Parkfield Capital Advisors launches EB-5 restructuring advisory practice
LOS ANGELES, CA – Parkfield Capital Advisors LLC (“Parkfield Capital”) announced today that it has launched an EB-5 restructuring advisory practice. The new practice will focus on advising stakeholders in working out underperforming and nonperforming EB-5 deals.
“We will assist in recapitalizing, restructuring and turning around deals that have EB-5 funds in the capital structure,” said Andres Pinter, Parkfield Capital’s Managing Director. During the last eighteen months, Parkfield has advised stakeholders in EB-5 deals with aggregate value in excess of $300 million.
“We have experience in the EB-5 space and see the acceptance and prominence of this type of financing growing in the near future,” said Pinter. Although Parkfield’s previous EB-5 advisory assignments have been primarily focused on real estate, the new practice will span all industries.
Established by Congress in 1990, the Immigrant Investor Program (or EB-5 visa program) encourages foreigners to invest in the U.S. by offering green cards to those investors who create American jobs. Under this program, a foreign investor must invest $500,000 or $1 million (depending on the geography of the deal) and, as a result of this investment, create ten jobs.
There are currently no restrictions on where in the capital structure EB-5 financing may be invested or in what industries. The funds can come into a deal in the form of senior secured debt, subordinated debt or equity. As long as the investment creates or preserves ten permanent full-time jobs for qualified U.S. workers and complies with certain other criteria, the investor’s visa is likely to be approved by the U.S. Customs and Immigration Services (“USCIS”).
The popularity of the EB-5 program has soared in recent years and, in fact, reached its capacity for the first time in August 2014 when the State Department stopped issuing EB-5 visas for the year. Based on I-526 petitions filed in 2014, total EB-5 investment for that year alone totals $5.5 billion. Not only is EB-5 investment expected to continue at capacity in coming years, Congress is considering legislation that would increase limits on funds invested through the program.
“EB-5 investors have different motivations than typical investors, and working out troubled EB-5 deals tends to be an incredibly complex and nuanced process,” said Pinter. Recovery of the EB-5 investor’s original investment often takes a backseat to creating the requisite number of jobs which in turn facilitates the investors’ visas.
Knowledge and experience with the EB-5 program are critical to working out distressed EB-5 deals. In addition to USCIS, which administers the program, investors and their advisors must be familiar with the potential role of Immigration & Customs Enforcement (“ICE”) and Homeland Security.
“It’s the early vintage EB-5 deals, the ones underwritten prior to 2011, which are starting to see some distress,” remarked Pinter. “EB-5 investment is here to stay and although the quality of these deals is improving every year, there will inevitably be issues where Parkfield can be helpful.”
Parkfield Capital Advisors LLC is a leading boutique financial advisory firm located in Los Angeles, California. Parkfield focuses on advising stakeholders in balance sheet restructurings and private placements of debt and equity. The firm was founded by Andres Pinter in 2014.