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This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
19 August 2014  

Asians love California, particularly Southern California! They love it as a place to live, buy homes, invest, go to school, and run their businesses. In June, we talked about the close affinity between China and Los Angeles County as revealed by a new report. Now there is yet another report documenting how Asians love Orange County.

Why? The report does not tell us that, but certainly Asians are attracted to California for the same reasons they been settling here for more than a century: proximity, climate, opportunity, and the largest communities of Asians outside of Asia.

News about Asians in Orange County

Recently, Los Angeles Times reporters Anh Do and Christopher Goffard reported on a phenomenon which we at JMBM are well aware: Asians want to live, work, study and invest in Orange County, California.

JMBM has served Orange County’s Asian community for more than 30 years. From our office in Irvine, members of JMBM’s Chinese Investment Group™ and Global Hospitality Group® are active participants in Orange County’s Asian business community where we represent Asian investors, developers, business owners, as well as new residents – primarily from China – seeking to invest in California businesses and buy luxury homes in Orange County’s prestigious neighborhoods.

New Study on Asians in Orange County

The Times article cites “A Community of Contrasts”, a study published by Asian Americans Advancing Justice, and reports the following key findings:

  • Orange County ranks third in the percentage of Asian Americans, by county, in the U.S. (two other California counties – Los Angeles and Santa Clara – top the list)
  • Orange County’s Asian population grew 41% from 2000 to 2010
  • Irvine – Orange County’s upscale, master-planned community – has the county’s largest Asian population accounting for 43% of the city’s residents
  • Westminster’s population is 49% Asian, and Garden Grove’s is 39%
  • More than 1,200 students are enrolled in Irvine’s Chinese School
  • 51% of residents of La Palma, in Orange County’s northwest corner, are Asian
  • Orange County’s Asian American population has more recent immigrants than any other group; 62% were not born in the U.S.

Chinese make up a large portion of the Asian population in Orange County, but in terms of population size they are behind Vietnamese, Korean, and Filipino and just ahead of Japanese, Indian and Taiwanese.

Chinese Americans own approximately 16,000 businesses – a quarter of all Asian American-owned businesses in the United States. In 2007 (the last year for which such data was available), Asian American-owned businesses in Orange County employed more than 96,000 people and generated more than $20 billion in revenue.

More than two thirds of Asian American immigrants in Orange County are citizens, a rate similar to that of white immigrants. And of approximately 430,000 voting-age Asian Americans in Orange County, more than three quarters are citizens.

Orange County has the fourth largest number of Asian American immigrants among counties anywhere in the United States – nearly 350,000 Asian Americans.

Asians in Los Angeles County

In June, the Hotel Law Blog’s article Hotel Lawyer: Growing Together – China and Los Angeles County summarized data from the Los Angeles Economic Development Corp.’s report, “Growing Together – China and Los Angeles County”. This report was another indication of what those of us who live in Southern California have witnessed this past decade: vibrant Asian American communities and thriving Asian American businesses are flourishing throughout the southland: Orange County, Los Angeles, San Diego, Ventura, Riverside and San Bernardino Counties and beyond. (And don’t forget San Francisco – we have lawyers there, too!)

Opportunity to work with new Asian friends

The significant increase in Asian presence in California is a great opportunity for those who recognize it for what it is. Growing numbers of hard-working people will be coming to California and needing hotels, restaurants and entertainment for travel, homes for their families that are immigrating, businesses and investments for their livelihood and adding to the robust economy.

Earlier this month, our Chinese Investment Group™ launched the Chinese language Hotel Law Blog, focused on Chinese investment in U.S. hotels and real estate. The blog is one way we can share some of the experience and insights our team has gained over the years with our many Chinese clients. As investors from China and other Asian countries continue to migrate to the U.S. and invest in hotels, real estate and luxury properties, JMBM’s lawyers are with them every step of the way.

To download a copy of the report

Click here to download a free copy of the Community of Contrasts Orange County 2014 Report.  

About JMBM’s Chinese Investment Group™ The lawyers comprising JMBM’s Global Hospitality Group® and Chinese Investment Group™ assist Chinese investors with legal and business advice on their investments in the United States. They help Chinese investors identify, analyze, evaluate, validate, acquire, finance and manage hotel and real estate opportunities. This includes due diligence, purchase and sale structure and documentation, development and repositioning of U.S. real estate — particularly hotels, hotel mixed-use, multi-family and commercial real estate. For more information:

Click here for Simplified Chinese
Click here for Traditional Chinese

Picture of Jim ButlerJim Butler is a founding partner of JMBM, and the founder and chairman of JMBM’s Global Hospitality Group® and Chinese Investment Group™. He is recognized as one of the top hotel lawyers in the world and has authored or co-authored The HMA & Franchise Agreement Handbook, How to Buy a Hotel Handbook, and The Lenders Handbook. Jim has led the Global Hospitality Group® in more than $68 billion of hotel transactional experience, involving more than 1,500 hotel properties located around the globe. Jim has more than 30 years of experience representing and advising Asian investors, with a particular emphasis on Chinese investors in the last five years given the dramatic increase of outbound investments by Chinese nationals and companies into the United States.
+1-310-201-3526 or jbutler@jmbm.com
Picture of Eudeen Y. ChangEudeen Y. Chang,is the vice chairman of the Chinese Investment Group®. He is a trusted advisor and lawyer to a number of Chinese investors who seek to diversify their wealth by investing in the United States. Among other investments and acquisitions, Eudeen represented the purchasers in the 802-room Sheraton LAX Gateway Hotel, the 244-room Crowne Plaza Los Angeles Harbor Hotel, 151-room Hampton Inn Newark-Airport, and the 349-room Wyndham Garden Hotel Newark Airport. Eudeen is fluent in Mandarin Chinese. His understanding of the Chinese business approach, culture, and language is an invaluable asset in any deal’s negotiation and success. +949-623-7232 or echang@jmbm.com.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $68 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who’s your hotel lawyer?

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
18 August 2014

Today, the Hotel Lawyers in JMBM’s Global Hospitality Group announced our 25th Annual Meet the Money® conference to be held May 4-6, 2015, at the Sheraton LAX. It’s hard to believe we are marking the 25th year of getting together with our friends in the industry for a couple of days where all participants share information, meet leaders in the industry and make deals. It will be an exciting conference and if you have not joined us at Meet the Money® in the past, we hope you will come find out what all the buzz is about in 2015! If you are a regular participant, I promise that 2015 will not disappoint!

 

JMBM’s Meet the Money® marks its 25th anniversary in 2015
National Hotel Finance & Investment Conference – May 4-6, 2015 in Los Angeles

LOS ANGELES – Meet the Money®, the premier national hotel finance and investment conference will convene for its 25th annual event on May 4-6, 2015 in Los Angeles. Since 1990, the conference has connected attendees with the industry’s top executives and leaders.

“When we established Meet the Money® 25 years ago, our purpose was to provide hotel developers and owners with a forum to meet capital providers and to gain insight on debt and equity financing,” said Jim Butler, Chairman of JMBM’s Global Hospitality Group®. “This milestone signifies our continued commitment to that vision.”

Each year, Meet the Money® brings together 400 hospitality executives and capital providers to discuss the latest trends in hotel finance in a casual and lively atmosphere.  Meet the Money® 2015 will provide the latest information on hotel industry fundamentals and numerous panel discussions by the industry’s top thought leaders and innovators. The conference will include two evening receptions, two breakfasts and lunches, and plenty of networking time to meet leaders and make deals.

“One of the best parts of Meet the Money® is the stream of messages we get afterward from participants who tell us that they found a new capital source, or are doing a deal with someone they met at the conference,” said Guy Maisnik, Vice Chair of JMBM’s Global Hospitality Group®.

Butler also acknowledged the dozens of company sponsors and hundreds of speakers who have contributed their time and resources to Meet the Money® throughout the years. “Each year, we are delighted to add new speakers and sponsors,” he said. “But many of them have been with us since our early years, and without their commitment, we would not be celebrating 25 years of success.”

About Meet the Money

Meet the Money® is an annual national hotel finance and investment conference held in Los Angeles for 25 years. Attended by hotel owners, developers, investors, lenders, operators, advisors, consultants and brands, the conference is big enough to attract heavy hitters in the industry, but small enough so that conference attendees and speakers can meet each other in person, forge relationships and do deals. This year’s conference will be held on May 4-6, 2014. Register now at MeetTheMoney.com.

About Global Hospitality Group® of JMBM

The hospitality attorneys in the Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP comprise the premier hospitality practice in a full-service law firm, and the most experienced legal and advisory team in the industry. Our team of hotel lawyers and business advisors has more than $68 billion in hotel transaction experience, involving more than 1,500 properties located around the globe, and providing one of the most extensive virtual data bases of market terms for deals and financings.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $68 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who’s your hotel lawyer?


Our Perspective. We represent hotel owners, developers and investors. We have helped our clients find business and legal solutions for more than $68 billion of hotel transactions, involving more than 1,500 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.

Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE “hotel lawyer” and you will see why.

Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

 

 

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
4 August 2014

Frequently Asked Questions about EB-5 project financing
for new hotel development

by

Jim Butler and Jonathan Bloch
Partners, Jeffer Mangels Butler & Mitchell LLP

 

Why is there so much buzz about EB-5 financing?

In the last five years, EB-5 financing has become extremely popular in development circles and is being widely used by mainstream, institutional players including government entities such as port authorities, major hotel brands like Marriott and Hilton, and some of the largest owners of hotels and restaurants. EB-5 financing has provided low-cost, non-recourse, five to six year term financing for construction and development of new projects and offers a number of advantages to developers.

What is EB-5?

EB-5 is a provision in the United States immigration laws. It is the fifth “Employment Based” immigration provision providing expedited visa processing (hence “EB-5″). The program is a win-win-win arrangement giving wealthy immigrants the opportunity to earn a “fast-track” for a US green card if they make an investment of $500,000 or $1 million, and create a minimum of at least 10 permanent US jobs. In return, communities get the benefit of economic stimulation created by this investment and the new jobs. And developers get a valuable source of financing for new projects that is otherwise more difficult to obtain.

Is EB-5 funding available for new development and new construction?

Because foreign investor money must create NEW US jobs, construction and development projects are the normal target of EB-5 financing investment. Although the law does not restrict the nature of the investment to real estate, foreign investors have demonstrated a clear preference for real estate-related projects, particularly hotels, restaurants and resorts. EB-5 financing can also be used to add new facilities to existing ones, such as a new tower of hotel rooms, a spa, a restaurant or nightclub. And, in limited circumstances, EB-5 financing can be used to rescue a bankrupt or failing business, but this exception is difficult to use. CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
30 July 2014

How should hotel developers go after EB-5 financing?

Although the EB-5 immigrant visa program has been around since 1990, the current trend of using this as a source of financing for hotel development began only three years ago. We worked on one of the first hotel EB-5 financings for the W Hotel and Residences in Hollywood, and have since worked on more than 60 EB-5 projects all over the country. Now, use of the EB-5 financing program has gone mainstream. Headline grabbers include the $400 million financing of the SLS Hotel in Las Vegas, the $100 million Ritz Carlton & JW Marriott in downtown Los Angeles and now the $1 billion Silverstein project to be built in New York City with a Four Seasons Hotel.

As a growing number of savvy hotel developers hurry to assess the EB-5 financing opportunity, they frequently receive conflicting advice as to the best way to pursue EB-5 financing. Many immigration lawyers and advisors tout the advantages of the developer forming its own regional center — basically to shave a few points off the all-in cost of EB-5 financing.

Although this advice may work well for the EB-5 advisors (in that they get $100,000 or more of fees), for most of the hotel developers we know, forming a captive regional center is a bad idea. This article should provide a note of caution for developers considering this course.

Based on our extensive experience with financing hotel development from EB-5 funding sources, we believe that the answer for most hotel developers will be to obtain “preferred” status for themselves and their projects — if they can do so — and to tap into the very best established EB-5 funding sources.  For more on this approach, see “Hotel development financing: How to win the race for EB-5 capital.CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
29 July 2014

A viable source of capital and now mainstream

The EB-5 Immigrant Investment Visa program offers an alternative means of raising capital for hotel development projects in the U.S., and the lawyers in JMBM’s Global Hospitality Group® and Chinese Investment Group™ have worked on more than sixty EB-5 projects all over the United States.

Over just the past 3 years, the EB-5 program has quickly gained the support of some of the largest, institutional-quality developers as well as major hotel brands. Perhaps a bit late, many developers have recently noticed the significant capital being raised through EB-5 and they are scrambling to catch up with those already far down the track.

Looming problem of limited bandwidth

Fortunately, EB-5 capital remains abundantly available. But unfortunately, there is limited bandwidth to tap into it. As a result, the competition of developers for access has become quite intense as they seek to gain the attention of the small number of players with the track record of success to complete their capital raise, and the increasingly discerning EB-5 investors who are much more careful today on who they trust with their immigration visa investment.

Why it is important to gain “preferred” status

Not surprisingly, the hotel developers who will win this race to receive EB-5 funding for their projects will be “preferred” hotel developers in every sense – preferred as to the excellence of the track record and experience of the developer, the quality of the project, the structure of the deal to satisfy EB-5 investor requirements and protect the developer, the experience and relationships with Regional Centers and sales teams, and experienced Counselors to advise on every aspect of the project.

The JMBM Global Hospitality Group® helps high quality developers with great projects achieve this “preferred” status and win the race for EB-5 capital. Some background on which developers and deals will be successful in raising EB-5 capital may be helpful in order to understand the importance of planning, structuring and positioning necessary to obtain the best result. CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
25 July 2014

EB-5 financing has gone mainstream for hotel development

The use of EB-5 financing has exploded over the past 3 years as an important funding source for new hotel development. It is clearly now part of the “mainstream” being used with great success by increasingly institutional companies. Marriott was among the earliest advocates for the program and has used it for many high profile hotels such as the Ritz-Carlton/JW Marriott and Marriott Courtyard/Residence Inn hotels in DTLA. But more recently, other major brands have come on board and encourage developer use of EB-5 financing.

As lawyers who have worked on more than 60 EB-5 projects all over the country, we have noticed that everyone who investigates EB-5 financing wants answers to 5 big questions about the EB-5 financing opportunity for their project. It should come as no surprise that most of our EB-5 projects involve financing for new hotel development, because hotels are the most popular type of project for EB-5 investors and we have one of the most prominent hotel law practices in the world. However, our team has also successfully used EB-5 financing for a number of non-hotel projects including senior living, restaurants and solar farms.

The 5 questions every hotel developer is asking
about EB-5 financing

by
Jim Butler and Jonathan Bloch

In seeking to access EB-5 financing, our developer clients have asked a lot of questions, but most of them can really be summed up in the following 5 questions:

1. Will EB-5 work for me on my project?
2. How much money can I get?
3. How much will it cost?
4. How long will it take?
5. How can I get certainty of execution?

CONTINUE READING →

Published on:

July 9, 2014

LOS ANGELES—The Global Hospitality Group® and the Chinese Investment Group™ at Jeffer Mangels Butler & Mitchell LLP are pleased to announce the launch of a Chinese-language version of the Hotel Law Blog. It is available as a new tab on www.HotelLawyer.com or it can be accessed directly at www.ChineseHotelLawBlog.com.

CONTINUE READING →

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Hotel Lawyer looking at the EB-5 program

Over the past 5 years, JMBM’s team has helped clients with more than 40 EB-5 projects all over the U.S. The program is more popular than ever and the standards continue to rise for sponsors who want to advantage of this funding technique.

I asked Jonathan Bloch, a corporate partner and Senior Member of JMBM’s Global Hospitality Group®, to put together an Executive Summary and Overview of the EB-5 Program for investors and developers wanting to explore the funding source for new projects.

Here it is.

An Executive Summary and Overview of the EB-5 Program
by
Jonathan R. Bloch | Senior Member of the Global Hospitality Group®

U.S. Citizenship and Immigration Services (USCIS) administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, Congress has allocated 10,000 EB-5 visas for investors designated by USCIS based on proposals for promoting economic growth. Of the 10,000 visas available annually for immigrant investors, 3,000 are reserved for investments in Targeted Employment Areas and another 3,000 are set aside for investment through the Regional Center Program.

Up until very recently, the EB-5 Program has been both controversial and underutilized. However, as a result of some positive developments by the USCIS, the Program has been revised to make EB-5 investments more readily available and easier to obtain. In addition, due to the difficult financing market that developers have faced, the number of petitions has increased from 332 in 2005 to 4,156 in 2012, and the approval rates for the Program have risen from 53 percent to 79 percent.

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
16 June 2014

The growth of outbound Chinese investment

Earlier this month we posted an article about the surge in Chinese investment as reported by Tiffany Hsu in the Los Angeles Times. See, “China and JMBM’s Chinese Investment Group™ are in the news again!”

That article prominently featured the Sheraton Gateway LAX hotel, its 15% increase in Chinese travelers since the beginning of the year, and its purchase by our Shenzen Hazens Real Estate Group, and JMBM’s role as counsel to Shenzen Hazens.

Special Report Just Released: Growing Together — China and LA County Report – June 2014

Tiffany Hsu’s article also summarized some of the interesting data from a new report dated June 2014 by the Los Angeles County Economic Development Corp. (LACEDEC), entitled “Growing Together — China and Los Angeles County.” A full copy of LACEDEC’s Growing Together report (the “Growing Together Report” or simply the “Report”) can be downloaded by clicking the link at the end of this article.

But here are the “Key Findings” of the Report:

  • Investment into Los Angeles County from China has doubled over the past 5 years, with China becoming one of Los Angeles County’s top investors
  • China and Los Angeles County continue to increase business and commercial ties and the opportunities for Los Angeles
  • Tourism has nearly quadrupled over the past four years alone, from 158,000 Chinese tourists in 2009 to 570,000 in 2013, making China the top overseas market for Los Angeles tourism
  • Los Angeles is America’s top international trade gateway to China and China’s top gateway to the U.S., handling nearly 45% of trade between the two countries
  • China is the Los Angeles Customs District’s (LACD’s) #1 partner in international trade, accounting for nearly 60% of all activity at the San Pedro Bay ports
  • LACD exports to China have increased from $23 billion in 2009 to $35 billion in 2013 – less waste and scrap and more consumer and knowledge-intensive goods
  • Los Angeles County has the largest Chinese population of any county in the nation, and has grown from 360,000 in 2008 to 413,000 in 2012
  • Los Angeles County has the largest number of Chinese students of any county in the nation, increasing from roughly 3,000 Chinese students studying in local universities in 2009 to roughly 10,000 in 2013
  • Strong cultural and network ties are the foundation of the relationship
  • Future business prospects may be found in clean tech, entertainment, aerospace, e-commerce, real estate/property development, tourism, logistics and electronics.

CONTINUE READING →

Published on:

By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
15 June 2014

Concerns over a real estate bubble in China

For decades, China was referred to as the “sleeping giant.” This reference is to the great potential impact of the country, its vast population, and its economy, but also to the fact that this potential was largely unrealized for hundreds of years. Well, the sleeping giant is awake! And the world financial press is now full of analysts following China and the international ramifications of its every action on the world economy.

Recently, great concern has been raised by some over the impact of the stalling Chinese economy as it drops from double-digit growth in GDP to 7.5% or less. Alarm has been raised about the bubble in the Chine real estate markets, particularly the housing, and now commercial real estate as well. And most recently, financial analysts worry about the shadow banking system (financing and loans by non-banks) and Chinese real estate companies’ interest in purchasing banks or substantial interests in them.

Some suggest that Chinese construction companies’ investments in banks may be with a view to getting easier loans on more questionable deals, and that when real estate projects sour, they could take down both the construction companies and their banks. Is this reminiscent of the S&L crisis and the Japanese bubble of the 1980s?

Let’s separate the issues — real estate company investment in banks and shadow banking

To begin with, one must clearly define the activity being analyzed, who the players are, and the market in which the activity is taking place. For example, current reports detail investments by Chinese real estate development companies in banks located in mainland China, Hong Kong, Australia, the United States, and elsewhere. Some of these investments are modest. Some of them are significant. Some of them appear to be newly capitalized banks with IPOs financed largely by the real estate construction companies (taking the “p” out of “IPO”).

Each country has its unique set of government and regulatory controls. It is difficult to generalize the motivation of the Chinese real estate companies in making banking investments, whether and how they will attempt to deal with the banks they have invested in, and how regulators will respond in each affected jurisdiction as to particular investments and related activities.

Will this be like the Japanese investment bubble of the 1980s or the S&L crisis?

At least two situations may serve as case studies to provide some historical perspective on the new phenomenon of Chinese real estate companies investing in banks, and the shadow banking situation. One is the US real estate bubble of the 1980s followed by the Savings and Loan (S&L) and banking crisis with more bank failures than any time since the Great Depression. The other somewhat intertwined event is the Japanese investment (by banks and related Japanese construction companies) of up to $120 billion in United States real estate (primarily in Hawaii, California, and New York), and subsequently “disinvestment” in the collapse of the early 1990s. Many believe that the Japanese investment was made at what otherwise would have been the peak of the US real estate bubble (carried by loose S&L lending and tax-driven investments that made no economic sense). The Japanese investment propelled the U.S. real estate bubble even higher for several years until the it finally became unsustainable, and collapsed in a worse crash than might otherwise have resulted.

Both the S&L crisis and the Japanese investment phenomena displayed cozy relationships of real estate companies and lenders. The Japanese banks owned significant holdings in their borrower clients, and encouraged them to buy market share with below-market loans. When the real estate market soured, the Japanese banks were hit with the double whammy of huge loans on real estate now worth a fraction of its cost, and stock investments in companies with huge losses. The leverage increased the pain for everyone participating and the lost decade (or two) has followed for Japan.

CONTINUE READING →