“Expected and needed program reforms will increase transparency and integrity for all stakeholders in the EB-5 market place,” says Rajan.
Suresh Rajan is the Chief Executive Officer of LCR Capital Partners. LCR is a U.S. private investment firm that provides growth capital to premier resort developments as well as the best performing brands in the franchise industry. Prior to launching LCR, Suresh served as President and Chief Executive Officer of Java Nova LLC, a private equity funded franchisee of Dunkin Donuts. An experienced QSR operator, Suresh’s focus was on real estate selection, market development, finance and human resources. In an interview with The American Bazaar, Suresh spoke about the future, scope, and challenges of EB-5 visas. Excerpts of the interview:
1) A vast majority of EB-5 applicants were from China, but in recent years, Indians also started applying for the visa in significant numbers. What do you think is the reason for this?
Though Indians have always been keen to move to the West for better opportunities, the lack of knowledge of best paths has led to a slow growth of the EB-5 program in the Indian market. Only a few Regional Centers have realized the potential of the Indian market for EB-5 interest. We have seen an increased number of H1-B and F-1 applicants from India move forward with EB-5 in order to secure a Green Card and enjoy the vast opportunities that can be availed with it. The more common Green Card pursuit can take 10-12 years or more before resolution.
2) Recently, President Trump signed the HR 601, which extends the time for applying for the EB-5 visa till December, is this the opportunity that Indian investors should cash in?
Definitely. The law has temporarily been extended with no change in investment amount, but the word around Capitol Hill is the probability of the investment increasing from $500,000 to $800,000 or more is an almost certainty. The extension affords all prospective investors additional time to enter the EB-5 program under the existing investment levels. However, it is very important to note that the extension will be no later than December BUT it could end earlier with little or no notice to the market. As such, we strongly encourage prospective investors to conduct their due diligence on EB-5 with some haste.
3) Do you think there will be a policy change before December expiry as bills proposing changes to the program is currently before the Congress?
Our firm is actively involved in Congress’ review and reform of the EB-5 program. While it is impossible to predict an outcome, we have a real reason to believe that an agreement on a long-term extension might be achieved within the next couple of weeks. If so, all groups involved in the negotiations will want to finalize legislation as soon as possible – and well before December.
4) A bill has asked for an increase the minimum investment amount from $500,000 to $800,000 or more. How will it affect the EB-5 program and in particular Indian investors who are thinking of US investment for obtaining green cards?
The most obvious impact is that it will cost considerably more to partake in the EB-5 program under these new investment levels while the benefit remains the same – a U.S. Green Card. What should also be considered is that there might not be an immediate availability of projects designed for the new investment levels and program requirements. Designing an EB-5 offering takes time so even if you are able to afford the higher investment levels you may have to wait a substantial amount of time before a new compliant project comes to market.
5) Since H-1B visa is awaiting rigorous changes under the Trump administration, and the path to getting a Green Card through EB-2 & EB-3 programs continues to get longer, do you think EB-5 will become more accretive in the future?
There is no doubt that changes in a variety of visa categories are increasing international demand for a Green Card. For those who meet the requirements to participate in the EB-5 program, the benefits of the investment are getting more pronounced by the day.
6) Several fraud and abuse cases in the EB-5 program have been exposed in the last couple of years. There have been numerous calls from several Members of Congress to shut down the program. Is there a dark cloud looming over EB-5 program?
I would not say that there is a dark cloud approaching the EB-5 program. On the contrary, I think expected and needed program reforms will increase transparency and integrity for all stakeholders in the EB-5 market place – particularly improved investor protections for EB-5 applicants. There is no capital market completely free of bad actors. A successful EB-5 investment, like any investment, is a function of due diligence above all else.
7) What was the driving force that made a Harvard Business School student think of starting LCR Capital Partners?
Almost every Harvard graduate has a goal of becoming an entrepreneur – eager to identify a market inefficiency and turn it into a business opportunity.
LCR Capital was founded in 2012 by first-generation U.S. immigrants. We met at Harvard Business School in the mid-90s. I met my co-founder, Rogelio Caceres on my first day on campus, and our President & COO, Joe Haggenmiller, was also a classmate. We graduated together in 1997. LCR’s partners and co-founders are a diverse group of experienced professionals from impressive academic and professional backgrounds, representing numerous countries such as India, El Salvador, Brazil, Japan, Mexico, the United Kingdom and the Dominican Republic. We’ve come together some twenty years after first meeting to change a little-known immigration program into a standardized and transparent financial product in an effort to meet the residency needs of thousands of people globally. It has and continues to be a rewarding labor of love.
8) How does LCR Capital Partners make sure that the clients live their American dream through an EB-5 investment?
We at LCR care for the client first. Our project offerings, partnerships and services are first focused on meeting the best interests of our clients. In considering the EB-5 program and LCR, we know our clients are in the midst of one of the most important decisions they will ever make for their families. We work with trusted brands (like Dunkin’ Donuts or Four Seasons Hotels & Residences) and best in industry service providers to meet our investors’ needs. Our team is carefully selected and well-diversified to meet our global clients’ requirements in order to make their experience as stress-free as possible.
9) How do you look at the future of EB-5 considering the Trump administration’s stated positions on bringing more investment and creating jobs?
The impact will almost entirely be a function of how high the increase is. As previously said, the word around Washington D.C. is that the investment is likely to increase to at least $800,000. At this level, we don’t believe there will be a fundamental change to global demand of EB-5 visas since the largest market for EB-5, China, currently has a 4-year waiting period because of a backlog of applications. Since India is a relatively new market for EB-5, an increase to $800,000 would likely not have a meaningful impact on market demand.