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[Q] What are the basic investment structures and trends of Regional Center EB-5 projects?
Although the Regional Center (RC) EB-5 projects are engaged in a variety of industries, and after you examine many RC structures, it becomes readily apparent there are just two types of investment structures utilized by the Regional Centers.
One type of structure utilized by RCs pool the requisite investments from multiple EB-5 investors, then usually adds additional money from another party -- up to this point, it's the same for all RC -- and then partakes an equity interest in an actual business, such as renovating, building and operating a commercial real estate properties, dairy farms, ethanol manufacturing plants, which hire new employees. Then, the profit (if any) is divided between General Partner (either the RC operator or an affiliate) and Limited Partners (composed of EB-5 investors).
The second type of structure pools the requisite investments from multiple EB-5 investors into usually a Limited Partnership structure which acts as a New Commercial Enterprise -- up to this point, it's the same structure as the first type -- and then makes an investment loan(s) to a third-party company (both for-profit and non-profit) which borrows the loan for the specific purpose of using the investment loan to partly finance the bona-fide and job-creating project. The project can range from building hotels, hospitals, manufacturing plants, expanding shipyards, renovating huge office buildings, large, and high-class restaurants to using the investment loan to finance film production activities.
The gradual trend appears to be towards the second type of structure. Another trend is towards undertaking bigger projects, primarily because it takes a great deal of time and efforts to put together good EB-5 projects.
Which one do we prefer? It really depends on the specific characteristics of a particular EB-5 project, but everything being equal, we generally prefer the 2nd type of investment structure.