EB5 Investors Magazine | Page 17

MZ: There is more time needed to educate agents and investors on “non-traditional” projects, which can be a challenge. Marketing non-traditional projects also relies on the involvement of certain agencies that are interested in diversifying their portfolios, which can also take time to find. For our regional center, the biggest advantage is helping projects receive EB-5 financing who might not otherwise. That equals job creation in our region. EB5 Investors Magazine: What other types of projects do you see popping up in the EB-5 industry, now that the real estate market seems to be back on track? Aker Philadelphia Shipyard at the Navy Yard TR: The Navy Yard is a good fit for the EB-5 program because it represents a coordinated approach to the development of a public asset. EB-5 financing enables this development and rather than simply representing low-cost construction financing, loans made to borrowers such as Aker and Rhoads enable the domestic preservation of an industry that is increasingly dominated by overseas producers. SEPTA is a good fit for the EB-5 program for different reasons. In that case, the local transit authority servicing the Philadelphia area was in need of a long-overdue upgrade but faced a restricted budget and competition for federal and state grants. The EB-5 financing allowed SEPTA to upgrade its fare collection system— thereby increasing revenue and enhancing efficiency—which otherwise would have been difficult to finance. EB5 Investors Magazine: Are potential investors skeptical about non-traditional projects at first? MZ: As a non-profit organization, we aren’t necessary looking for flashy projects, but rather, solid, well-packaged EB-5 projects. Unfortunately, agents often have a narrowly defined idea of what makes a ‘good’ project, which more often really just describes a project that is easier to sell. We have found that investors, on the other hand, are much more open to “non-traditional” projects so long as they fit into the risk tolerance of an EB-5 investment (job creation, exit plan, etc.). However, it is still important that the business model is easy for investors to understand. EB5 Investors Magazine: What are some of the challenges associated with more non-traditional projects? What are some advantages? TR: Some of the challenges for a “non-traditional” project may include underwriting issues if the borrower is a new industry, a project’s unproven technology, or a project that lacks a track record. However, “non-traditional” projects may also represent a unique opportunity to utilize EB-5 in the way in which it was originally intended—to encourage and promote U.S. jobs. “Non-traditional” projects may also be more high profile than, say, a hotel development. MZ: We have screened projects like airplane design and manufacturing, hydroponic lettuce growing, medical device technology, a cement company, fertilizer plants, renewable energy plants, a natural gas trucking fleet, a transportation loading facility, and even a dance production. TR: We believe that as the EB-5 program has grown in popularity, borrowers are becoming more knowledgeable about the program. We believe we’ll see increased inbound inquiries from borrowers who have not historically utilized EB-5. EB5 Investors Magazine: What are your suggestions to Chinese migration agents regarding matching up investors and projects? TR: As with all projects, it is important to be able to communicate all aspects of the project, including credit worthiness, source of repayment, exit strategy, and appropriateness for the investors’ risk appetite. MZ: Chinese migration agents should understand the robust discussions that are taking place regarding changes to the EB-5 program. These changes could include an increase in the program’s minimum investment amount. This could come in the form of a reduction in the flexibility of gerrymandering TEA zones, making it harder for projects (e.g. in Manhattan, San Francisco, etc.) to qualify as a $500,000 investment. Expanding on that, the majority of the coun ѥ