On March 17, I attended the 6th Annual Invest in America Summit held in Beijing. As a follow-up to my post last week, I will address the following issues that resulted from the conference.
Too many deals available. The market, especially in China, has been bombarded with an enormous number of credible projects. Therefore, good deals that more readily got done are now actively competing with each other to obtain funding. Costs increases – As the result of the competition stated above, the overall marketing costs could potentially be increasing as a function of supply and demand. There is some concern over the new potential legislation, but that is not a driving factor. There was inquiry as to the increased SEC involvement in the EB-5 process, although there are some misconceptions as to the role of the SEC. My goal was to explain that the SEC provided significant protection to the program and the investor interests.Based upon these concerns, solutions include the following:
The sooner the better as to investment in order to get in to the visa queue line as soon as possible, since the visa wait at this time will only get longer. Seek EB-5 capital from markets other than China in other to mitigate the retrogression risk. Seek other visas to enter the country on an extended basis in order to offset the retrogression time delay. There is now much more of a need to differentiate a project by emphasizing the location, the developer equity, developer guarantees, as well as potential governmental sponsorships. There needs to be a heightened focus on escrow arrangements early releases and the developer guaranty. This will be addressed in a future post. If one is marketing in China, no substitute for boots on the ground there, with detailed participation in the marketing process.