of similar projects. After a long dialogue, ADF worked with
Stockbridge to structure the project to be EB-5 friendly, which
meant setting up a loan model that did not require EB-5 investors to be involved in the day-to-day matters of the business.
EB-5 investors provided capital flow to the project by investing in a special purpose entity (SPE) set up by ADF to loan
funds to the SLS project. As such, investors are able to fulfill
the program requirements with minimal actual involvement in
the business. While EB-5 funds make up about 35 percent of
the total investment in the project, this structure is indicative of
a wider trend to view EB-5 investments in real world business
terms—as just one part of a successful capital stack. EB-5 funds
work in concert with other loaning parties and private equity
brought in by the owners of the project.
32
George Ekins (left), and Joe McCarthy (right).
Although the project was backed by reputable sponsors, Ekins
and McCarthy nonetheless encountered difficulties marketing
the project abroad in the wake of the controversy surrounding
A Chicago Convention Center. Potential EB-5 investors became
understandably cautious of the program, which made it much
more difficult for ADF to get these investments. However, because the project was built on a strong foundation with reputable
players, and had been adequately vetted for EB-5 compatibility,
ADF was able to bring in over 600 interested investors. Because
they had conducted due diligence, they were able to ensure,
from the very beginning, that they were choosing a project that
would be attractive to investors.
E B 5 I n v e s to r s M ag a z i n e