acg eb-5 presentation- market research, tenant occupancy, and direct investment
DESCRIPTION
Aginsky Consulting Group (ACG) presented on March 30th at the EB-5 event "Unlocking Foreign Capital through the Federal EB-5 Program" sponsored by the EB-5 Institute in Portland, Oregon. These slides summarize our presentation. For more information please contact us at (503) 546-4049 or [email protected]TRANSCRIPT
Navigating Through the EB-5 Landscape: Market Research,
Tenant Occupancy, and Alternative ApproachesBy Manuel Rivera & Yurop Shrestha
Outline of the PresentationManuel Rivera
Market ResearchTenant Occupancy Issue
Yurop ShresthaObjective Comparison: Direct
Investment V. Regional Center
April 11, 2023 www.aginskyconsulting.com 2
The Role of Market Research
For the USCIS
For Investors
For the Management Team
www.aginskyconsulting.com 3April 11, 2023
ACG Methodology: PFN
General Industry Trends (U.S.)
Comparable Cities
Portland
Neighbor-hood
Progressive Focus Narrowing (PFN)Approach.
Precedes the development of a sound business strategy.
www.aginskyconsulting.com 4April 11, 2023
General Industry Trends
General Industry Trends (U.S.)
Comparable Cities
Portland
Neighborhood
Macroeconomic factors and their impact in the industry.
Penetration rate in similar markets.
www.aginskyconsulting.com 5April 11, 2023
Local Industry Trends
General Industry Trends (U.S.)
Comparable Cities
Portland
Neighborhood
Microeconomic factors affecting the local industry.
Distribution within a specific area.
Key local players.
www.aginskyconsulting.com 6April 11, 2023
Tenant Occupancy
“The ‘tenant-occupancy’ methodology seeks credit for job creation by independent tenant businesses that lease space in buildings developed with EB-5 funding. USCIS continues to recognize that whether it is economically reasonable to attribute such “tenant-occupancy” jobs to the underlying EB-5 commercial real estate project is a fact-specific question. Each case filed will depend on the specific facts presented and the accompanying economic analysis.”
(USCIS, Feb. 2012)
www.aginskyconsulting.com 7April 11, 2023
ConsequencesNew difficulties for investors
seeking permanent residency through a RC.More RFEs are being issued on I-526
and I-829New difficulties for RCs
During Q1 of 2012 the Agency denied 61% of the applications for new regional centers. Only 39% were denied during fiscal year 2011
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Addressing the Problem
Painting the RIGHT PictureMarket Research is KEYEconomic studies need to be more
thorough:Show vacancy: unemployment ratioDemonstrate wage and rental pressures
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The Situation
The RE Development Project
The Tenant
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Employees VS Space Utilized
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12009 2010 2011 2012
0
10,000
20,000
30,000
40,000
50,000
60,000
0
20
40
60
80
100
120
140
160
180
200
# SF Utilized Logarithmic (# SF Utilized)# Employees Logarithmic (# Employees)
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STAGNATION
Avg. Wages and Rental Rates
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12009 2010 2011 2012
$10,000.00
$15,000.00
$20,000.00
$25,000.00
$30,000.00
$35,000.00
15
25
35
45
Wages Exponential (Wages)Leases ($/SF/Annum) Exponential (Leases ($/SF/Annum))
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Thinking Outside of the Box
Direct Investment is an ALTERNATIVE.
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Regional Centers VS Direct Investment
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Business Control Investor maintains control over
his/her investment rather than relinquishing it to a 3rd party
Final decision making power remains with the investor
www.aginskyconsulting.com 15April 11, 2023
Higher Returns The typical regional center offers
about 1–3% returns on investment By investing directly into a
business, there is no limit to the recurring revenue stream
www.aginskyconsulting.com 16April 11, 2023
Greater Numbers of Options Regional centers tend to invest into
a very small no. of industries Majority are real estate developments Energy, Healthcare, Manufacturing
Taking the Direct Investment path Virtually any industry
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InvolvementSome prefer a more passive role Some investors prefer to be
involved in the day to day operations and be the driving force behind the operation
Direct investment offers choice, regional centers don’t
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Transparency Since the
investor owns the business
He has access to any information related with the asset at ANY time
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Tangible Asset By investing into a regional center,
an investor often gets shareholder rights in a large organization Ownership structure is often confusing
With a direct investment, there is no confusion regarding what was actually acquired
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Reduced Risk “Always try to invest in a company
that a monkey could run and still reward shareholders because eventually a monkey will run it” – Warren Buffet
Too many moving parts and potential for pitfalls in RC’s
Meeting the job creation requirement can get challenging www.aginskyconsulting.com 21April 11, 2023
Global Business DiversificationEB-5 will allow investors who
already have a business in their home country to Diversify geographically Increase brand equity/overall value of
the business Technology transfer Have access to US capital in the future
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ConclusionImportance of Market Research
Tenant Occupancy Rule
Direct Investment – An alternative
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Thank youAGINSKY CONSULTING GROUP, LLC.WEB: www.aginskyconsulting.com
EMAIL: [email protected]: 877-WITH-ACG