How fiscal policy contributes to unintended consequences in the real estate industry- like clockwork

1. 2017 – A Year of Distressed
CRE and EB-5 Opportunities
January 2017

2. Table of Contents
1
Page
Turbulence in the US Commercial Real Estate (“CRE”) Market 2
Sins of the Past 3
Risks Impacting the US CRE Market 4
Brandlin & Associates – Trusted Advisors 13
Strategic Advisory Services 14
Why B&A 15
Biographies 16
EB-5 Immigrant Investor Program
Program Background 6
How Real Estate Developers Leverage the EB-5 Program 8
EB-5 Foreign Direct Investment in Billions by Fiscal Year 7
Scams, Scrutiny and the Future of the EB-5 Program 10
The Unintended Result - Poster Child for Bad Behavior 9
Known Defaults of EB-5 Foreign Direct Investments Since 2013 12

3. This belief it based upon the following macro trends and facts:
 Out of market lending by hot money lenders.
 Smart money sitting on the sidelines – while the retail investors increase participation.
 The changing landscape of Retail and the cooling down of hot MSAs (Metropolitan
Statistical Areas).
 An increase in sub-leasing activity.
 Wall of maturing loans that will be hard-pressed to refinance – over $200 Billion
through end of 2018.
 Paying for “Sins of the Past” – please refer to next page.
 Continued fraudulent activity.
2
Turbulence in the US CRE Market
Our Belief:
Select Commercial Real Estate sectors / MSAs are poised for a correction primarily
driven by poor underwriting, an uneven economic recovery and rising interest rates.

4. 3
2005,3%
2006,50%
2007,26%
2011,2%
2012,3%
2013,7%
2014,7%
2015,2%
Loans originated in 2006 and 2007
accounted for 76%, or approximately
$1.1 billion, of 2016 defaults
as of 6/30/16.
Sins of the Past
We are still paying for sins from 10 years ago! The chart below breaks down the $1.4
billion of 2016 defaults by origination year (as of June 16, 2016).

5. U.S. Real Estate Returns and Economic Growth
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 As reflected on the graphic to the
right, real estate returns are often
inversely correlated with GDP
growth given the market’s reliance
on leverage. One will also note that
this real estate cycle is now very
long in the tooth.
 As the market has been operating under an “artificially” sustained period of historically
low interest rates, a rise in interest rates will result in increased borrowing costs and
negatively impact pricing and valuation of CRE.
 Growing competitive pressures have resulted in banks increasing credit risk and easing
underwriting standards and practices including less-restrictive loan covenants, extended
maturities, longer interest-only payment periods, and limited guarantor requirements.
Risks Impacting the US CRE Market

6. 5
For more information on Brandlin &
Associates’ Real Estate capabilities please
refer to, or request to receive, our Real
Estate Statement of Qualifications where
you will find B&A’s systematic approach to
distressed real estate projects.
Risks Impacting the US CRE Market
 Risk assumed by non-bank lenders. Subsequent to the Great Recession, non-bank
lenders have increased in popularity to lend on riskier investments that banks would
pass on. Riskier investments have increased default risk.
 The lure of low-cost financing for development projects via the United States “EB-5
Immigrant Investor Program.” While the EB-5 Program is not exclusive to CRE, it has
become an attractive option for developers to obtain low cost financing.

7. Program Background
6
EB-5 Immigrant Investor Program
 EB-5, which stands for Employment Based 5th category, is the fifth (and last) category
of all employment-based immigration categories in the US.
 In 1990, Congress created the EB-5 Program to stimulate the U.S. economy through job
creation and capital investment by foreign investors.
 One of the original goals was to stimulate rural and struggling urban neighborhoods by
offering a lower minimum investment for those areas.
 For projects in rural or high-unemployment areas, the minimum investment is $500,000.
That compares with $1 million for a standard project. Far easier to raise money at the
$500,000 level.
 Under the EB-5 program, these qualifying foreign investors are eligible to apply
permanent US residence, commonly referred to as an Investment Green Card, if they:
• Make the necessary investment in a US commercial enterprise.
• Demonstrate that 10 or more jobs are actually created either directly or indirectly by
the new commercial enterprise.

8. EB-5 Foreign Direct Investment in Billions by Fiscal Year since 2006
7
EB-5 Immigrant Investor Program
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EB-5$ 0.17 0.24 0.32 0.63 0.68 0.79 1.84 1.85 2.56 4.38 3.82
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
EB-5$inBillions
From 2008 through 2015, annual
Foreign Direct Investments volume
increased over 1,200%
Source: www.USCIS.gov – Approved I-526 petitions using an estimated $500,000 investment per approval, by year.

9. How Real Estate Developers Leverage the EB-5 Program
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EB-5 Immigrant Investor Program
 In recent years, developers have embraced the EB-5 Program, tapping foreign
investors, especially Chinese investors, to help finance their projects at a cost
substantially below the market cost of “equity” capital.
 The foreign investors have shown a preference for flashy real-estate projects, often built
on “spec” vs rural manufacturing plants, nursing homes or hotels.
 Despite the fact that one of the original goals was to stimulate rural and struggling urban
neighborhoods, a high volume of projects that have raised EB-5 financing are in
prosperous neighborhoods (more than 20 are in NYC today).
 Developers have been successfully leveraging this “loophole” to qualify projects in
prosperous neighborhoods thus, lowering the minimum investment requirement.

10. 9
American Dream Broken Promises Fraud
As the EB-5 Immigrant Investor Program has become an attractive option for developers
to obtain easy low cost financing – It has become the “Poster Child for Bad Behavior!”
The Unintended Result!
EB-5 Immigrant Investor Program

11. Scams, Scrutiny and the Future of the EB-5 Program
10
 As the EB-5 Program has increased in popularity, so has the frequency of fraudulent
schemes and misappropriation of investor funds – Between January, 2013 and
January, 2015, the SEC received over 100 tips, complaints and referrals relating
to possible securities fraud violations in the EB-5 Program!
 Below are some recent EB-5 fraud cases filed by the SEC in which the underlying
business involved either commercial or residential real estate projects:
February, 2013 – Chicago Convention Center ≈ $156 Million raised
October, 2013 – Marco and Bebe Ramirez ≈ $5 Million raised
August, 2015 – Path America ≈ $136 Million raised
November, 2015 – Zhong ≈ $8.5 Million raised
November, 2015 – Suncor ≈ $150 Million raised
April, 2016 – Jay Peak ≈ $350 Million raised
“Rampant fraud and abuse within
the EB-5 Regional Center program
prevents the program from serving
its original purpose, which was to
create jobs and direct capital to
underserved areas starved for
investment. As I have said before,
the program needs to be reformed
or it needs to end.”
Senator Patrick Leahy (D-VT)
EB-5 Immigrant Investor Program

12. Scams, Scrutiny and the Future of the EB-5 Program
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 Over the last three years in response to the increased activity with the EB-5 Program
and related scams, there has been increased scrutiny over the program including
various bills being presented to the US Congress.
 Senate Judiciary Committee Chairman Chuck Grassley (Republican) made the
following statement after meeting with General John Kelly, Secretary of Homeland
Security on January 13th
“…. we talked about new proposed regulations published by the Department today that would go a
long way to restoring the EB-5 immigrant visa program to the way Congress intended it to be used: to
help bring much-needed jobs and capital to rural and economically distressed areas. I expressed my
strong desire that these rules be kept in place and allowed to go forward to ensure that this program
fulfills its original intent.”
 Brandlin’s interpretation and expectation; more oversight and transparency coupled
with a higher cost of entry when the program is up for renewal in April of this year.
EB-5 Immigrant Investor Program

13. Known Defaults of EB-5 Foreign Direct Investments Since 2013
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EB-5 Immigrant Investor Program
 As can be expected with any financing vehicle that experiences explosive growth such
as the EB-5 Program, defaults will soon follow. The chart below demonstrates this
point. Total defaults now aggregate more than $1.5B over just the last four years
2013 2014 2015 2016
Default $ 0.16 0.01 0.20 1.27
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
EB-5Default$inBillions
Over the four year period from
2013 – 2016, identified EB-5
defaults amount to approximately
13% of EB-5 $ invested.
Source: Public data from press releases and SEC complaints obtained from www.sec.gov.

14. Brandlin & Associates – Trusted Advisors
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LITIGATION
SUPPORT
FORENSIC
ACCOUNTING
DUE
DILIGENCE
RESTRUCTURING
&
TURNAROUND
QUALITY SERVICE
CREDIBILITY
EXPERIENCE
QUALIFIED PROFESSIONALS

15. 14
Falling under one our primary services listed above, B&A provides the following capabilities:
 Feasibility & Economic Return Analyses.
 Strategic Restructuring and Repositioning of Assets.
 Funds Flow Analyses (typically looking like spider webs or spaghetti).
SERVICES
Restructuring
& Turnaround
Due
Diligence
Forensic
Accounting
Litigation
Support
 Financial Advisory & Workouts
 Interim Management
 Insolvency and Reorganization
 Financial Due Diligence
 Portfolio Company Reviews
 Pre-sale Planning
 Complex financial fraud investigations
 Ponzi schemes, embezzlement and kickbacks
 Receiver, trustees and independent monitor services
 Pre-trial and courtroom activity services
 Data mining and management
 Expert witness testimony
B&A’s primary services are complementary strategic advisory services
critical to an EB-5 fraud case.
Strategic Advisory Services

16. Experience
 B&A’s professionals have either started their careers in “Big 4” accounting firms or in
in Banking. Our professionals hold professional designations such as Certified Public
Accountant (CPA), Certified in Financial Forensics (CFF), Certified Insolvency and
Restructuring Advisor (CIRA) and/or Certified Merger & Acquisition Advisor (CM&AA).
 B&A understands that trust must be earned and deserved. We are transparent in our
execution and work diligently to appropriately manage all stakeholders’ expectations.
Our People
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Why B&A for EB-5 cases
 B&A has been providing professional services to clients for over 30 years.
 B&A is currently providing forensic accounting services to a SEC appointed Receiver
on an active EB-5 case.
 We have a proven track record of providing innovative, strategic, high quality solutions
in complex situations.

17. Jeffrey E. Brandlin
Senior Managing Director
jeff@brandlin.com
Jeff is an industry leading provider of consultative accounting and financial advisory services. Top tier banks, private equity groups,
non-bank senior and mezzanine lenders and middle market companies depend on Jeff and his firm for the financial information they
need to make intelligent decisions, both in advance of an investment and when a portfolio company’s performance deteriorates. In
litigation, attorneys and their clients rely on his thorough forensic accounting, concise reporting and expert witness testimony to help
resolve highly-contentious situations.
During his 40 year career, Jeff has uncovered numerous financial frauds and accounting malpractice. He often remains involved in
these situations to provide litigation support or assist with financial restructurings or workouts. Jeff also has provided thorough
financial due diligence in support of hundreds of successful transactions for equity and debt capital providers. Perhaps more
importantly, he has saved clients from committing to money-losing investments on numerous occasions.
Jeff founded Brandlin & Associates in 1980 to provide clients with tangible, timely and action-oriented insight. Previously, he was an
audit manager at Coopers & Lybrand in Los Angeles. His experience spans a broad range of businesses in industries including
entertainment, manufacturing, wholesale distribution, retail, technology, apparel, oil and gas, food service, health care, construction,
automotive, financial services and professional services.
Jeff is a frequent speaker to industry organizations and law firms on the topics from fraud, forensic accounting and financial
statement analysis. He earned his Bachelor of Science degree in Accounting from San Diego State University and has been licensed
to practice accountancy in California since 1976. Jeff also is a Certified Insolvency and Restructuring Advisor (CIRA), a Certified
Merger & Acquisition Advisor (CM&AA) and is Certified in Financial Forensics (CFF) by the American Institute of Certified Public
Accountants.
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18. David has over 20 years of experience in public accounting, private industry and transactional services. Since joining Brandlin &
Associates in 2003, he has assisted in over 100 mergers and acquisitions transactions ranging in value from $5 million to $250 million. He
also has contributed to several litigation support and forensic accounting assignments for counsel, and senior and mezzanine lenders.
David has provided expert testimony in United States Bankruptcy Court, Central District of California – Los Angeles Division regarding
fraud, conversion and civil conspiracy matters. Among several successful outcomes involving litigation, his work and testimony were
instrumental in obtaining a $40 million judgment against the defendant’s principals in a civil matter. In another matter, he provided expert
testimony for the bankruptcy Trustee’s prosecution of accounts receivable debtors, leading to a series of default judgments and
negotiated settlements.
A wide range of clients across a broad spectrum of industries benefit from David’s thorough approach to providing forensic accounting,
litigation support and financial advisory services. He is particularly skilled at advising capital sources and their clients, counsel and creditor
committees regarding accounting malpractice theories, sources and methods of recovery and restructuring alternatives.
David frequently gives presentations to banks, law firms and finance-related organizations on topics including: Financial Due Diligence:
What Matters Most; Uncovering Landmines: Lessons Learned Conducting Forensic Accounting; and Financial Statements for Attorneys.
Prior to joining Brandlin & Associates, David was Manager of Financial Reporting for the mortgage division of one of the nation’s largest,
publicly-held, residential builders. His responsibilities included financial planning and budgeting, due diligence and compliance reporting.
David began his career at Ernst & Young LLP in Los Angeles where he was an audit manager. His clients included both private and public
companies of varying sizes and industries, including financial services, pension plans, software and manufacturing.
David graduated from the University of Southern California in 1992 with a Bachelor of Science degree in Accounting.
David R. Bell
Managing Director
david@brandlin.com
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19. Martin A. Cauz
Martin is a seasoned financial consultant and accountant with over 25 years of experience. He advises capital sources, management
teams and legal counsel in all aspects of financial due diligence, forensic investigations, workouts and restructurings, and litigation
support. With deep knowledge gained as a turnaround consultant and over 10 years in public and private accounting, Martin is
particularly adept at: developing and evaluating strategic business plans; financial modeling and reporting; evaluating and
negotiating reorganization/restructuring plans; preparing/analyzing court and creditor reports; building and reorganizing corporate
teams; and preparing liquidation analyses. His industry expertise includes healthcare, financial services, manufacturing, retail,
distribution, sports franchises, and technology.
In providing value-added services to his clients, Martin focuses on mentoring management teams through unstable times; and on
enhancing stakeholder relationships by leading negotiations for his clients. As a result of this approach, Martin enjoys being
recognized as a trusted business advisor and developing long-term relationships.
Prior to joining Brandlin & Associates, Martin was a managing director at a nationally-recognized restructuring firm, for 14 years. In
this position, he worked with senior management teams, lenders, equity sponsors, attorneys and other professionals to develop and
implement restructuring plans and financial turnarounds. Martin began his career at KPMG where he was an audit manager
servicing public and private companies of varying sizes.
Martin is a Certified Public Accountant and a Certified Insolvency and Restructuring Advisor. He graduated from Moravian College in
1989 with a Bachelor’s Degree in Accounting. He currently sits on the Board for the Association of Insolvency and Restructuring
Advisors (AIRA).
Managing Director
martin@brandlin.com
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20. Mark Elletson
Mark is a seasoned financial consultant frequently assuming a lead change agent role for corporations while contributing to the
restructuring and turnaround of distressed companies. Mark advises capital sources, management teams and legal counsel in
enterprise strategy with a focus of increasing and realizing value.
Starting his career in banking, in the late 1980s, Mark was immediately exposed to real estate lending and distressed debt workouts.
Migrating to consulting in the mid-1990s, Mark continued to focus on real estate and distressed debt. As Mark’s career evolved, he
has frequently identified opportunistic restructuring situations in a wide range of industries and has led more than 30 executive teams
through intensive “top down / bottom up” reviews of internal processes, while skillfully restructuring capital structures to support
desired financial metrics.
Some of Mark’s notable accomplishments include:
•Advisor to a marquee private equity group on their renewable energy investment. Completed analysis and strategic business plan
over the course of three months.
•Advisor to the first lien lenders of the largest waste to energy conversion company in the US. Serving as a lead member of the
restructuring team, this restructuring resulted in a 100% ($300 million) recovery to first lien holders.
•Halted a likely bankruptcy filing and renegotiated the repurchase of over $200mm in debt from GMAC on behalf of one of the largest
timeshare operators in less than four months.
•Advised the board of a $1 billion international resort community developer and was instrumental in devising a strategy to seize
immediate control of all developments and rationalize resource commitments.
Mark has lived and worked in the United States, Europe and Australia is fluent in both English and German. Mark graduated from
Fairfield University in 1987 with a Bachelor’s Degree in Finance and received his MBA from Columbia University in 1995.
Managing Director
markel@brandlin.com
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21. Richard Lieu
Associate
richard@brandlin.com
Richard is an experienced financial consultant and accountant for companies ranging from private equity-backed growth businesses
to multi-national public corporations.
At Brandlin & Associates, Richard performs quality of earnings analyses on target companies for capital sources including banks,
private equity firms and other lenders to assist in their investment decision-making process. He has also provided forensic accounting
and litigation support services including fraud and accounting malpractice investigations, as well as damage calculations. Richard has
worked on matters with the Securities and Exchange Commission (SEC) including the investigation of an EB-5 Program fraud and
the Federal Trade Commission (FTC) in the investigation of negative option marketing schemes.
Prior to joining Brandlin & Associates, Richard was an audit senior associate at PwC where he primarily practiced in the financial
services industry. He frequently vetted portfolio company valuations for private equity clients by validating discounted cash flow and
market models. This involved analyzing complex contracts, progress payments, incentive compensation plans and international
operations. He also analyzed periodic fluctuations in financial statements to assess risk and draw conclusions, and evaluated the
design and effectiveness of internal controls.
Richard graduated from the University of California, Berkeley with a Bachelor of Arts degree in Economics. He is a Certified Public
Accountant licensed to practice in California and is Certified in Financial Forensics (CFF) by the American Institute of Certified Public
Accountants. In addition, Richard is candidate in the Chartered Financial Analyst (CFA) program having passed all three levels of the
exam.
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