Comment: EB5 Earthquake and Change of Guard

Changed EB5 Landscape

  • From 2012 to 2019, well over 2/3rds of the EB5 market consisted of large buildings in large cities built by developers with notable histories and having big names in the capital stack (which were significant economic entities outside of EB5 like big banks and marquee brands). Post regulation, i.e. post-Nov 21, large issues with 50+ investors appear to be less than 1/4th of the market. The median issue in the market seeks only about 15 investors. The overwhelming percentage of projects are based in small cities, with small buildings, with smaller developers with limited histories with local (nationally unknown) names in the capital stack.
  • There is a significant proportional increase in operating companies (without Real Estate assets) seeking EB5 capital - from about 5% of the old EB5 market to as much as 25% of the new EB5 market.
  • There is a greater geographical variety, a variety of asset classes, and a variety of names in the new EB5 market. We expect these trends to stay. In summary: A whole group of players left the EB5 market and a whole new group entered it.

Implications of the Change: What does this all mean?

  • Even a modest uptick in EB5 demand by investors will lead to supply shortages in EB5 issues available for investment. Over the past few months, demand has been artificially depressed by covid. As covid recedes, even a modest uptick in demand will swamp supply, since most issues are very small, and will quickly get fully subscribed once demand recovers.
  • An entire new tier of EB5 countries below the top 10 countries will develop. A dozen or so of these second tier EB5 countries off-the-beaten-path will enable smaller projects to complete their raises in a single country far away from most of their EB5 competitors.
  • The job of investors of project selection is harder due to the sheer number and diversity of players and the fragmentation of the market. Those in the investor supply chain (like agents in foreign countries) have their work increased. They will need to be working with 5 times the number of projects that they used to work with. They will need to do significantly more work for the same money as the value of EB5 capital remains the same. Immigration attorneys are in the same boat: the number of projects whose documents they will need to familiarize themselves with will increase significantly.
  • The chances of failure of EB5 projects goes up as the number of issues increases, however, there will be a larger number of smaller failures rather than a small number of big failures as in the legacy EB5 market of 2012-2019.
  • Covid has slowed down and obscured these massive earth-shaking trends in the EB5 market. These fundamental changes spring from the change of TEA definition. While covid is an acute problem which has drawn most of the EB5 industry's attention in 2020, the changes outlined above are chronic and will outlast covid.

Article: Venezuela and Terrorism-Related Inadmissibility Grounds (TRIG) by Ella F. Cleveland, Ph.D.

Article: Things Learned from EB-5 Chief at the IIUSA 2020 Virtual EB-5 Industry Forum by Joseph Barnett

Blogging: DHS Proposed Rule to Select only the Highest Wages in H-1B CAP by Chris Musillo

Blogging: Pennsylvania Construction E-Verify Law Now in Effect by Bruce Buchanan

Blogging: How Much More Damage Can the Trump Administration Do? by Jason Dzubow

Blogging: Is Trump planning a military coup so he can carry out his anti-immigrant agenda? Why are Republicans remaining silent? By Roger Algase

Focus: PERM For Beginners and Advanced Practitioners -- Inventory Clearance Sale 75% Off
Joel Stewart has done something remarkable in the new edition of THE PERM BOOK. He has taken the spaghetti of all the sources on PERM: legislations, rules, FAQs, cases etc. and reintegrated them into a simple and luminously logical progression of how to do PERM. In each of the chapters, he uses articles by notable practitioners and his own extensive commentary to provide deep insights on every aspect of PERM. If you are a seasoned PERM practitioner, you will appreciate the clarity of the organization seen in the table of contents below, and will discover many new insights in every chapter. For anyone relatively new to PERM, Joel Stewart serves as a trusted guide to your mastering the lay of the land of this complex area. This book belongs in the library shelf of every PERM practitioner.

Get your copy Now, Here:

Headline: San Diego Latinos plan to hold Biden accountable on immigration reform. Click here
Headline: Even as Trump Cut Immigration, Immigrants Transformed U.S. Click here
Headline: On Immigration, Biden's Biggest Promises Likely Hinge On Who Controls The Senate Click here
Headline: Under Trump, U.S. Citizenship and Immigration Services focuses on fraud Click here
Headline: Biden's First 100 Days: Here's What To Expect Click here

Letters of the Week

ComingsNGoings: Submit Your Announcement
If you have a professional announcement such as: New Position, Honors And Awards, Mergers & Acquisitions, New Office Address, New Appointment, New Associate, New Attorney, New Partner, that you wish to share with the Immigration Daily community, send your professional announcement to: comingsNgoings announcements is a free service

An Important disclaimer! The information provided on this page is not legal advice. Transmission of this information is not intended to create, and receipt by you does not constitute, an attorney-client relationship. Readers must not act upon any information without first seeking advice from a qualified attorney. Copyright 1995-2017 American Immigration LLC, ILW.COM. Send correspondence and articles to Letters and articles may be edited and may be published and otherwise used in any medium. The views expressed in letters and articles do not necessarily represent the views of ILW.COM.
Publisher: Sam Udani ISSN: 1930-062X
Advisory Board: Jason Dzubow, Rami Fakhoury, Matthew Kolken, Chris Musillo, Lory Rosenberg, Greg Siskind, Joel Stewart, Margaret Wong