For potential EB-5 investors, the most important questions to ask are: Will my investment meet all EB-5 requirements for securing a green card, and how confident am I that my $500,000 investment will be returned in a timely manner?
Investors need to be confident that the funds they invest will meet the United States Citizenship and Immigration Services (USCIS) requirement of creating at least 10 American jobs. If this requirement is not met, investors will not be eligible to receive a permanent U.S. green card.
Investors should also be comfortable that there is minimal risk of capital loss, and that, if successful, their investment has been structured for a timely return of capital once their permanent green card is approved.
LCR Capital Partners designed its flagship EB-5 investment offering, Surf Club Four Seasons Hotels & Residences, to serve these three main objectives: Dependable job creation; Principal protection; and Timely return of capital.
Why we believe the Surf Club Four Seasons project is lower risk than other EB-5 investment projects:
Job creation risk
The project has already created over 8,000 construction-related jobs. The hotel opened in March 2017; therefore, the job-creation credit for our EB-5 investors will be met immediately upon their I-526 submission. Investors in typical EB-5 real estate investment projects must usually wait for the successful completion of the project before they can be certain sufficient jobs have been created, which can take years.
Project completion risk
Again, a major portion of our project has already been successfully completed, and is open to the public. Other EB-5 investment projects will be at various stages of construction/completion at the time of investment, and some may not have even started. This increases the risk for investors, as the success of their green card application is tied to the successful completion of the project and the number of jobs created.
If the project has already been completed, how does it create new jobs?
USCIS permits jobs that have already been created to be credited to EB-5 investors if EB-5 funding replaces existing debt. In the case of the Surf Club Four Seasons project, LCR financing will be used to replace existing bridge financing for the project.
What is the overall capitalization of the project?
The Surf Club Four Seasons Hotel & Residences is a very well capitalized project. In the extremely unlikely event of default, our investors would have as collateral the equity in the hotel and the condominium company.
What are the provisions of the loan agreement?
There are specific mechanisms in the loan agreement that offers investors greater protection in terms of collateral coverage than most EB-5 loans.
- Collateral coverage ratio: The developer is contractually prohibited from falling below 1.2x collateral coverage.
- Debt-to-equity ratio: The developer must always maintain a maximum debt-to-equity ratio of 80:20.
What is the expected timeframe for repayment of the EB-5 investment?
The term of the EB-5 loan is 5 years and we expect the repayment of the investment to occur in 2022.
Is there an Independent Due Diligence Report on the Surf Club Project?
Yes, a comprehensive, independent due diligence report on LCR’s Four Seasons Surf Club EB-5 investment project has been compiled by EB-5 Diligence, widely considered one of the leading due diligence firms in the EB-5 industry. EB-5 Diligence conducts detailed independent analysis of EB-5 offerings thus helping investors make more informed investment decisions. Their reports outline both the financial and immigration risks investors face by identifying the backgrounds of the principals, the financial viability of the project, the reasonableness of the job creation estimates, and the investor’s exit strategy. This report is the product of weeks of detailed research by an independent investment advisory firm and is available to investors upon request.
LCR’s track record
We earned our first regional center designation by the USCIS in May 2014, and successfully closed our first fund in late 2015. LCR has welcomed clients from 15 different countries into five LCR-sponsored investment projects. This track record places the firm in the top 10% of all regional centers operating today.
Industry-wide approval statistics for I-526 applications were 93% for the first quarter of 2017*. The expectation is that our first EB-5 investors will receive their I-526 approvals beginning in 2018, and we’re contractually committed to returning the full investment, and admin fee, amount if any of our investors are not approved at the I-526 stage.
How does LCR differentiate itself from other regional centers?
LCR’s EB-5 investment projects are focused on premier, global brands with dependable job creation. By design, we have taken a conservative, risk-averse approach to project selection, and thus we structure our investors’ capital as five-year, secured loans to help fuel the expansion of premier hospitality brands (e.g. Four Seasons Hotels). We firmly believe these strong brands are ideally suited for our EB-5 investors, as they have long, proven histories of operating success and are some of the most efficient converters of capital into jobs.
Interested? Find out more here
*Source: IIUSA; https://share.geckoboard.com/dashboards/F7C1F0339D47813D