Foreign Direct Investment

Global Site Selection Consultancy

Overview - Executive Summary

The company has developed a highly leveraged tax driven equity acquisition method for the purchase, renovation, and restoration of historic and non-historic commercial real estate. We can demonstrate huge advantages and cost savings in the acquisition and redevelopment phase of commercial real estate property.

Company management believes the most under served tenant demand markets are international in nature for the following reasons:

A weakening dollar reducing the cost disparities between the developed and developing countries.
Weakening domestic demand for commercial real estate making U.S. based assets more attractive to overseas investors in the near term.
Dysfunctional credit markets and the implosion of CMBS (Commercial Mortgage Backed Securities) creating further downward pressure on commercial real estate values in the short term.
The United States has the most productive workforce in the world; making labor cost disparities much lower than they first appear.
The need of developing countries to maintain and expand their access to the largest consumer economy in the world, the United States.
Higher logistics and product costs due to higher energy costs and a reduction in transport capacity globally.
The erection of non-tariff trade barriers, such as carbon cap and trade, leveraging the environmental advantages of the developed nations. What is not imposed legislatively will be accomplished economically through higher oil and energy prices.

The existing commercial real estate and site selection organizations that currently exploit this highly relational international business generally seek opportunities far larger than the properties we acquire qualify, or are suitable for. To counter our weakness, avoid competing head to head with existing site selection organizations, and avoid the fate of having a stable of "see-through" freshly renovated buildings, our objective is to build and deploy a globalized site selection consultancy using technology as a core strategic asset to identify emerging enterprises that are, or should be, locationally active.

Our target is middle market and lower tier companies with $25 to $500 million dollars in annual sales and an international sales and facility footprint too small for the existing site selection industry (generally focused on the largest global Trans-national Corporations) to identify and service.

This need is further amplified by the fact that the United States stands alone among the industrialized nations as NOT having any form of economic development outreach to the International business community to attract FDI (Foreign Direct Investment). This task is left to the small Economic Development Agencies of wildly varying competencies in each state and locality who are competing with nationally organized counterparties in virtually all other globalized countries.

Relocation and facility expansion impediments to the emerging multi-national corporation are further compounded when you consider that, unlike most other trans-national corporate facility destinations, the legal and structural organization of the United States appear to the overseas entity as 50 different countries and regulatory systems instead of one.

Our company reaches out and touches those small and intermediate companies that do not have the internal facility selection resources to identify and quantify the economic costs and strategic benefits of establishing a new domestic U.S. based location(s) including but not limited to:

Reduction of logistics and distribution costs (resulting from higher energy prices)
Create a more tightly coupled relationship to the vendors U.S. based customer and consumer base,
Avoid non-tariff barriers being erected such as "carbon cap and trade"
Improve responsiveness to customers JIT (Just in Time) needs through local stocking and distribution facilities and thereby reduce rising supply chain risk and volatility
Improve technical and sales support to existing its customer base and provide a platform for market expansion and penetration
Quantify the costs of deploying U.S. based operations using our business model to obtain expansion results at costs far lower than currently perceived by the overseas entity

This site consultancy organization is one of three independent, but equally important, functional activities the company deploys to meet our primary objective of acquiring and expanding our commercial real estate portfolio at an increasingly rapid rate using substantially debt free, tax driven equity strategies to create performing commercial real estate assets.

A technology driven tenant acquisition engine utilized by a site selection consultancy team, (the smaller the community in which a project is located, the more critical this function becomes as existing economic development and commercial real estate outreach resources, hence proactive business attraction, is essentially non-existent)
The creation of a capital acquisition team experienced in private placement funding of commercial real estate projects
The continued development of our property acquisition resources to identify macro economic trends that create pockets of opportunity to acquire highly distressed properties in response to tenant needs and demands.

Global Development Analytics Business Model

The Macro Economic Drivers - The six reasons why we are about to witness a mass migration of manufacturing and service operations back to the United States

1. Weakening dollar driven by rapidly expanding government debt creating a highly inflationary bias in the domestic and global economy.

As we inflate other countries will follow suit and expand their domestic money supply to try and maintain purchasing power parity to protect their export based economies. This is a game of Russian roulette for other currencies because the US dollar, being the world's "reserve currency", can likely engage in a war of attrition and simply outlast smaller less developed nations and weaker currencies, inflating faster and farther than our international counterparts.
Inflationary environments reward asset based investments such as real estate and penalize savings, bonds, and other currency based investments.
Results in a debasement of dollar denominated foreign currency reserves and U.S. Treasury debt, weakening the monetary strength of the lending country, largely China and Japan and allowing the debtor nation, the United States in this case, to effectively reduce its foreign debt obligations by the debasement of its currency.

2. Volatile energy costs trending sharply higher increasing raw material, manufacturing input, operations, logistics and distribution costs. Global trade collapsed in the face of $150 bbl oil as traditional capital flows were sharply distorted causing credit and liquidity crises in the global financial markets. (see "Why the World is About to get a Whole Lot Smaller", Rubin, Random House Publishing 2009). A May 2008 study by the Canadian Imperial Bank of Commerce estimated that in 2000 the cost of shipping a standard 40 foot container from Shanghai to the U.S. Eastern seaboard was about $3,000 CDN but, with oil prices at $140 per barrel, it jumped nearly threefold to $8,000 in 2008 and, if oil prices reached $200, it would cost nearly $15,000 to ship that container. There is no evidence that over the medium to long term upward pressure on energy prices will abate.

Of course, the rapid deployment and expansion of nuclear power generation or the emergence of new hydrogen or fusion technologies could significantly alter our energy dependencies. However, the lead times required to design and deploy these technologies is typically a decade or more. Therefore in the opinion of company management, energy volatility in an upward trending path is going to be a fact of life for at least the next decade. Short term investment and economic focus will be on energy conservation and alternative energy development technologies which are currently deployable with little environmental risk, but will yield only small incremental results across the next decade. The result is that the age of long distance shipping of people, goods and materials in global commerce is coming to a close. Impacted first will be those manufactured, commodity products and services that are freight and/or transportation intensive. Lower value, low labor input industries such as food, mineral and metal based products are those that will likely see their supply chains disrupted first.

3. The U.S. represents the largest consumer market on the globe. Foreign corporations must continue to seek access to, and support of, our domestic consumer markets in order to thrive. This requirement is most acute for developing country export based economies and enterprises. (Most notably the BRIC countries, Brazil, Russia, India, and China) While these export driven economies are creating their own emerging middle class consumer markets and do represent growth opportunities, they pale in comparison to the size of the American consumer class. Slowing American imports due to economic contraction and rising energy prices will act as a sharp brake on growth of developing country consumer markets. America, in spite of all of the negative press, is still the gorilla in the room and represents the greatest economic opportunity on the globe.

4. Diminishing labor cost disparities, due to the rising costs of labor overseas, in combination with productivity gains and falling labor costs in the United States, the labor disparity between the United States and many developing nations is starting to flatten. The United States possesses the most productive labor force in the world (second only to Norway which, unlike the United States counts oil revenues in productivity calculations.) The productivity of the average U.S laborer is no less than 8 times that of the average Chinese laborer. When analyzed in these terms the real wage and cost disparity between our countries is much smaller than may first be perceived. Over the last three years alone (from 2005 through 2008), the costs of offshoring have increased across a broad range of indices: Ocean freight costs have increased 135%, the global commodity price index has risen by 27%, the Chinese Yuan has gained 18% in value compared to the dollar, Chinese manufacturing wages have risen by 44%. More than 90% of manufacturers surveyed in a 2008 Archstone/SCMR poll expected increases of 10% or more in the next 12 months!

5. Erection of Non-tariff barriers – Carbon Offset Tax, Carbon Cap and Trade Systems. The emergence of carbon offset taxes and/or carbon cap and trade systems will erect huge trade barriers to long distance shipping and the importing of goods and materials into the United States and other developed nations. The strategy side steps the obligations of our memberships in the World Trade Organization to maintain free and open markets. It leverages the environmental advantages the developed nations have over the non-developed nations and forces all companies on the globe wishing to access the markets in the developed nations to include the costs of their environmental footprints of their products and services by:

Imposing costs on long distance energy intensive shipping and poor environmental practices on products and services manufactured internationally. It levels the global economic playing field forcing inclusion of environmental costs regardless of origin. Finally, the strategy financially penalizes poor environmental performance where ever it occurs on the globe and rewards efficient environmental practices and inputs. Because the developed nations are more environmentally efficient than the less developed it provides the developed countries with a strategic competitive advantage.
Rising port and customs congestion/inspection costs resulting from increased security and awareness practices raising product costs. Lower container volumes currently increase the likelihood and frequency of secondary inspection at the U.S. ports of entry for foreign importers. The minimum expense for secondary container inspections are minimally $1,500 or more per container, on top of planned transportation and entry costs. For low value, low margin, or freight intensive products this can quickly move product transportation costs from 10% - 15% to more than 25% of product value instantly and obliterating any planned profits on the entire shipment. Conversely, when port traffic is high, demurrage and shipping delay costs can also yield similar results disrupting the global supply chain. While export driven economies have been investing billions of dollars in port capacity and expansion, the United States has been notably lax in making such investments. This acts as a brake on import activity imbalances which may be the desired policy result.
High priced oil did in a few months what the environmental community had been unable to accomplish in decades. Make the "Greening of America" mainstream economic policy.
The SEC is creating and implementing standards of accountability and reporting for the heretofore undisclosed environmental costs of production and enterprise. The result may serve as additional motivation to TNC’s (Trans-National Corporations) to repatriate select operations previously off-shored that engage in poor environmental practices by raising the effective landed costs of goods and services.
"Greening of America" policies are being positioned to provide strategic competitive advantages to domestically based operations for access to the American consumer. Carbon cap and trade legislative programs are encountering strong headwinds and are potentially adverse to large TNC's. What is not accomplished legislatively WILL be accomplished economically through rapidly rising oil and energy prices. "The world is about to become a much smaller place", regardless of what happens in Washington.

6. Widening of the Panama Canal will cause a paradigm shift in global trade patterns to the Eastern seaboard where 65% of the American population resides and 75% of the economic consumption occurs. This trade pattern shift away from West Coast ports will most benefit Eastern gateway cities and Cleveland where vast new real estate growth opportunities will occur over the next two decades. The rust belt is about to be re-energized and revitalized in the opinion of management as the canal expansion project completes in 2014. Informed commercial real estate investors are seizing the current economic malaise as a prime acquisition opportunity.

In summary, management expects a trickle to turn into a torrent of companies seeking to establish domestic domiciles in the United States as these macro-economic drivers gain traction. In many cases it will be a matter of corporate survival.