General Questions

The United States government created the EB-5 Immigrant Investor Program in 1990 in an effort to attract foreign investment and boost economic growth.Eligible foreign nationals can invest either $500,000 or
$1,000,000 in an eworexisting U.S.business.When investors demonstrate that their investment hascreated atleast ten jobs for U.S.workers,they may receive greencards for themselves and their families.Through its Regional Center program,LCR Capital Partners offers investment opportunities to meet the secriteria.
The EB-5 Program allocates 10,000 visas per year for immigrants and their family whose qualifying investments result in the creation or preservation of at least ten full-time jobs for U.S. workers.
The EB-5 Program offers a host of benefits to the investor, including but not limited to:

 Low Cost with One Investment: A one-time fee of $500,000 provides green cards for an investor, his/her
spouse, and children under 21 years of age.

 Easy to Qualify: No specialized skills required. No travel or age restrictions, and no language skills

requirements.

 Personal and Professional Freedom and Security: Investors can live, work, and retire anywhere in the

U.S., (and) travel easily to other countries. EB-5 participants can pursue a full range of professional and

business opportunities in the world’s largest economy.

 Healthcare: Investors can gain access to the same high-quality healthcare available to U.S. citizens.

 Children’s Education: Investors’ children may qualify for state and federal financial aid and pay reduced “in-

state” tuition at public universities.

 Passive Investing: Through the Regional Center option, third parties manage the investments and all

aspects of the project.

 Direct Path to U.S. Citizenship: Investors can apply for U.S. citizenship five years after receiving a Green

Card.

 Removes Uncertainty: The EB-5 program does not have any backlogs or lotteries unlike other visa

options (including H1-B, F1, and L1).

A TEA is a geographical area that is considered rural, or has an unemployment rate of at least 1.5 times the national average. When EB-5 Visa applicants invest in a TEA, they can invest $500,000 rather than $1,000,000. Individual states determine the precise boundaries of a TEA.
Each EB-5 Visa investment must create at least 10 full-time jobs for U.S. workers, lawful permanent residents, or immigrants authorized to work in the United States. Job creation must occur over a period of two years. By pooling funds with other investors in a Regional Center, investors receive the benefit of indirect job creation.
If you want to manage your own business, consider a “direct investment” approach to EB-5 by investing $1,000,000 into your own business which you control, and creating the necessary 10 new jobs within that new enterprise. If your goal is to have a Green Card and not to actively manage a business, it is often cheaper, more convenient and potentially much less risky to utilize a structured investment program in the Regional Center EB-5 category rather than to start and maintain your own business.
EB-5 Regional Centers are organizations authorized by United States Citizenship and Immigration Services (USCIS) to receive and manage EB-5 investor funds. Regional Centers promote economic development and job creation within a specific geographic area.
In 1990, the EB-5 program originated as a “direct investment” program, but due to its overall complexity and lack of success, the Regional Center program was launched in 2002 to help formalize and popularize the program.
There are several important differences including:

 Cost: The direct program requires a $1 MM investment versus $500K for the Regional Center program

 Time: Due to the nature of the direct program, where the investor is responsible for the entire business

plan and investment documentation process, the timeline before making the investment is typically

longer with the direct EB-5 program.

 Jobs: The direct program only takes Direct W-2 jobs towards the 10 job requirement, whereas the

Regional Center program allows for indirect and induced jobs (i.e. at least 2+ more jobs per dollar than

direct program).

 Flexibility: Direct requires investor to actively operate and live near the project, where under the Regional

Center program, the investor can live and work wherever they would like.

 Adoption: Due to the above, the direct program only attracts 5% of all EB-5 applicants (versus 95% in the

RC program)

Founded in 2012 by Harvard Business School alumni, LCR Capital Partners is a partner-owned, private equity investment firm that deploys debt and equity to experienced operators of top American franchise restaurant brands – an ideal industry for EB-5 investments as it is one of the most efficient converters of capital into jobs. The firm helps its clients and their families secure U.S. green cards and permanent residency through the EB-5 Immigrant Investor visa program. As a firm founded by first-generation U.S. immigrants, LCR understands the challenges of starting a new life in the United States and is committed to enabling a successful U.S. transition for all of our clients.
LCR received approval by the U.S. Department of Homeland Security to operate the LCR Overseas Regional Center (“LORC”) for the purpose of promoting investments in job-creating projects across the Greater New York Metropolitan area.
The most common problem area has been insufficient documentation of the source of funds. Many people try to disclose the least possible information only to have the file returned with a request for further information. It is better to provide too much information rather than too little information. In this era of terror alerts and suspicions about money laundering, USCIS case examiners require a well-documented source of funds.

KEY REQUIREMENTS

$500,000 investment in a new business or real estate project

 95% of EB-5 industry invests through Regional Centers at $500,000 level

 $1 million option available for EB-5 direct option (~5% of market)

 Minimum investment amount is likely to increase by September 30th, 2016

 Amounts has not changed since 1990 (never indexed to inflation)

 U.S. Green card program cheaper than UK, Portugal, Australia, etc.

Create or preserve at least ten (10) full-time jobs for American workers.
Proof that investor is not a convicted criminal, has no history of financial fraud and has not previously violated U.S. immigration laws.
Can you clearly document that the cash required to make your investment comes from a lawful source?

Acceptable options include:
– Salary earned through lawful employment
– Gifts of money from family members, friends, employers
– Profits made from sale of a house, real estate or other assets
– Loan (as long as the loan has collateral and the investor has the obligation to pay it back)

Investment must be “At Risk” (i.e. fully invested in the project, fund or new company) for a period of no less than 5
years

 Per U.S. law, the EB-5 investor cannot be offered any guaranteed return on or of principal nor possess any
redemption rights

IMMIGRATION QUESTIONS

The U.S. Citizen and Immigration Services office (USCIS) is the USA government office that processes all immigration and visa documents. A great amount of immigration information can be found on their website at www.uscis.gov including additional information on the EB-5 program, forms including the I-526 and I-829, and much more.
It is highly recommended that an investor obtains legal services for their immigration petition submission. The narrative and documentation needed for the I-526 petition package is extensive, and an experienced immigration attorney can provide valuable assistance with the petition, consulate interview, and visa processing.
The I-526 petition is the initial visa application as part of the EB-5 Immigrant Investor Program. Prospective investors and their attorneys file this petition with the USCIS and include documentation demonstrating the investor’s eligibility.
I-526 petitions are most commonly rejected due to the applicant’s failure to demonstrate that investment funds were lawfully obtained.
The I-829 petition is the final step in the EB-5 Immigrant Investor Program. Investors and their attorneys file this petition with USCIS, and provide evidence that the investor has successfully fulfilled all of the program’s requirements, particularly that investor funds resulted in the creation of at least ten jobs. Upon approval of the petition, investors and their family members receive permanent green cards.
An investor who is approved for the EB-5 immigrant visa receives a conditional green card, which must be reissued after two years and is subject to removal of conditions. Otherwise, the two cards offer the same rights and privileges.
Once the I-526 petition is filed, the approximate length of time for an investor to pass the U.S. Consulate interview
and receive a conditional green card is approximately 6-14 months. It is important to note that each investor’s particular situation is different; adjudication-processing times are often unpredictable, subject to USCIS adjudication delays, and may take a longer period of time.
The purpose of the Consulate application is to ensure that the investor and family members undergo medical, police, security and immigration history checks before the conditional permanent resident visas are issued. At the interview, the Consulate Officer may address these issues and information printed on the I-526 petition, including the nature of the immigrant investment. If the investor and family are in the United States, they may apply to adjust their status at the appropriate office of the USCIS.
(For example, if children are attending school in the U.S. and the parents are not in the U.S., etc.) Family members
may interview in different countries. The country of origin or where the family has current ties is the standard interview site. However, a student attending school in the U.S. would not have to return to the county of origin; status can be adjusted in the United States at the district office of the USCIS.
The investor, spouse, and any unmarried children under the age of 21. It is possible for adopted children to be included in the family. Upon approval you will receive a form evidencing approval and a travel document. You should also receive a temporary green card in the mail.
A potential investor is required to file a form I-526 for Alien Entrepreneur in conjunction with the documents supporting the EB-5 Investor Visa program requirements. Upon approval of this application, the investor and immediate family (spouse and single children under 21 years of age) may apply for an Immigrant Visa at the US Consulate, or if the investor is already located in the United States, apply for an Adjustment of Status at any regional USCIS office. The entire application process may take nine to fifteen months to be fully completed.
An investor must apply to the USCIS for EB-5 Visa qualification through the submission of a number of required elements including: USCIS forms, business plans and/or geographical statistics, financial information and other supporting evidence.
Under USCIS regulations, investors must demonstrate that investment assets were gained in a lawful manner, such as income from a bona fide business, salary, investments, sale of a property, inheritance, gift, loan or other lawful means.
Rejection in the past does not disqualify the applicant, unless the reasons related to immigration fraud or other
major problems. It is most important that all criminal, medical, or U.S. immigration history problems be disclosed to LCR Capital Partners and legal counsel in advance of application.
There are no requirements with respect to prior business experience or education. The only requirement is that the investor is accredited and meets certain suitability standards, with respect to income, net worth, etc. The investor also must prove unconditionally that the source of funds is legal, through the submission of proper documentation
No, but it is strongly recommended that a non-English speaking investor should hire the services of a translator to ensure that the investor fully understands the investment terms and the offering materials are reviewed carefully before the investor makes a decision.
Short answer:

 There is a difference between “continuous residence,” which refers to a requirement for naturalization,
and maintaining residence in the US for green card purposes:

 If you are interested in obtaining U.S. Citizenship as soon as possible and becoming a naturalized U.S.
citizen, then as you receive conditional green card and enter the country, you should aim to spend at least 180 days per year in the U.S.

 If, on the other hand, you are interested in simply maintaining residency status and your green card, as long
as you spend no more than 180 consecutive days outside of the U.S., you are good to go.

Long answer:

 To maintain your LPR or Conditional Residence status (i.e. green card) you have to keep from abandoning your residence in the US. You can have a trip out of the US greater than 180 days without abandoning your residence. However, if you are out of the US for more than 365 days, then you are presumed to have abandoned your residence and you can be placed in removal (deportation) proceedings. Only a judge can take away your residence. People can be threatened to sign a form abandoning their residence, but it would be imprudent to do this. The only way around the presumption is if you got stuck out of the US because of health problem. You can also apply for a re-entry permit which allows you to stay out of the US for up to two years without abandoning your residence. The reentry permit, however, does not save you from the continuous residence requirement for citizenship.

 For Naturalization – the individual has to be physically present in the US at least 50% of the time + 1 day for
the last five years. The clock for the five years of residence starts on the date of issuance of the first green
card (during the conditional residence). Continuous residence is essentially that the individual does not have any trips outside of the US greater than 180 days. USCIS counts days out of the US differently than we do. For USCIS, if you go on a cruise and leave Friday and come back Monday at 8:00AM, then you have been gone for four days. That is how USCIS counts travel days. The day you left, the days in between, and the day you arrive back in the US. If you have a trip out of the US for greater than 180 days, you are presumed to have broken your “continuous residence” for naturalization purposes. You can rebut this presumption by showing that you still had a house, car, job, insurance etc., in the US during the time you were away.

By receiving your Green Card through investment (EB-5), you should have a conditional Green Card for two years. You must apply for removal of the condition within 90 days before the two years are up. Once that is approved, you have a regular unconditional Green Card. If you apply either too early or too late, you have a problem and should consult with an attorney for advice. If you do not have the condition removed, the Green Card will become invalid at the end of two years, and your permanent resident status will be terminated.
Once you receive a green card, there are only two conditions required to keep it for life. First, you must not become
removable or inadmissible. The most common way of doing this is to be convicted of a serious crime. The second requirement is that you not abandon the United States as your permanent residence. As long as you are not planning to make your home somewhere else, then legally you are still a resident of the United States. Problems may arise, however, because the INS will try to judge your intention by the way you act.
You can apply for a reentry permit (on form I-131) before you leave the US. You can depart before the reentry permit is approved. With such a reentry permit, you can return to the US even after one year until the reentry permit’s expiration date. Reentry permits are issued for two years. You cannot renew a reentry permit, but you can return to the US for a short time and apply for a new one. The second such reentry permit will be granted for two years ago, but subsequent ones may only be approved for one year at a time.
Once you obtain a green card, and become a legal permanent resident, you have most of the rights and obligations of U.S. citizens, except that you cannot vote and are not entitled to some public benefits. You are subject to the same tax filing requirements and entitled to the same tax rates and deductions as U.S. citizens.
One of the most important rights legal permanent residents possess is the right to obtain U.S. citizenship after five
years. There are two ways to become a U.S. citizen. One is by being born in the U.S. or being born to a U.S. citizen.
The other way is by naturalization. The first step in becoming a U.S. citizen through naturalization is to become a Legal Permanent Resident (LPR). Being an LPR for 5 years is one of the basic requirements for qualifying the
naturalization. A second requirement is being physically present in the U.S. for 30 months during the 5 years prior to
the naturalization application. Once becoming a U.S. citizen, an individual is entitled to benefits including the right to vote and hold public office.
Out-of- status nationals are no longer permitted to apply for permanent residency from within the United States. They
must first return to their country of origin and apply through the United States Embassy there. Examples of “out-of- status” individuals are students, tourists, E-2 treaty investors who no longer have valid visas because they remained in the United States after their visas expired or were revoked.
Sometimes. The U.S. allows dual citizenship, but your original country of origin may not allow it.
On the USCIS website at the following page: USCIS Policy and Procedural Memoranda for EB-5 Immigrant Investors
Unfortunately, we cannot provide an exact timeline give the U.S. government immigration aspect of this program. To be safe, the EB-5 investor should not anticipate having their conditional green card become permanent until year 4 or so.
Incorrect (Thankfully). There are no age or language restrictions in EB-5. Students in middle-school and high- school can apply and thus have their green card well before they apply for U.S. colleges.
Yes. This is a very common option, in fact, it is one of the most popular ones. Rarely does the husband want to leave
the family business or his career but rather he wants to ensure a better future for his family. Therefore, he will gift $500K to wife and then wife will become investor and sponsor their children at the same time. It is important to note that BEFORE this transaction occurs (the gift), the couple should engage LCR and immigration counsel so that this gifting process is done correctly.
Please read comprehensive overview on this question below.
http://www.greencardfamily.com/residentspouse/prspouse_faq.htm
The child will likely have a problem under this scenario. Very simply the immigrant visa must be issued to the family
before the child turns 21. However, the child status protection act (CSPA) can provide some relief for children who
would have maintained eligibility but for the time USCIS took to adjudicate the immigrant visa petition. This relief
takes the form of subtracting the time the petition was pending from the child’s age; this is the child’s “CSPA age.”
Provided that the child’s CSPA age is under 21 at the time the immigrant visa is issued to the principal, the child will not be ineligible to receive a visa based on age, even if the child’s real age has reached 21. So, assuming the I-526
takes 14 months to adjudicate, the son won’t ‘age’ during that period. When the green card (either AOS or consular processing) is approved, the son will be his actual age minus the 14 months, if that puts him over 21, which will be likely, then he will not be eligible. AOS takes 8-9 months and CP varies but is likely at least 3-4 months. My general rule as a “cutoff” For CP would be at least 6 months away from turning 21. That is still cutting it close.
It depends on the specific states requirements. In most cases, the student would move to the U.S. after their junior year of high school and spend their final year in the state and thus qualify for in-state- tuition.

INVESTMENT QUESTIONS

LCR uses a variety of financial instruments across the capital structure from first equity to senior debt. LCR invests
capital into a wide variety of industries in which firm leadership has deep expertise. LCR leverages its proven
knowledge in franchise operations to target investment opportunities in restaurant franchises, while also seeking out signature real estate and similar projects (hotels, mixed use developments, condominiums and sports complexes).
Yes, provided that any applicable gift taxes are paid. It must be demonstrated that the gift is an actual arm’s- length transaction, and that it is a not a mere ruse nor that the gifted funds will be given back after permanent resident status is granted.
The EB-5 regulations require involvement in management or policy making. The regulations deem a limited partner in a limited partnership, which is properly structured and that conforms to the Uniform Limited Partnership Act as sufficiently engaged in the EB-5 enterprise.
While providing an absolute guarantee of return of capital is prohibited by U.S. immigration law since the EB-5
investment must be “at risk”, this does NOT mean that it must be a risky investment.
Our clients tell us that we developed the best EB-5 product available in the market today because we focused on their most important needs: (i) high job creation and (ii) principal protection.

To summarize, 5 key factors separate LCR’s EB-5 franchise funds from everyone else:

 Optimal investment structure: Mutual fund structure spreads development risk across over multiple

stores and thus risk is not concentrated in a single project as in most EB-5 projects.

 One of the highest job generating Industries in the U.S.: Restaurant franchising creates more jobs per
invested dollar than virtually all other industries. In fact, nearly 1 out of 10 jobs in the U.S. created in 2014 was
in the franchise industry.

 Safe instrument – Senior-secured, 5 year loans less risky than equity investments and have a clearly
established liquid exit strategy

 Proven Brand – Dunkin Donuts is a publicly traded company on the New York Stock Exchange with multi-billion-dollar market capitalization. As a franchise business, by definition, it is based on a proven business model. The Dunkin franchise model, in fact, is one of the longest, most well established franchises in the U.S. having been founded in the 1950’s and now growing by over 400 new stores per year.

 Best Restaurant Operators – LCR will only lend to proven operators in the Dunkin network, typically ones who operate multiple stores and operators whom Dunkin’ corporate HQ awarded new development rights to build new stores based on their confidence in the development and operating capabilities.

LCR’s EB-5 investments are structured as mutual fund-like vehicles where LCR acts as the General Partner of the fund and the EB-5 investors are the Limited Partners. The fund provides loans to experienced multi-unit operators for new store development. LCR’s first investment will finance the development and operation of a series of 18 Dunkin Donuts franchised restaurants in the New York metro area.
If you are currently residing in the U.S. on a non-immigrant visa, in order to invest in one of our projects you must
be an accredited investor. The $500,000 used for the investment can be counted towards the requirement of $1 million in total assets.
An accredited investor is a term defined by U.S. securities law which describes the characteristics of the investors who are legally permitted to invest in certain types of unregistered or higher risk investments, limited partnerships and hedge funds. In the U.S. an individual is considered to be an accredited investor if they have a net worth of at least $1 million or if they have made at least $200,000 each year for the past two years (or $300,000 with their spouse, if married) and have the expectation to make the same amount in the current year.
The regulations specifically allow for the pooling of funds by several investors to establish a Limited Partnership sufficient to qualify all participating investors. The only requirement is that each investor must individually meet the minimum at risk capital and new job creation requirements.
EB-5 program regulations and USCIS rulings require all EB-5 investments to be at risk, so there is no guaranteed return on investment. Each investment is specific to its risk reward analysis and pro forma analysis.
LCR has designed an investment vehicle and structure to maximize principal protection and return to its investors.
Each loan made by the LCR investment vehicle will have a defined 5-year maturity date, with strong penalties if principal is not repaid as well as collateral including personal guarantees by the borrower.
There are no other fees. If the client chooses to hire 3rd party tax advisors, those fees are of course additional. This
does not cover travel expenses to the U.S. etc., of course.
A prospective investor can first register by filling out the contact form to receive offering materials (investment
prospectus).

a. In terms of investing, once you sign the official English version of the subscription agreement (in the prospectus) and we counter-sign the same document, you are admitted as a limited partner. The next step for the foreign investor is to follow our wiring instructions and send the investment funds. Typically, within 1 to 2 days of your wire transfer, our office will send you a confirmation of receipt of the funds. If you are an EB-5 investor, a copy of the remittance confirmation will also be provided to your immigration attorney, so he or she can submit your I-526 petition.

b. At any stage of your decision-making process, please feel free to contact us via phone, send us an email or set an appointment online to speak to one of our managers.

There are two principal concepts in assessing a lending risk.

a. The probability of default.
b. The severity of default: the higher the recovery rate is, the lower the severity of loss due to default.
i. One initial way to assess the probability of default is the track record of lending in a specific space. For Dunkin that is low, at 2%.
ii. The recovery rate on default is also assessed on a track record basis. But both of these are at the aggregate level.
iii. For example, the default rate includes the default rate of loans made to store number one of a Dunkin operator and store number 300 of the Cafua family. Obviously, there is a much lower probability of default with Cafua than others. The same is true for LCR’s borrowers because they are seasoned multi-unit operators.

iv. In the same way that the recovery rate on a default of a single unit operator is going to be much lower than a default on a Cafua operator because the Cafua loan was cross collateralized, the recovery rate on a Cafua deal is likely to be 100% for many reasons including the borrower wanting to protect their credit profile. This will be true for LCR’s borrowers as well.

There are no other fees. If the client chooses to hire 3rd party tax advisors, those fees are of course additional. This
does not cover travel expenses to the U.S. etc., of course.
The risks vary depending on the project. In general, EB-5 investor risks include fluctuations of economic conditions, risks inherent in the real estate market, statutory changes and risks associated with a private offering. There are specific risk factors for each Limited Partnership, which are specifically addressed and described in detail in the offering materials for each Limited Partnership.
a. How are you managing capital deployment to accommodate return of funds requests in event I-526s are rejected? [ i.e. If an I-526 petition is rejected for non-project related reasons – (ex. USCIS is not satisfied with proof of funds, etc.) and LCR cannot find an EB-5 investor to replace me, (to the extent funds in escrow allow to prepay loan up to value of commitment), will an investor ever be stuck in the partnership?]

 No. We plan to deploy capital over an 18-24-month period meaning that there should be ample capital available to return principal to any rejected applicant.

b. Sourcing strategy? What if (LCR) cannot find (a) place to deploy (my investment)?

 We have personal relationships with many of Dunkin’s large area developers in our target geographies.

LCR’s PR advisor is also Dunkin Brand’s advisor and is aware of Dunkin expansion plans before the public. In addition, we feel that the product, specifically the Interest-Only feature of the loan, is highly appealing to Dunkin’ operators, thus making the value proposition very attractive…. leading to few impediments to deployment.

c. Is the partnership and/or project company expected to take on any debt?

 Minimal working capital (is) projected to be no more than $250K for project company, so there will be no debt on the partnership.

a. Is this an approved project with a “Matter of Ho” compliant business plan?
i. The exemplar was filed in September. Hirson reviewed the offering and Business Plan. They filed the exemplar. We have not been notified of approval/denial as of today.
b. Of the 2,400+ jobs expected to be created for this fund, how many are direct vs. indirect?
i. All indirect. We use the US Federal Government’s RIMS 2 model (initially developed in the 1970s by the Bureau of Economic Advisors as a method for estimating regional Input-Output multipliers). This measures all jobs created resulting from sales and goods produced from business activities.
c. There are only 72 stores vs. 98 investors. How many employees are hired per store and how will LCR get to the 2,400 figure?
i. Over 30 jobs are expected to be created per store on an indirect basis. We are not factoring in ANY of the direct employment within the stores themselves. This option is available to us, if needed, but the likelihood that it will be needed is very low. As for actual in-store employees, that will depend on the asset type of the store i.e. a small gas station location may only have 3-4 employees, whereas a free-standing pad site, operating 24 hours a day, would likely have more than 30 direct employees by itself.
d. What is capital structure of project company – will it take on any leverage? If so, where does partnership sit in (the) capital stack?
i. The project will not take on debt.
e. I-829 removal of conditions: Is documentation / proof of job creation provided on a FIFO basis as investors hit (the) 2 year mark or only when all fund investors receive I-526s?
i. Job allocation is on a FIFO basis.
f. How are new lending opportunities sourced? What type of diligence is done on the operators?
i. All Dunkin’ Franchisees by definition have to be approved by Dunkin’ Corporation. The higher hurdle is for them to get approval for expansion. Because all Dunkin’ operators to whom we lend are approved for expansion, they already have had a high degree of diligence by Dunkin’ corporate. Separate from that, we have full underwriting, lending, and credit criteria procedures for each borrower.
g. Are costs of diligence, drafting loan docs to franchisees, etc. assumed by the project?
i. No. All will be absorbed will be absorbed by the borrower.
h. How will timeliness of capital deployment impact job creation figures and availability by date of removing conditions (I-829)?
i. It should take that amount of time or shorter. We already have a backlog of lending opportunities.
It should not affect the I-829.
i. Whose responsibility is it to prove jobs created (for I-829) and how often will this analysis be updated – will it be ready in time to file the I-829 petition?
i. LCR and NES Financial will both monitor the use of funds, job creation and immigration status and reporting. LCR will provide regular letters to investors discussing deployment and job creation activity.
a. What reporting is provided? For which entities? How frequently?
i. Each investor has access to their own NES account, showing, among other items, principal balance and money movements. In addition, at year end a certified financials will be provided to investors by an independent accounting firm. That is something that few Regional Centers provide.
b. Will you provide partnership audited financials? What about the project company accounts – will they be disclosed?
i. See above.
c. Will you allow access to franchisee-level loan documents (i.e. loans made by the project company to franchisees)?
i. Audited financials of the LP (the fund) will be conducted annually and will be made available to investors. Access to individual loan agreements is confidential and will not be provided. We will endeavor to provide as much information as we can on a request basis.
d. What checks & balances are in place to ensure no overcharging of offering and organizational expenses, or other fees to the partnership?
i. LCR has a three-person committee that decides which expenses are allocated to the partnership and the JCE. The expense allocation will be in-line with the PPM. New legislation proposed specifically calls for auditing of Regional Centers and their fund investment activities. LCR is prepared to have an “open-book” policy when/if this occurs. This should provide comfort that all expense allocation will be appropriate.
a. Preferred return will be paid at what frequency?
i. Currently, it is set up to be paid annually. We may change that to monthly or quarterly, but have not made that decision as of today.
b. What is the plan for return of capital? Do LPs have to wait until all other LPs have reached the I-829 stage before starting to get their capital back?
i. No. But a return of capital will be on a pro-rata basis. Return of capital will not be on a FIFO basis.
c. Run through example mechanics of return of capital in the event that one is the first investor to get I-829 adjudicated?
i. When sufficient capital is available for distribution after 5 years, LCR will return it on a pro-rata basis.
d. Loan maturity is 5 years after the date last funds are advanced (and not first funds), meaning that if first advance is made today and final advance is made two years from now, then the final maturity date of Loan is 7 years from now (plus two optional one year extensions)?
i. Yes. But there are early pre-payment incentives for the borrowers such that LCR is targeting to have maximum cash available for distribution at year 5.