years, USCIS has been very vocal of interpreting the law
such that the EB-5 investors’ funds have to be “at-risk” at
least until I-829 filing.
Even without any retrogression considerations, I-526
approvals, as well as subsequent immigration steps, are
taking longer than previously. Thus, even if the initial project
is successfully completed, sold or
refinanced, if the investor is not
able to receive back his capital, the
capital will need to be redeployed.
CATEGORY D: RETURN ON THE CAPITAL INVESTMENT
This used to be the least important criteria. Investors were
told to focus on the return of their investment rather than
return on their investment. Most EB-5 investors have been
primarily concerned about getting their conditional green
card and keeping it by making sure that the conditions are
removed following I-829 filing. The second criteria that
investors cared about was to be
able to get their capital back. The
timing of the capital return and the
return on the capital investment
has for the most part been ignored.
Most projects that offered “above-
market” returns were projects that
the savvy investors preferred to stay
away from due to their undue risk.
Today, with the increased required
investment amounts for both TEA
and non -TE A projects, return on
the investment can no longer be
ignored.
"Regional centers who
have adopted the new
USCIS policy of paying
back soon after the I-829
filing as opposed to after
the I-829 adjudication,
should be preferred."
One key criterion in this category
is whether the regional center has
updated its policy to payback eligible
investors at the I-829 filing stage,
as opposed to the I-829 approval
stage. This could have dramatic
implications. While we expect most
I-829’s filed to be adjudicated within
a year, the USCIS website is currently
showing otherwise. They are posting
2 3 .5 to 5 4 m o n t h s . T h e r e fo r e ,
regional centers who have adopted
the new USCIS policy of paying back soon after the I-829
filing as opposed to after the I-829 adjudication, should be
preferred.
In a typical EB-5 financed project,
the cost of funds for the alternative
financing method of EB-5 is between 8 to 12% per annum.
Therefore, developers could afford to pay a reasonable rate
for the use of these funds and still save a significant amount
on the cost of their funding. The sharing of the investment
returns with the EB-5 investors has already begun in certain
projects at the redeployment stage.
Going forward in the new environment, EB-5 investors need
to get a clear explanation of the redeployment strategy.
They will also need an explanation of the revenue sharing
arrangement with the regional center who will most likely
be redeploying their funds. The return that is offered to the
EB-5 investors will need to better reflect the opportunity
cost of tying their money for so many years.
Marko Issever
is CEO of America
EB5 Visa, whose mission is to connect
international investors with EB-5 issuers.
He is also a managing director at Riverside
Management Group, where he leads the
firm’s EB-5 capital-related activities via its
wholly owned subsidiary, BCW Securities.
Previously, Issever was a managing director
at BNY Mellon, leading the firm’s financial
institutions derivative sales business
globally. Issever earned his MBA in finance
from The Wharton School of the University of Pennsylvania. He is
also a graduate of Bogazici University and Robert College, located in
Istanbul.
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