Articles Posted in Hotel Mixed-Use

Published on:

08 December 2015

Editor’s note: The EB-5 program has been renewed! The article below describes the changes to the EB-5 Immigrant Investor Visa program that were ALMOST enacted in December 2015. At the eleventh hour, Congress completely shelved all the proposals discussed below, and instead decided to continue the program, without any change, through September 15, 2016. 

For the current status of the EB-5 financing program, see “EB-5 Immigrant Visa program extension signed into law — without any changes. EB-5 financing continues for new development projects.

Hotel Lawyer preview of the new EB-5 financing rules.

Although minor tweaks and adjustments continue to be made to legislation in the final hours before Congress votes, it looks like we have a pretty good idea of what the new rules will be for EB-5 financing. Top takeaways for developers are:

  • The EB-5 regional center program will be extended for 5 years
  • Developers will be able to raise 60% more EB-5 capital on the same number of jobs
  • Minimum investment will be raised to $800,000 (not expected to deter investors)
  • TEAs will be forced into a “modified California model” of not more than 12 contiguous tracts
  • NOW is a good time to get started on EB-5 financing before the New Year rush
  • There will be much greater scrutiny and compliance required of those in the capital raising process, and there may be a trickle-down effect on developers (unless they want to form and use their own regional center)

Read on for more details. CONTINUE READING →

Published on:

30 October 2014

Click here for the latest articles on Condo Hotels.

Condo hotel revolution and resurgence:
Why developers are using “new breed” of condo hotels for financing

One “little” legal change has revolutionized and revitalized condo hotels


Jim Butler, Bob Braun and Guy Maisnik
Condo Hotel Lawyers

The condo hotel lawyers at JMBM have helped clients with more than 100 condo hotels and hotel condos. Our experience proves that well-structured condo hotels play a valuable role and have earned an enduring legacy in the hospitality industry. They make new hotel development feasible where limited financing and high construction costs would otherwise be prohibitive. And now one recent legal change sweeps away some of the knotty issues that have hampered condo hotel growth, and reignites the popularity of this approach with a “new breed” of condo hotels.

We are now at a pivotal point for condo hotels. We are witnessing the complete turnaround in the way developers will structure condo hotel deals — particularly for high-end and luxury properties. This 180 degree turnaround in approach is creating a new and better breed of condo hotels that builds upon past successes and takes a giant step forward.

This was all accomplished with the stroke of a pen late last year when the Securities and Exchange Commission (SEC) adopted Rule 506(c) in response to the express requirements of the JOBS Act. The JOBS Act required the SEC to eliminate the prohibition on using “general solicitation” in private placements under Rule 506 where all the purchasers of the securities are “accredited investors.” Effectively, this single legal change has suddenly made it feasible for most hotel developers to structure and sell their condo hotel projects as “securities.”

This is a big change! Over the past 50 years or more, with only a few isolated exceptions, all condo hotel deals were tortured monstrosities of legal convolution. Because of the prior securities laws, it was not practical for most developers to have their offering be considered a “security” because it was not practical to register the securities with the SEC (as in an IPO), and general public solicitation is essential to the sale of real estate like condo hotel units. However, under the prior law, achieving the critical “non-security” status imposed some nonsensical legal requirements.

Most of these absurdities resulted from the fact that investors typically buy condo hotels as an investment and want the kind of information that would be relevant to making an intelligent investment decision. However the prior SEC rules effectively prevented developers from selling condo hotels as an investment with the relevant information and structure to provide the greatest prospects of success. This created the practical paradox that it was illegal for developers to sell condo hotels as an investment, but it was not illegal for buyers to purchase condo hotels as an investment (and most buyers did so).

Practical implications of the new approach

In other articles, we intend to provide more background and detail for those who are new to the condo hotel scene. But this piece is designed for those who already know the basics, and perhaps even struggled with the limitations of condo hotel structure under the old rules. Thus, we move straight to the key considerations that hampered condo hotels under the old rules, and explore how the “new breed” of condo hotels (structured as securities to take advantage of the latest legal changes) is now positioned to become the dominant approach for this entire niche.

The table below summarizes some of the most significant requirements or features that distinguish the old approach of avoiding security status (and the old SEC rules on private offerings), from the new approach of accepting security status and complying with the new Rule 506(c). The critical requirement for the new approach is that all buyers of condo hotel units must be “accredited investors.” Generally speaking, this means that each purchaser must meet the requirement of either (1) a minimum net worth of $1 million (excluding primary residence), or (2) a minimum income of more than $200,000 per year (or $300,000 for a married couple) for each of the last two years, and reasonably expects the same for the current year.

So here it is in a nutshell, or in this case, a table. CONTINUE READING →

Published on:

17 January 2014

Hotel Lawyer on Hotel Mixed-Use.

Four%20Seasons%20Philadelphia%20Liberty%2002.jpgProposed $1.2 billion, 59-story Comcast Center with Four Seasons Hotel in Philadelphia, PA.

JMBM’s hotel lawyers are proud to be the hotel legal and advisory team for the developers on the Four Seasons luxury hotel component of this spectacular project. This is one of the high-profile hotel-retail-office mixed-use projects we have been working on for more than a year.

Hotel mixed-use is back! Hotels are being added to projects with retail, residential, office, entertainment and other uses — and the multiple uses enhance each other’s value, so the value of whole is worth more than the sum of the parts. If this subject interests you, see the links below the press release.

Here is the press release from Comcast and Liberty Property Trust announcing the project.

Comcast Corporation and Liberty Property Trust
Designed by Lord Norman Foster and developed by Liberty Property Trust to achieve LEED Platinum Certification, the 59-story tower will include a Four Seasons Hotel. Thousands of jobs and billions of dollars of economic activity will be created in Philadelphia and the Pennsylvania commonwealth.

Comcast Corporation (Nasdaq: CMCSA, CMCSK) and Liberty Property Trust (NYSE: LRY) announced today they will jointly develop the “Comcast Innovation and Technology Center” on the 1800 block of Arch Street in Center City Philadelphia. The proposed $1.2 billion 59-story, 1,121-foot tower will neighbor Comcast Center, Comcast Corporation’s global headquarters, and become a dedicated home for the company’s growing workforce of technologists, engineers, and software architects. The facility will also create a media center in the heart of the City by becoming home to the operations of local broadcast television stations NBC 10/WCAU and Telemundo 62/WWSI and offer space for local technology startups.

Designed by world-renowned architect Lord Norman Foster of Foster + Partners, the glass and stainless steel tower will complement Comcast Center as a new energetic dimension to Center City. The 1.517 million rentable square foot project will include a new Four Seasons hotel and a soaring, block-long lobby with a glass-enclosed indoor plaza accompaniment to Comcast Center’s existing, dynamic outdoor plaza. The lobby will feature a restaurant and a new concourse will provide direct connections with SEPTA’s Suburban Station, enhancing accessibility and providing new options for commuters. The $1.2 billion mixed-use tower is expected to be the tallest building in the United States outside of New York and Chicago and will be the largest private development project in the history of Pennsylvania.


Published on:

13 December 2013

Hotel Lawyer with some insights on buying and developing golf courses.

Hotel investors suddenly seem to be buying or building more golf courses. With the right expectations and circumstances, golf courses can make sense — particularly as an amenity for hotels, residential development and other real estate. But as more hospitality clients look at golf courses, it seems appropriate to consider the drivers of this renewed interest, and some of the similarities golf courses share with other hospitality investments such as hotels. And finally, we want to look at some of the big factors that make golf courses very different from other hospitality investments, so you can avoid some unnecessary pitfalls.

Why the increased interest in golf courses?

Interest in golf courses has likely increased for a number of reasons, including the continuing overall improvement in the economy, favorable projections for the hotel industry, the return of home builders to the active market, and the likely surge in new development in 2014 and beyond. In addition, it is now well proven that “mixed-use” really works, and that includes adding a golf amenity for hotels, condos, residential and other real estate product. On top of all this, there is a wave of Asian investment and tourism — particularly Chinese — that favors golf.

Many of these investors and developers are familiar with hotels, and have established teams of experts that are familiar with hotels — but they often don’t have golf course-specific experience and capabilities.

That is why it is important to realize that hotels are different (from golf courses) though they share a number of characteristics and are often both regarded as “hospitality” product. Recognizing the similarities and the important differences will enable investors and developers to fill in potential gaps of expertise to avoid unnecessary problems.


Published on:

14 August 2013

Hotel Lawyers on “hotel condo” units as securities (or NOT).

An important decision on when a condo hotel does NOT involve the sale of a “security”


Jim Butler, Bob Braun and Guy Maisnik
Condo Hotel Lawyers

One of the most significant challenges for developers of a condo hotel project is whether the sale of the condo units constitutes the sale of a “security.” If it does, the principals and sellers of the project will have much greater compliance issues, costs and liabilities, which could make the project unworkable.

We have been advising clients on these issues in connection with more than 100 hotel mixed-use transactions since 2000. The deals usually have a significant residential component (condo hotels, hotel condos, single family homes or home sites, etc.) retail, entertainment and other uses added to a core hotel component. The Ninth Circuit opinion in Salameh v. Tarsadia Hotel (CA-9, No. 11-55479) discussed today provides a significant new level of comfort for all involved in such matters.

In an important decision yesterday (August 13, 2013) written by Judge Ronald M. Gould, a 3-judge panel of the Court of Appeals for the Ninth Circuit upheld the lower federal district court’s dismissal of plaintiff’s lawsuit arising out of their purchase of hotel condominium units at the Hard Rock Hotel San Diego, a “condo-hotel.”

The case was filed as a class action by Tamer Salameh and other named plaintiffs against some of the most respected people in Southern California’s hospitality industry, including Tarsadia Hotel, Tushar Patel, B.U. Patel, Gregory Casserly and other defendants. Notably, Playground Destination Properties, one of the first developers and most esteemed marketing companies for condo hotels, was also named in the action.

Essential to the plaintiffs’ claims was their characterization of their purchase as involving “securities” under the federal securities laws. They said that defendants offered condominium units together with a rental-management program, and doing so, constituted the sale of a “security.” The lower court dismissed the case after giving plaintiffs an opportunity to amend, finding that the amended complaint still did not state facts sufficient to find the existence of a “security.” The lower court also dismissed related common law fraud claims. For background on this issue and its importance, see “Condo Hotel Lawyer: Why does the SEC care about condo hotels?
If you don’t know what a condo hotel is, or how it fits into hotel mixed-used, we have an entire section of and HotelLawBlog devoted to condo hotels and to mixed-use. Just use the search bar at the top for any subject or click condo hotels or mixed use!

Why is this case important?


Published on:

15 March 2013

Great opportunity . . . and danger . . . await shopping center owners who seek to add hotels to their shopping centers, malls and retail centers.

An interesting confluence of factors has ignited a wave of hotel development — adding hotels to shopping centers, malls and retail centers. This trend is already underway and will be headline news for the next couple of years.

There are compelling synergies for both the shopping center and the hotel. These have been thoroughly documented by major players. One major shopping center owner performed a multi-year study on its 200+ properties and found that the right hotel can boost gross sales at shopping centers 20% to 40%. And the associated hotels also get a boost in Revenue Per Available Room (RevPAR) of 30% to 40% over hotels in their competitive set.

If you need more information on the basics — why people are adding hotels to shopping centers and malls — look at the articles posted on From the home page, scroll down and look on the right-hand side for under “Hotel Development” or go to


Published on:

5 March 2013

Hotel Lawyer on adding a hotel to shopping centers and malls.

The ULI program held on February 20, 2013 in JMBM’s Los Angeles offices was a great success. The program title says it all — “Back to the Future: The Renaissance of Hotel-Retail Mixed-Use.”

As one might expect for a ULI event on a timely topic like this, there was a capacity crowd, sharing of the latest “technology” in adding hotels to shopping centers, and a veteran team of presenters.

Jim Butler, Chairman of JMBM’s Global Hospitality Group®, moderated the panel, which included:

  • Guy Maisnik, Partner and Vice Chairman of JMBM’s Global Hospitality Group®
  • Steve Mermell, Assistant City Manager, City of Pasadena
  • Bruce Baltin, Senior Vice President, PKF Consulting
  • Les Melcher, SVP – Business Development, Woodbine Development Corporation
  • The panel looked at why many shopping center owners and developers are adding hotels to their projects, and commented on some tips and traps along the way. There were some great case studies that the panelists worked on.


    Published on:

    28 January 2013

    We are at the beginning of what looks to be a renaissance of “hotel-retail mixed-use” development. Shopping center developers nationwide are exploring the feasibility of adding a hotels to existing retail properties, while others are already implementing plans that have been in the pipeline. Some are adding hotels to the mix for new ground up development. Fueling this trend is research showing that both retailers and hoteliers make huge gains in revenue when they come together in the “hotel-retail mixed-use” environment.

    My partner, Guy Maisnik, and I recently wrote an article on this subject for Hotel Business and it is reprinted below, with permission.


    Published on:

    17 December 2012

    A wave of “hotel-retail mixed-use” is coming. It may mark the rebirth of bricks and mortar.

    Put on the back burner by the Great Recession, the hotel-retail mixed-use development is back in play. Virtually every major shopping center and mall owner is exploring whether it makes sense to add a hotel component to existing projects, and are checking feasibility for new ones. Some new hotel-retail projects are underway, and many others are in the planning stage.
    What’s behind this trend is a simple and powerful driver: The right hotel added to the right project can boost retail sales by 20-40%! And the retail shopping can boost hotel RevPAR by a comparable amount over the competitive set.

    My partner, Guy Maisnik, and I were asked by Globe St to write a guest column for their publication on the hotel-retail trend. It is reprinted below, with permission.


    Published on:

    28 April 2011

    Hotel Lawyer with more on the long-term future of condo hotels.

    It is interesting that I got calls from two reporters about the state of the condo hotel sector this week. One from a major daily paper doing background research, and the other from a well-respected industry publication, MortgageOrb, published by Zackin Publications (which also publishes Commercial Mortgage Insight and Secondary Marketing Executive.)

    Condo hotels have not been in the news for some time, and as hospitality transactions heat up, many are now wondering how and when this niche product will be resurrected.

    Phil Hall of MortgageOrb asked some excellent questions about the condo hotel sector and our interview, titled Jim Butler Checks Out the Condo-Hotel Niche, published in MortgageOrb’s Person of the Week column, is reprinted below.