Jay Peak EB-5 news

[Masskier]

That really doesn't make sense in this case since there is no interest being paid on the EB-5 loans (is there?), so "refinancing" kind of seems pointless.

I think it depends, (and I am just thinking out loud) if there is a lot of competing projects and you want to be able to attract money then you would have to make your deal more appealing to investors by offering a roi. Granted, the main motivation is the green card. However the investor is going to choose the investment that he feels that has the best opportunity to get his money back plus some type of return. Since investors usually want than money back asap, so many times there are built in incentives for developers to pay them back sooner (no interest, less interest ect).

 

[skifree]

I know a few EB-5 investors that got a green card and basically told no dice on getting your investment back.
Wish I could run the EB-5 scam with my business.

 

[BenedictGomez]

Stenger said the first 35 investors, whose funds built the Tramhaus Hotel project, will receive their $500,000 investments back in installments over the next 10 years.

What an "investment" indeed.

You given someone $500,000 for a DECADE and don't see a penny in return!

An "investment" my ass. LOL. That's just necessary terminology to enable this scam.

 

[VTKilarney]

You given someone $500,000 for a DECADE and don't see a penny in return!

Stenger didn't say this the day the he received the investments. If what I have read online is true, the total period for Phase One payback is 15 years. This assumes that Jay can make a balloon payment in the final year in the amount of $306,500 per investor.

So to recap:
a) No return for a few years.
b) After fourteen years, only $193,000 has been paid back (38.7% of the original investment).
c) In year fifteen, a balloon payment of $306,500 to pay everything back. If this balloon payment is made, the original $500,000 will be paid back with no interest or income from the hotel operation.

Again, this is just what I've read online. It may or may not be accurate.

 

[fbrissette]

What an "investment" indeed.

You given someone $500,000 for a DECADE and don't see a penny in return!

An "investment" my ass. LOL. That's just necessary terminology to enable this scam.

I agree that it's not an investment. But unless the project goes bankrupt, the 'investors' will see some money back. They still own the tramhouse lodge for example. Whether or not it's worth their original 500k is another story.

 

[thetrailboss]

I might be wrong, but this is equity and not loan deals.

The hope might be some ROI, but the expectation seems to be get your money back and a green card.

 

[Domeskier]

I agree that it's not an investment. But unless the project goes bankrupt, the 'investors' will see some money back. They still own the tramhouse lodge for example. Whether or not it's worth their original 500k is another story.

It's essentially a ten-year interest-free loan. The real cost to the "investor" over the ten year period will be significantly more than $500,000 assuming any reasonable rate of return elsewhere.

 

[VTKilarney]

My understanding is that they are not loans. The investors have an equity stake in the operation. I do know that EB-5 rules require that the money be placed "at risk." This does not mean that you will lose your money. It means that there is a risk of losing some or all of your money. Public opinion seems to believe that the risk is quite high.

Since they aren't loans, the investors cannot foreclose like a regular mortgage holder would be entitled to do.

 

[Domeskier]

My understanding is that they are not loans. The investors have an equity stake in the operation.

That makes a lot more sense.

 

[BenedictGomez]

It's essentially a ten-year interest-free loan. The real cost to the "investor" over the ten year period will be significantly more than $500,000 assuming any reasonable rate of return elsewhere.

Absolutely.

Luckily for the EB-5 "takers", few people understand finance.

My understanding is that they are not loans. The investors have an equity stake in the operation.

Really? That doesn't seem very likely to me.

 

[thetrailboss]

I think that each project is an LLC with each EB-5 investor made a member of the LLC....or something like that...so yeah, equity investors.

 

[thetrailboss]

And I think that I read in the Jay magazine that they now have 2,600 beds, which is impressive.

 

[VTKilarney]

Really? That doesn't seem very likely to me.

Apparently there can be a two-tiered structure. Here is an explanation of a two-tiered arrangement from a law firm's website that I just read:

Most commonly, the foreign investors invest in a new entity, “NEWCO,” which in turn, makes a secured, collateralized loan to the operating company consuming the capital, “OPCO.” The loan will have collateral (security against loss of capital) in the form of a mortgage or UCC filing on personal property (e.g. equipment), a five year repayment term (fixed term for return of the investors capital), and a specified interest rate (fixed or floating return on capital). Since these loan agreements and security run between NEWCO and OPCO, and do not run directly to the investors, EB-5 regulations are satisfied. Of course, via NEWCO, investors run the risks of market interest rate changes and repayment that attach to any creditor – placing their capital “at risk.” (see: http://www.tollefsenlaw.com/answers/The-Law/Immigration/EB-5-Project-Finance.asp )

In the single tier model, the investors are equity holders in the business. That same website stated that Jay is a single tier model.

 

[BenedictGomez]

And I think that I read in the Jay magazine that they now have 2,600 beds, which is impressive.

That's awesome. It means that once the gravy train ends and the "free money" stops, there will be affordable places and some deals to stay at Jay Peak once their artificial market ends.

In the single tier model, the investors are equity holders in the business. That same website stated that Jay is a single tier model.

But what exactly is the equity that they have true ownership of? They certainly don't have any rights to liquidate an asset. This seems mostly like semantics to me

 

[AdironRider]

Did he seriously promise that for an investment of 21.5k in nine years it would be worth 306.5k?

Either Stenger is going to end up in jail or this was lost in translation.

 

[thetrailboss]

Did he seriously promise that for an investment of 21.5k in nine years it would be worth 306.5k?

Either Stenger is going to end up in jail or this was lost in translation.

Huh? Where was that?


Sent from my iPhone using AlpineZone

 

[fbrissette]

Huh? Where was that?


Sent from my iPhone using AlpineZone

Somehow I think a post was deleted. Here's what I got in my email alert:
--------------------
Dear fbrissette,

bbery has just replied to a thread you have subscribed to entitled - Jay Peak EB-5 news - in the Northeast Skiing and Snowboarding Forum forum of New England & Northeast Skiing, Mountain Biking, Hiking Forums - AlpineZone Forums.

This thread is located at:
http://forums.alpinezone.com/showthread.php?t=129570&goto=newpost

Here is the message that has just been posted:
***************
we are phase one and the above are true ,we have no say in what happens at tram house, we have just found this out,and $21500 for 9 years and supposedly in 9 years $306500, unfortunately not everyone who invested in eb5 were super rich it was just the best way forward for our family and we believed in jay peak and bill stengers promises, not any more though.
***************


There may also be other replies, but you will not receive any more notifications until you visit the forum again.

All the best,
New England & Northeast Skiing, Mountain Biking, Hiking Forums - AlpineZone Forums
--------------------------

 

[VTKilarney]

That is consistent with what I have read - but AdironRider appears to have misinterpreted the data. Stenger did not say he would turn an investment of $21,500 into $306,500 after nine years. These numbers have to do with payback of a $500,000 investment.

 

[mbedle]

I tried reading about the program today and there seems to be a lot of confusion about the actual program. I think that is partly because the government has very little control over firms/brokers that are using or promoting the EB-5 program. On a lot of websites (include the US Immigration site), it seems pretty straight forward that EB-5 investors understand that they may never get a permanent VISA (i.e., job creation never happens company and or project fails, etc.), they may only receive part or none of their investment back and in most cases they never will receive a return on their investment. With that said, I got to believe that a lot of these EB-5 investor have 500K sitting around in a forgotten bank account and are not putting their entire life savings into the program. I also got to believe that most of them, if they did their due-dillegences, understand the risks associated with the program. To me, if it generates jobs and brings new businesses, I happy with it. If 20 people chose to pay 500K each to gain citizenship, that is their choice. And yes there have been some failures and scams committed under this program.

Apparently there can be a two-tiered structure. Here is an explanation of a two-tiered arrangement from a law firm's website that I just read:

Most commonly, the foreign investors invest in a new entity, “NEWCO,” which in turn, makes a secured, collateralized loan to the operating company consuming the capital, “OPCO.” The loan will have collateral (security against loss of capital) in the form of a mortgage or UCC filing on personal property (e.g. equipment), a five year repayment term (fixed term for return of the investors capital), and a specified interest rate (fixed or floating return on capital). Since these loan agreements and security run between NEWCO and OPCO, and do not run directly to the investors, EB-5 regulations are satisfied. Of course, via NEWCO, investors run the risks of market interest rate changes and repayment that attach to any creditor – placing their capital “at risk.” (see: http://www.tollefsenlaw.com/answers/The-Law/Immigration/EB-5-Project-Finance.asp )

In the single tier model, the investors are equity holders in the business. That same website stated that Jay is a single tier model.

 

[AdironRider]

That is consistent with what I have read - but AdironRider appears to have misinterpreted the data. Stenger did not say he would turn an investment of $21,500 into $306,500 after nine years. These numbers have to do with payback of a $500,000 investment.

I should have quoted the post, but a guy with one post in broken english said he paid 20.5 and was supposed to be paid out 306500. Its exactly what he said, and hence my lost in translation comment.