Facts You Didn’t Know About Australia’s Regional Areas Australia is a country full of natural beauty and magnificent ecological diversity. With tropical climates in
EB5 Investor visa
Apply for our services
Market Concentration of EB-5 Regional Centers
The top seven states with the most EB-5 regional centers account for 54% of all EB-5 regional centers in the United States. California has the greatest percentage of EB-5 regional centers, with 19%. The next highest is Florida, which has 8% of all EB-5 regional centers, followed by New York, which has 7%.
In the last year, applications for new EB-5 regional centers have soared. Furthermore, the number of approved EB-5 regional centers increased by 88% in 2015. With new regulatory changes for EB-5 regional centers on the horizon, we may see many EB-5 regional centers merge and begin to prefer renting or affiliating over owning.
EB-5 Project Concentration Project Concentration by State 2015 Slide 2 Project Concentration (V2)
New York, Florida, California, and Texas are the top four states for EB-5 projects, accounting for 62 percent of all projects completed in the United States. New York has an unusually large number of projects. Despite having just 7% of all regional centers, it accounts for 22% of all projects. On the other hand, while having 19% of all regional centers, California only completes 14 percent of projects.
The top states for EB-5 projects are predictable, given that foreign investors seek appealing and familiar locales for their projects.
Project Distribution by Industry Sector 2014 – 2015 Slide 3 Project Distribution by Industry Sector (V2)
In 2015, developers and investors were more interested in resort, casino, and hotel buildings, as well as multi-family housing projects, than in 2014. Meanwhile, as a percentage of total project distribution, projects in retail and restaurant development, public works, and healthcare fell. Energy and mixed-use office space have remained generally stable.
Multi-family housing developments, in example, increased significantly from 6% of all projects in 2014 to 22% in 2015.
Distribution of EB-5 Capital by Industry Sector 2014–2015 Slide 4 Distribution of EB-5 Capital by Industry Sector (V2)
In 2015, EB-5 financing flowed towards multi-family housing projects, resorts and casinos, and mixed-use office space, accounting for 69 percent of total capital raised. Another 18% of money raised in 2015 was for public works and energy. When compared to 2014, however, there was a decrease in financing for mixed-use office space, healthcare, and retail and restaurant buildings.
Funding for multi-family housing developments increased dramatically in 2015, as seen by the increase in multi-family projects from 2% in 2014 to 22% in 2015.
Project Size and Distribution in 2015
2015 Target Raise Slide 5 Project Size and Distribution in 2015 (V2)
Only a small percentage of initiatives reach their fundraising goal. In 2015, 22% of initiatives attempted to obtain more than $500 million in finance, however just 1% of those projects were successful. Only 9% of the ventures that intended to generate between $100 million and $500 million succeeded.
In contrast, just 9% of initiatives planned to fund between $5M and $20M, while 37% of projects ended up reaching that amount. Fewer than 1% of initiatives establish a fundraising goal of less than $5 million, while 16% of projects receive funding in that amount. In fact, 63 percent of all initiatives raise between $5 million and $50 million. While most investors establish lofty fundraising targets, only a small percentage of them are met.
Size of Target Raise, 2011–2015 (V2)
Since 2011, the average goal rise has increased by about 30 percent per year. However, for the first time in five years, investors set reduced fundraising targets in 2015. This shift is mostly due to fewer investors offering funds for projects from $100 million to $500 million and more over $500 million.
Overall Summary by State in 2015
Overall State Summary in 2015 Slide 7 Overall State Summary in 2015 (V2)
When it comes to EB-5 projects, four states stand out: New York, California, Florida, and Texas. These four states are home to 62 percent of all projects, 75 percent of all target raises, and 40 percent of all regional centers.
2015 Funding Model 2015 Funding Structure Slide 8 2015 Funding Model (V2)
EB-5 project developers are frequently required to invest more stock and less financing in their projects than they had planned for in their target raise. In 2015, the average fundraising structure for target raises was around 94% debt, 5% equity, and 1% bonds. In practice, however, most initiatives fall short of this finance arrangement. Typically, projects have 87 percent debt, 12 percent equity, and 1% bonds. As competition for investment dollars heats up, many international investors prefer projects where developers have a greater stake.
Structure of Debt Financing – Interest Rates
Interest Rates – Debt Financing Structure Slide 9 Debt Financing Structure – Interest Rates (V2)
Loans are paid out to project developers at a rate of between 3% and 6% for most projects spanning a wide range of industries, from resorts to manufacturing. A few projects are able to acquire financing rates ranging from 1% to 3%. Only a few projects are obtaining financing rates exceeding 6%. Most projects appear to provide a 0%–1% interest return to the investor, however others are promising up to 2%. Competition for foreign investment may continue to force developers to enhance the interest rates given to investors.
Investor Market Growth Trends in 2014 vs. 2015
Growth Trends in Investor Markets 2014 versus 2015. (V2)
South America, notably Columbia, Argentina, Brazil, and Venezuela, had an extraordinary increase as a new source of EB-5 investors in 2015. Columbia, for example, had close to a 1300 percent spike in new investors, due in part to its tiny sample size. Asian nations such as South Korea, Hong Kong, India, Vietnam, Russia, and Taiwan all had rapid development, with South Korea experiencing 600 percent increase since 2014. Canada and Mexico are developing as new markets for international investment in North America.
The New Normal: Early Release Escrow
The New Normal: Early Release Escrow Slide 11 The New Normal: Early Release Escrow (V2)
Projects are being paid earlier and earlier, with early release escrow becoming the norm in project agreements. Most projects enabled some type of early release escrow in the fourth quarter of 2015. This pattern corresponds to shorter processing times for I-526 forms.
Latency Between Contract Signing and Investor Funding EB-5 Funding Analysis Slide 12 EB-5 Funding Analysis (V2)
One of the most typical queries project developers have is, “How long will it be after all of the paperwork until I receive financing for my project?”
Typically, it takes a bit more than a year following the contract signing to secure investor cash. Only a small percentage of projects get funded within a few months of contract signing. The majority of companies acquire investor funding between 4 and 20 months. Fundraising is a time-consuming and tough process, especially attracting the initial few investors.
Cumm Investors Funded vs. Time Since Contract Signed EB-5 Funding Analysis Slide 13 EB-5 Funding Analysis (V2) (V2)
Fundraising is a time-consuming and costly activity. Even a year after contracts are signed and documentation is filed, most projects only raise 60% of the funding required. It takes around two years for a project to raise 90% of its funding objective. Successful project developers anticipate these fundraising obstacles and plan their financing arrangements appropriately.
Read from our Blog
Important Things To Consider If You Want To Invest In Canada What makes Canada such an attractive investment destination? It has a lot to offer