EB- 5 Immigrant Investment Program for Texas Dandan (Danna) Zou President and CEO, Texas Investment Regional Center Vice Chair Greater Austin Chinese Chamber of Commerce Chairwoman GACCC International Investment Committee 1
Agenda Texas Investment Regional Center (TexIRC) What is the EB- 5 program? How does the EB- 5 program work? Who invests in EB- 5 projects? What s in it for Central Texas Businesses? How can Texas Investment Regional Center (TexIRC) help you? Current Project 2
Texas Investment Regional Center (TexIRC) Matching with strong in Texas 3
USCIS EB-5 Program Attract and encourage foreign investment in US Heavy Focus on job creation 4
USCIS EB-5 Program Quick History EB- 5 category created in 1990 10,000 EB- 5 green cards available each year 3,000 set aside for regional centers (RC) Total visas issued: FY 2011 3,805 Q1 FY 2012 1,293 Slow start; Congress added regional center pilot program in 1993 Started to grow in mid- 1990s 5
USCIS EB-5 Program Quick History EB- 5 program is now on the increase especially through regional centers 90%- 95% EB- 5 visas obtained through RCs 194 approved RCs as of June 2012 stakeholder meeting - Just two years ago, there were only 114 20 approved RCs in 2008 6
How does EB-5 Program Work? Obtain Regional Center Designation Investors invest in projects through Regional Center Investors File for Conditional Residency and move to U.S. 2 years later, file for permanent green card if: 1) the capital is still in place and 2) 10 jobs have been maintained per $500k investment 7
3 Components of EB-5 Program Regional Center Designation Investor Marketing Regional Center Operations 8
Who invests in EB-5 Program? 9
Who invests in EB-5 Program? Chinese allocated 21% of their assets to real estate. Global average is 14% * Chinese interests in overseas real estate and immigration are getting stronger. Drop in housing prices in US Steady RMB have created an opportunity for wealthy Chinese to invest in real estate in the US. *Asia- Pacific Wealth Report 2008 by Merrill Lynch and Capgemini 10
The Wealthy in China China has 960,000 millionaires with personal wealth of 10 million Yuan or more (USD$1.5 million) ** Up 85,000 individuals or 9.7% year over year 2009-825,000 millionaires 2010-875,000 millionaires China also has 60,000 super rich with 100 million Yuan or more, up 9.0% over last year 4 out of 5 Chinese millionaires are considering sending their children to study overseas, with the US and UK their preferred destinations. Report also indicates that about 27% Chinese billionaires have been involved in emigration investment.*** ** The GroupM Knowledge - Hurun Wealth Report 2011 http://www.hurun.net/hurun/listreleaseen548.aspx *** China's Private Wealth Report 2011 issued by China Merchants Bank 11
Why do investors want EB-5? Permanent Residency in the USA Access to good schools for their children Growing cost of living in Asia Uncertain political climate in China Half of Chinese millionaires polled in 2011 said they are thinking of emigrating, mostly to North America* *Hurun Research Institute and Bank of China report, Nov. 2011 12
Why does the USA want EB-5? Investment Capital and Jobs!!! Since its inception in 1990, EB- 5 has been responsible for: 46,810 jobs more than $2.3B in investments all at no cost to the government Congress and Senate both voted to extend the program for 3 more years with bipartisan support 13
What s in it for Central TX Business? Businesses considering EB- 5 as alternative capital, sometimes the only source of capital EB- 5 may be the answer for many investment projects without traditional capital funding Job creation is mandatory requirement for EB- 5 Texas is currently behind East and West Coasts in EB- 5 deals 14
Why use a Regional Center? Regional Centers (RCs) bring investors to deals Potentially bring manufacturing projects from China The Regional Center Pilot Program allows $500k minimum qualifying investment if invested in a TEA or Rural Area vs. $1M minimum TEA designation area with unemployment of at least 150% of national average. Rural Area geographic area outside of an MSA and in a town having a population of 20,000 or less. RC allows indirect job creation to be counted 15
What projects are a good fit for EB-5 Capital? $25M to $125M Job Generators need 10 perm. jobs per EB- 5 investor Public and Private partnerships Shovel ready projects Business plan Economic analysis that will satisfy USCIS Located in a TEA or Rural Area Ongoing support New high net- worth immigrants need housing Support and services for new immigrants 16
Important Sectors for EB-5 Hotels Health Care Manufacturing Senior Living and Assisted Living Facilities Charter Schools Much more 17
Who is using EB-5 Funding? Developers for Marriott, Hilton, Hyatt, Starwood City Market at O Street- $225M mixed use project in Washington D.C., $15M in EB- 5 funding Hutchinson Medical Office Complex part of the 42 acre multi- building office campus in the Bronx West Village- Dallas, 20 story $100M mixed use project, $64M in EB- 5 funding Solaris Project a $375M mixed use project in Vail, Colorado, $80M in EB- 5 funding 18
EB-5 First Lien Capital Stack Example Project Cost $30M Private Equity 25% $7.5M EB- 5 Loan 75% $22.5M 19
EB-5 Second Lien Capital Stack Example Project Cost $50M Private Equity 25% $12.5M Construction Loan 40% $20M EB- 5 2 nd Lien 35% $17.5M Total Debt 75% $37.5M 20
How can TexIRC Help You? Established to help fund activities in Texas, with focus on central Texas Help configure projects so they are best suited for EB- 5 program Committed to the highest level of integrity and ethics to all stakeholders: Investors Developers/business owners USCIS TexIRC is focused on the following markets: Commercial real estate development Accommodation Restaurants Manufacturing Senior Living 21
Q&A Texas Investment Regional Center (TexIRC) www.texirc.com 512-850- 6568 Dandan (Danna) Zou President and CEO, Texas Investment Regional Center Vice Chair Grater Austin Chinese Chamber of Commerce Chairwoman GACCC International Investment Committee 22