Business Overview
Berkeley University & McGee LP is raising EB-5 capital to fund a two-part mixed-use development project in Berkeley, California. The project aims to cater to the student community, with the first phase involving the expansion of an existing student housing building on McGee Avenue. This expansion will include 12 additional units to accommodate 20 beds. The second phase consists of constructing a new mixed-use building on University Avenue, which will feature 37 units of student housing along with a Japanese/Chinese fusion restaurant, an entrepreneurial incubator, a tutoring business, and a beauty salon. The project aims to provide a comprehensive range of services, including an online tutoring platform, support for student entrepreneurs, and a diverse culinary experience for customers.
Location Overview
The Project location qualify as a Targeted Employment Area (TEA) as the location has an unemployment rate that exceeds 150% of the U.S. national average unemployment rate, which currently stands at 5.4%. The Project's location has an unemployment rate of 8.1% and therefore qualifies as a TEA, subject to the decreased investment amount of $800,000 (the “Capital Contribution”) and allows investors to get access to the visas set-aside for this category (10% of the total EB-5 visas).
Market Opportunity
The market for student housing around Berkeley University presents a strong opportunity, given the housing shortages on University of California campuses, including University of California, Berkeley ("UC Berkeley"), where only 20% of students have access to on-campus housing (source: Edsource.org, September 28, 2022). While lawmakers have requested UC Berkeley to increase its enrolment of California residents, there are limited living spaces available to house these students. In addition, the off-campus student housing market in Berkeley has a severe supply-demand imbalance, resulting in soaring rents for student housing in newer buildings near the campus (source: San Francisco business Times, August 8, 2022). Therefore, the Project's development is likely to experience a strong demand for its units.
Owner Equity
The Project has been funded with bridge financing from the owners, who have invested roughly $4.8 million by way of bridge loans.
Previous Capital Raise
Berkeley University & McGee LP previously conducted an offering of limited partnership interests under a Private Placement Memorandum dated February 8, 2017, under which a total of $4,000,000 from 8 investors (the "Original Limited Partners") was raised, at a per unit price of $500,000, all of which has been advanced by the NCE for use in connection with the construction of the Project.