EB5 Investors Magazine Volume 7, Issue 2 | Page 21

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. EB5INVESTORS.COM 21