ACG EB-5 Presentation- Market Research, Tenant Occupancy, and Direct Investment

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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 acgpdx@aginskyconsulting.com

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ACG EB-5 Presentation- Market Research, Tenant Occupancy, and Direct Investment

  1. 1. Navigating Through the EB-5 Landscape: Market Research, TenantOccupancy, and Alternative Approaches By Manuel Rivera & Yurop Shrestha
  2. 2. Outline of the PresentationManuel Rivera  Market Research Tenant Occupancy IssueYurop Shrestha Objective Comparison: Direct Investment V. Regional CenterApril 3, 2012 www.aginskyconsulting.com 2
  3. 3. The Role of Market ResearchFor the USCISFor InvestorsFor the Management TeamApril 3, 2012 www.aginskyconsulting.com 3
  4. 4. ACG Methodology: PFN General Industry  Progressive Focus Trends (U.S.) Narrowing Comparable Cities (PFN)Approach.  Precedes the Portland development of a Neighbor -hood sound business strategy.April 3, 2012 www.aginskyconsulting.com 4
  5. 5. General Industry Trends General Industry Trends Macroeconomic (U.S.) factors and their Comparable Cities impact in the Portland industry. Penetration rate in Neighborhood similar markets.April 3, 2012 www.aginskyconsulting.com 5
  6. 6. Local Industry Trends Microeconomic General Industry Trends (U.S.) factors affecting Comparable Cities the local industry. Portland Distribution within a specific area. Neighbor hood Key local players.April 3, 2012 www.aginskyconsulting.com 6
  7. 7. 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)April 3, 2012 www.aginskyconsulting.com 7
  8. 8. ConsequencesNew difficulties for investors seeking permanent residency through a RC. More RFEs are being issued on I-526 and I- 829New 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 2011April 3, 2012 www.aginskyconsulting.com 8
  9. 9. Addressing the ProblemPainting the RIGHT Picture Market Research is KEY Economic studies need to be more thorough: Show  vacancy: unemployment ratio Demonstrate wage and rental pressuresApril 3, 2012 www.aginskyconsulting.com 9
  10. 10. The SituationThe RE Development The TenantProject April 3, 2012 www.aginskyconsulting.com 10
  11. 11. Employees VS Space Utilized60,000 200 18050,000 160 14040,000 12030,000 100 80 STAGNATION20,000 60 4010,000 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 # SF Utilized # Employees Log. (# SF Utilized) Log. (# Employees) April 3, 2012 www.aginskyconsulting.com 11
  12. 12. Avg. Wages and Rental Rates$35,000.00 45$30,000.00$25,000.00 35$20,000.00 25$15,000.00$10,000.00 15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 Wages Leases ($/SF/Annum) Expon. (Wages) Expon. (Leases ($/SF/Annum)) April 3, 2012 www.aginskyconsulting.com 12
  13. 13. Thinking Outside of the BoxDirect Investment is an ALTERNATIVE.April 3, 2012 www.aginskyconsulting.com 13
  14. 14. Regional Centers VS Direct InvestmentApril 3, 2012 www.aginskyconsulting.com 14
  15. 15. Business ControlInvestor maintains control over his/her investment rather than relinquishing it to a 3rd partyFinal decision making power remains with the investorApril 3, 2012 www.aginskyconsulting.com 15
  16. 16. 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 streamApril 3, 2012 www.aginskyconsulting.com 16
  17. 17. 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 industryApril 3, 2012 www.aginskyconsulting.com 17
  18. 18. InvolvementSome 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’tApril 3, 2012 www.aginskyconsulting.com 18
  19. 19. TransparencySince the investor owns the businessHe has access to any information related with the asset at ANY timeApril 3, 2012 www.aginskyconsulting.com 19
  20. 20. 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 acquiredApril 3, 2012 www.aginskyconsulting.com 20
  21. 21. 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 challengingApril 3, 2012 www.aginskyconsulting.com 21
  22. 22. Global Business DiversificationEB-5 will allow investors who already have a business in their home country to Diversifygeographically Increase brand equity/overall value of the business Technology transfer Have access to US capital in the futureApril 3, 2012 www.aginskyconsulting.com 22
  23. 23. ConclusionImportance of Market ResearchTenant Occupancy RuleDirect Investment – An alternativeApril 3, 2012 www.aginskyconsulting.com 23
  24. 24. Thank youAGINSKY CONSULTING GROUP, LLC. WEB: www.aginskyconsulting.comEMAIL: info@aginskyconsulting.com TEL: 877-WITH-ACG

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