EB-5 PLANNING OPPORTUNITY TO AN ALTERNATIVE FINANCING VEHICLE By Ronald R. Fieldstone, Esq. Arnstein & Lehr LLP 1

OVERVIEW STRUCTURE – REGIONAL CENTER 2

OVERVIEW STRUCTURE – DIRECT EB-5 PROGRAM NO REGIONAL CENTER 3

In planning each EB-5 transaction from its inception, the following checklist of items needs to be considered: 1.Job Creation. Role of economist. Use of indirect construction jobs. Concern over “Tenant Occupancy” issues (see attached USCIS publication). 2.TEA – Economist or Direct with State Agent. Use of census tracks (always $500,000 investment). 3.Multiple Location Offering. Possibility of TEA for some locations and not others. 4.Economic Model to be Used. RIMS, REDYN, IMPLAN, others. 5. Debt vs. Equity. Almost all transactions are debt offerings. 6. Capital Stack: a. Developer Equity; b. EB-5 Debt (if debt program) or EB-5 Equity; c. Senior Debt, if applicable; and d. New Market Tax Credits or other sources of financing. 4

Need to comply with debt to equity ratios for purposes of marketing projects. Investors (brokers) like to see at least 25% to 30% of developer equity. 7.Bridge Financing: Ability to prefund development in order to commence development. Look back time period needs to be considered. Need to place EB-5 Funding language in bridge financing documents (see attached language): 5

Bridge Financing Compliance with EB-5 Restrictions. Borrower acknowledges that YYY, LLC, an affiliate of Lender, or its designee (“YYY”), has arranged alternative financing (“Permanent Loan”) through the fifth employment based (EB-5) preference category of the Immigrant Investor Program (“IIP”) administered by U.S. Citizenship & Immigration Services and under the authorization of a USCIS-designated Regional Center, (the “Regional Center”). The Lender hereby acknowledges that it has made the Loan in contemplation of being repaid by the Permanent Loan. Borrower agrees to operate its business in a manner that is designed to comply with, and to enable EB-5 Investors and Regional Center to comply with, legal and policy requirements of the IIP, as advised by Regional Center. In particular, Borrower agrees that, pursuant to the terms of such Permanent Loan, the Borrower will: –track, maintain and share data and records with YYY and Regional Center concerning the Project, including the expenditure of funds, employment of workers, completion of construction, operation of facilities and enterprises. Such Permanent Loan will provide for an interest rate of X% percent (X%) per annum, interest only payments during the term of such loan, a five (5) year term and such additional terms and conditions as are customary for a EB-5 financing, commencing from the date of funding. 6

In planning each EB-5 transaction from its inception, the following checklist of items needs to be considered: 8.Team Involvement. a.Players: (1)Economist; (2)Business Plan Writer; (3)Immigration Attorney; (4)SEC/Corporate Attorney; (5)Marketing Project/Marketing Study Preparer; (6)Sales/Marketing Group to Sell Project; (7)Escrow Agent; and (8)Client Representatives. b.Regular conference calls and circulation of documents and reports. c.Set time schedules for all participants in order to coordinate processing. 7

Special Product Considerations – Structure of Loan Interest rate and sharing between investors and Regional Center and Manager. Have direct payment to Regional Center and Manager. Income tax issues. Collateral. First or second position. Term and right of extension. One or two years. Exit Strategy. Obligation to sell project to liquidate investment within second extension period. Conflicts of interest and disclosure of affiliated transactions. Minimum/Maximum Concept: –Scalability of Project –Other Sources of Capital 1940 Investment Act Considerations. 8

Marketing Issues a.SEC Restrictions regarding Broker-Dealer/Finder Issues b.Payment of Commissions - Sources. Part of Initial cost to Investor from administrative cost payment. Developer Fee. In part utilized to subsidize regional center costs. The cost to maintain regional center cannot come from EB-5 investor funds. From fee payments by Developer paid to Regional Center and Manager for management and administrative fees. Sales within and outside the United States. Combine Regulation D and Regulation S exemptions. Registered Investment Advisor and Broker- Dealer registration issues. c.Sales within and outside the United States. Combine Regulation D and Regulation S exemptions. Registered Investment Advisor and Broker-Dealer registration issues. 9

DEVELOPMENT OF INVESTEMENT CRITERIA AND DUE DILIGENCE STANDARDS Corporate/Securities Viewpoint 1.Issues of Investment Security: a.Debt; b.Equity; c.Collateral Base – 1 st mortgage, 2 nd mortgage, mezzanine loan or unsecured; d. Recourse to developer; and e. Guarantees. 2.Is the project in an industry with a high default rate? 3.Feasibility Report? a.Yes, from reputable/well known firm with positive result; b. Yes, from unknown firm, with positive result; c.None; and d.Yes, not positive result. 10

4.What is the excess demand for the product or type of real estate in local area? a.High; b. Medium; c. Low; and d. No demand. 5.Value of the collateral in relationship to total EB-5 investment plus all senior debt? a.Developer Equity; b.Total Debt; c.EB-5 debt in relationship to developer equity; and d.Total equity based upon appraised value of the project (3 variations). (1)Existing Asset Valuation; (2)Completed Project Value; and (3)Stabilized Value. 6.Track record of developers/owners? a.Completed 2 successful projects of similar size and attributes; b.Complete one or two successful projects of similar size and attributes; and c.No track record. 11

7. What is the construction risk? a. Very low as project has completed a 3 rd party construction budget review; b.Low with Completion bond or other surety bonding; c.Unknown with Completion/Surety bonding; d.Not addressed/Project spending-schedule is within industry-regional standards; and e.Not addressed/Project spending-schedule is outside industry-regional standards. 8. Exit Risk; what is the exit strategy? a.Sale of Facility; b.Refinancing; c.Cash Flow from operations- More applicable for Direct Programs; d.Tax Rebate not based on revenues; and e.Tax Rebate based on revenues. 9.Public/Private Projects – weight to government sponsorship and government sponsored Regional Center. 12

Ronald R. Fieldstone, Esq. Arnstein & Lehr LLP 200 South Biscayne Boulevard Suite #3600 Miami, FL Tel: Fax: