How and why did you get involved in the EB-5 industry?
The way I got involved in the EB-5 industry is an interesting detail of the story of my career. I used to run the Financial Institutions Derivative Sales desk of the Global Markets department of The Bank of New York Mellon. After 17 years at the bank, I decided to form my own company, BH Capital Management, in 2015. I got into real estate development and fundraising in the form of equity for large real estate developers. One prominent developer in New York City proposed I raise EB-5 funds for them in Turkey. Having graduated from Robert College and Bogazici University in Istanbul, Turkey, I still had quite a few very high-level contacts there. I accepted the challenge. I joined Riverside Management Group (RMG) as a managing director. Through BCW Securities LLC, the wholly-owned subsidiary of RMG, I started leading their EB-5 capital raising and placement activities. Subsequently, I launched America EB5 Visa LLC to connect international investors who aim to immigrate to the United States with EB-5 issuers, typically real estate developers, looking into EB-5 as an alternate funding method for their projects. The rest is history.
What are some current trends you are seeing in the EB-5 market?
First and foremost, the investor base is becoming more and more sophisticated. They do not only want to rely on the recommendation of unlicensed migration agents anymore. They are demanding rigorous due diligence. Before investing in any project, they are looking for choices. The days of presenting a single project with almost no investment and immigration analysis are over. I see this as the current trend from an investor behavior perspective. The market itself has become much more competitive. There are much fewer transactions worth showcasing to the investors. The recent revisions to the required minimum investment amounts, the redefinition of what qualifies as TEA and what does not has significantly reduced the investor demand. As a result, the supply has gone down. Developers are thinking much harder before launching EB-5 projects today and looking for alternative funding methods as well.
How do you think the pandemic has impacted the EB-5 industry?
On a positive note, there have been some great silver linings of the pandemic. But processing times have increased. Prospective clients who could not travel to the United States to see the projects in person have shied away from investing. As a result, the I-526 petition statistics in 2020 have been the lowest for many years.
What are your top business goals this year?
I plan to spend more time educating the potential investors on EB-5 and teaching them alternative ways to arrive on United States shores. There are many misunderstandings about the EB-5 process that discourages potential investors. Therefore, education is a must. There is no substitute for making informed decisions after a well-thought analysis of the pros and cons of the decisions taking all factors into account. If the investors conclude that EB-5 is not the right strategy for them, they could consider many other options such as E-2, EB-1, EB-2, EB-3, and a whole host of other options. We work with experienced immigration attorneys as solution partners if and when our clients are interested to learn more about these. Many of these options are not necessarily alternatives to EB-5. Instead, investors could consider them in conjunction with EB-5. Those who cannot wait as long as it takes to obtain a green card through the traditional EB-5 route could consider the E-2 visa. If their country of citizenship has the necessary treaty with the United States, then we can help them identify a suitable business to buy. Alternatively, they could establish their business in the United States and qualify through that business. If their country of citizenship does not have the necessary treaty with the United States, we can help them obtain second country citizenship. Once they acquire citizenship of, for example, Turkey, Grenada, or Montenegro, they become eligible for the E-2 visa. The whole procedure takes, typically, less than six months. Once they arrive in the United States and work and live in the United States, should they wish to get a green card, we can assist them with EB-5.
I am also deeply concerned about the current form of the program. Even if the program gets reauthorized before June 30 this year in its current form, it is unclear that the investor demand will pick up significantly. Therefore, when offered a chance to speak privately or publicly, I will continue to voice my opinion. I will state that the current minimum required investment amounts and redefinition of targeted employment areas have harmed our industry. They have become detrimental to create much-needed jobs.
What achievement in this industry has been most rewarding? Why?
The EB-5 industry has come a long way from its inception in 1990. Back then, it was exclusively a Chinese market. Bankers like myself, large developers, and investors from other parts of the world had no clue about EB-5. Today, when you look at the statistics, you notice investor participation from all around the world. In addition to China, there are investors from Vietnam, South Korea, India, Brazil, Russia, South Africa, Hong Kong, Taiwan, Turkey, and many other countries. Because we are a relatively latecomer to the EB-5 industry, our investor base is primarily from these new markets. We owe this diversified investor participation to the education provided to platforms such as EB5 Investors and its affiliates Uglobal and, we are grateful for it. These investors realize that they can make their investment decisions, on a fully informed basis. They know that broker-dealers are required to provide transparency and make sure that the investment is suitable for their clients.
What are your thoughts about the redeployment situation and the best strategy to deal with it?
Many investors conduct rigorous due diligence at the initial stage of project selection but are unaware of the redeployment risk until they can get their capital back. Investors are now hoping to receive an additional investment return, in line with other similar risk investments, in addition to the principal. The success of these two objectives largely depends on a well-thought redeployment strategy. Investors must discuss the redeployment strategy with the project sponsors before they invest. Otherwise, their whole due diligence on the initial project they are investing in becomes a futile exercise.
What do you think needs to be reformed with the EB-5 program at the time it is up for renewal in June?
The measures proposed and became part of the new regulations other than the new increased investment amounts and redefinition of targeted employment areas were long overdue. These measures will help eliminate fraudulent activities of bad actors. However, a significant number of eligible investors cannot simply afford $ 900,000. We could blame the dull 2020 period on COVID-19, but in reality, it was due to the misguided impression that if an investor could afford $ 500,000, they could also afford $ 900,000. That was wrong! I have no empirical data on the average or typical wealth of an EB-5 investor. I would guess that it ranges between $ 3 million and $ 10 million. Anyone who has less than that cannot afford it. Anyone who has more than that has much better cost-effective methods to obtain a green card. Therefore, by almost doubling the minimum required investment amounts, we ended up cutting out many potential EB-5 investors who would have been happy to enter the market. By redefining what a TEA is and what it is not, we potentially increased the credit risk of such investments. Dealing with the backlog without doing something about the unaffordable nature of the new investment amounts does not help either. At best, it makes the market a strictly Chinese one again as they seem to be the only group who does not mind the increased investment amounts. It is hard to predict what will happen between now and June 30. I suppose Congress will reauthorize the program in its current form. Let us hope that, once reauthorized, they address these highly political but very crucial issues mentioned above before it is too late.
What would you change or do if you were president for a day?
I wish that was a possibility. Having not been born in the United States, that is strictly theoretical. Anyway, the two major issues we are facing are immigration and health care. I would try to address these two immediately.
What is your favorite quote and why?
I have two favorite quotes. The first one is from King Solomon. In Proverbs, Chapter 19, verse 21, he wrote, “Many designs are in a man’s mind, but it is the LORD’s plan that is accomplished.” I use this phrase as the compass of my life. The purpose of the creation of Mankind was so that he works and does good. In no time, however, he should think that his accomplishments are solely due to his efforts. They would be futile without the Almighty-provided energy.
The second quote is by King Solomon’s father, King David. In Psalms, Chapter 35, verse 15, he said, “Turn away from evil and do good, seek peace and pursue it.” This verse is also the key to a fulfilled life. Sometimes our evil inclination gets the better part of us, and we do stupid things we know are wrong to do. However, by performing good actions, we can erase the darkness we or others might have created with wrongful acts. It is akin to lighting a candle in a completely dark place. As our sages say, a little light pushes away total darkness.
What about you would surprise others?
I spoke about my background in an article EB5 Investors magazine published a couple of years ago entitled, Why international students in U.S. colleges should consider EB-5. I came to these blessed shores as an immigrant from Turkey. I married my wife from Japan, another immigrant who I met at work. In our orthodox Jewish family, we successfully blend our Turkish and Japanese cultures. We have raised proud American children who value their heritage and consider honesty, diligence, and trustworthiness to be the pillars of a fulfilled life.
Why did you decide to join our verified EB-5 community, and what has it done for your business?
I decided to join EB5Investors.com verified community to inform various EB-5 stakeholders such as investors, developers, regional centers, and immigration attorneys about the due diligence and project selection assistance services our company provides. We are a broker-dealer regulated by SEC and FINRA. I, and my colleagues in BCW Securities LLC, carry Series 7 and 63 licenses. I thought that this was an essential service for investors who need to identify qualified, vetted projects. Without the assistance of a broker-dealer, they would need to approach the regional centers directly without the buffer we provide. The same holds for immigration attorneys. In reality, they would prefer to focus on the immigration aspects of the EB-5 petitions rather than due diligence or project selection.