Masami Hibino

Return of investment criteria

Could you please comment on the return of the investment mechanism when we pick a project and invest through a Regional Center? We hear many divergent opinions on this. We would like to understand how it works in terms that are simple to understand.


Marko Issever
May 28, 2018 04:59 PM  Marko Issever

I am glad that you asked this question as just about all of our clients ask us this. When you make an eb5 investment through a Regional Center, you are purchasing a private placement in the form of equity. In other words, you are purchasing shares in a newly created entity (NCE). The NCE lends the funds it collects from all the investors including you to another legal entity called job-creating entity (JCE). The loan from the NCE to the JCE has a tenor, otherwise known as maturity. The JCE typically has a couple of (two or three) one year extension rights when the loan is due. They would use this right if the project owner is not yet in a position to pay back the loan due to delays in construction, sales or procurement of permanent financing. In most transactions, however once the senior loan, ahead in priority of payments to the loan made by the NCE to the JCE, is paid off the JCE would be ready to pay off the loan. The key is to understand that the NCE does not have any legal obligation to return the principal back to the EB5 investors. That said, we are not aware of any case whereby the funds have been ready to be returned to the investors and the NCE has decided to hold the funds longer than necessary despite the EB5 investor being ready to receive the said funds. Of course, in case the EB5 investor’s I-829 has not been adjudicated yet and their return of principal would jeopardize their entire EB5 application, the NCE could either hold on to their funds or on their behalf reinvests the funds in another project until the I-829 is adjudicated.


Securities Disclaimer

This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. Any such offer or solicitation will be made only by means of an investment's confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. This website does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. LLC and its affiliates expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.