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Immigrant helped finance his apartment tower in Oakland at 1900 Broadway
A photographic representation through Colin Behring of Behring Companies (Getty, Behring Companies)
Colin Behring Companies is widely known as the developer of the EB-5, which faced the United States twice and won.
Behring said his Danville-based company filed a lawsuit after U. S. Citizenship and Immigration Services and the Department of Homeland Security “randomly” cut the program, created in 1990, that allows foreign investors to obtain a green card if they invest a minimum of $800,000 for a task that creates at least 10 full-time jobs.
It’s “a little stressful for our investor base and for the entire EB-5 industry” that those instances have come through the legal system, he said. But after the settlement, it became clear that “EB-5 is back” and, as a plaintiff in this case, Behring is in the perfect position to cash in on his newfound notoriety.
“A lot of new investors who saw the program reopen knew exactly who we were, because we were the explanation for why the doors opened again,” the East Bay developer said. “Our program and platform grew about 300% after that. »
Behring’s most recent EB-5 assignment is 1900 Broadway in Oakland’s Uptown neighborhood, a 39-story tower just above the 19th Street BART station that recently began leasing.
In a verbal exchange with TRD, Behring explains why he has a long-term vision for the Oakland market, why it’s better for remote workers, and where EB-5 is headed in the future.
After six weeks of effort, our 452 sets are approximately 25 percent complete, and rents are 15 to 20 percent less than we expected when we planned the project.
We arrived and started searching this site in 2017, and the world was completely different. The tech boom in San Francisco has spread to Oakland, and Oakland’s job market has seen the fastest growth in rents in the world. Singapore, Tokyo, London and Hong Kong didn’t matter: Oakland was number one.
The global has changed since COVID, it’s easy to identify. However, we were at the end of the cycle when we started structuring at the end of 2019 and everything after that was put on hold. There’s nothing new to come. What you get is what you get, and once it’s filled, the source and demand will increase rents.
When you have secure products that are quick to build, quick to support, and quick to deploy, you can focus a little more on watching the market. But we have a 39-story tower, close to public transportation and BART stations. , and the timing of that investment is actually considered generational. You are in a privileged location of great quality. You have all the infrastructure you need in perpetuity. The price of this construction will increase over time. We’d like to keep it forever. That’s not to say we’d forget to make sound money decisions if someone tried to buy it from us, but we’ll face that challenge when we get there.
I think the entire market will soon see hiring increases across the board. We are building enough housing and the economic expansion continues.
2025. I think that’s when we start to see the headlines about the origin crisis.
We have mezzanine debt limited to approximately 20% of the principal. Then, above 20, all the equity, and then we have a 50% senior loan from OZK Bank.
We have 14 new homes in our portfolio and in the process of doing all types of EB-5 financing. But it’s all aimed at the multifamily urban domain from the East Bay to Berkeley, Emeryville and Oakland. We opened it last August and they’re almost at 30% capacity, which is pretty smart because it’s a $128 million capital raise.
We never publish an EB-5 assignment that does not have the ability to stand on its own. EB-5 helps you do this faster and makes the equation much more useful to other investors.
The time when EB-5s had become a family claim in the aftermath of the Great Financial Crisis. All doors to investment were practically closed. EB-5 has provided a much-needed source of investment and you are seeing it again. We are seeing a significant increase in inquiries about the program.
However, I wouldn’t say that there are many more projects that are launching EB-5 investments or acquisitions. But in fact there’s a lot of research, and other people need to know more, because the global EB-5 has grown tremendously and matured. Barriers to check-out have increased dramatically since the post-financial crisis of 2010-2011, when it was literally the Wild West, where anyone could just show up and leave to do the EB-5.
Nowadays, it’s hard to have to hire someone new when you have an organization that has a track record like ours and a full portfolio of functions to reach deals that are already fully prepared, under construction, and creating jobs.
I was living in China in 2010 and many of my family, friends, other people, and partners would come to us with EB-5 options and ask me, “Which one do I choose?We looked at it and, from an investment perspective, none of them were remotely institutional. So, after enough projects that can’t help anyone, and many other people ask us, “Can we just invest in your products in the U. S. ?”Can the U. S. be eligible for EB-5? In the end, we ended up creating the regional media [to advertise the program]. And then, 10 years later, here we are.
But we were already developers. We were precisely what you would need us to be. Most of the other people who ran those other regional centers, if you take a look at the executives, the founders, and a lot of the staff, are other people who are closer to the investor than they are to the project. This is a user from a safe country where they are an immigration lawyer, accountant, or representative of some kind and who has access to the money. They’re between projects and investors and that’s how they go up in value.
China, India, Vietnam, and even Brazil used to be the big four or five countries. Today, there is a distribution between India, China, Korea, and then a plethora of other countries with very little representation.
There are also foreign scholars who place us locally. They’re on the streets of Stanford, Berkeley, and UCSF. Then the H-1B world, whether they work for Google, Apple, Facebook, etc. or for small start-ups. So we have other people from all over.
There are other tactics for starting the program with less than $800,000. You can invest in stages, and our company has a subsidiary that lends cash for EB-5 investments if you so choose.
$800,000 is a lot of cash for anyone. Therefore, having to pay fees and loan functions reduces the value of the voucher and at the same time allows them to participate in the program.
It’s not a simple program because of the $800,000 mark, but that’s the investment point we want to make an economic impact. The program doesn’t work for everyone, however, a smart portion of the population is looking for ways to access it.
That changes, but I’d probably say it’s a 50% relief from other intermediate debt resources you can find.
It’s a popular choice for mezzanine debt because it won’t have competitive costs with a senior loan, and that was especially true before 2022, when interest rates were low. If you can get a senior structure loan of up to 5%, you wouldn’t be able to compete because the cost of running the program is too high.
If you take a look at today, where the WSJ Prime is 8. 5, then all of a sudden, EB-5 can be competitive with a senior loan. But senior loans are also easy to obtain, if you’re qualified and have a smart project. It takes two to three months of trading and you have access to 50-60% of your capital. With EB-5, you don’t know when or if you’ll be able to raise all the equity. So, hiring a senior lender at the first 50 or 60 percent of your capital is a simple, prudent and wise decision.
Well, it’s relative. Can you get senior debt. Was this the senior debt you needed?Is it a 30% loan and the rates are too high?You might get it. You just didn’t need it.
When you say it’s very hard to get into debt, it’s very hard to get the debt you want.
The program is booming and has benefited from some smart solutions from the new policy followed in 2022. The long-term EB-5 program and its ability to create jobs and capital for long-term transactions will increase dramatically. next legislative policy cycle that will take position after 2027.
Prior to 2022, there was communication about EB-5 and its flaws. People made assumptions like, “Oh, there’s too much fraud” or that the program wasn’t creating the jobs we claimed. But in the end, it all turned out to be wrong.
A report from the government accountability office was released indicating that less than 1 percent of any EB-5 petition is involved in some type of fraud or problem. This is a longer transaction history than almost any other sector similar to securities or finance. In terms of job creation, we’ve created more than 140,000 full-time jobs as an industry at a faster rate than nearly any other federal economic program in history.
So now the discussion about what it is has disappeared.
When Congress reviews this program in 2027, it will most likely just need to let it work and accelerate, and let it proliferate rather than try to eliminate it. So let’s hope there is a policy that supports a lot more EB-5 investments and capital. and creating tasks that hinder it.
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