Articles Posted in EB-5 Financing

Published on:

25 June 2021

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on EB-5 Financing here for C-PACE Financing.

Some believe the recent Behring v. Wolf case revitalizes EB-5 financing for developers because it rolls back the EB‑5 minimum investment to $500,000

On June 22, 2021, in the case of Behring Regional Center LLC v Chad Wolf, a federal court in the Northern District of California effectively invalidated the final rules for EB-5 which became effective in 2019. These rules raised the minimum foreign immigrant investment from $500,000 to $900,000 and imposed other restrictions.

Many commercial real estate developers are hoping this development will launch a new surge of EB-5 financing that could fuel their projects, as was the case for years (until a few years ago when the music stopped).

Don’t get too excited about reliable EB-5 financing coming back – but there may be a better alternative . . .

For many years, we helped developers source and close EB-5 financing for new construction and development projects. We had a 100% success rate in closing all our EB-5 deals totaling more than $1.5 billion. But we have not felt comfortable using this source of capital for several years, because none of the reliable sources we worked with were able to commit to a deal. They couldn’t raise the immigrant investor funds.

What happened? More than 85% of the funding came from Chinese immigrant investors, and the USCIS processing times for immigrant visas grew to more than 15 years! No investor wants to wait 15 years to get the immigration visa he is paying for today.

These processing backlogs effectively killed EB-5 as a reliable and robust source of financing for commercial real estate development. The court decision invalidating the final rules on EB-5 will not fix this or any other issues with the program.

But a better alternative to EB-5 financing has come mainstream and should be considered. Many are not aware of this alternative – Commercial PACE (or C-PACE).

Is C-PACE the “new EB-5” financing for commercial real estate developments? YES and NO . . .

C-PACE is the “new EB-5” financing for commercial real estate developers, but only in one notable sense: virtually every commercial real estate developer will at least seriously consider C-PACE for projects in the 2020s, just as they did with EB-5 in the 2010s.

Other than the skyrocketing popularity and even more favorable terms, the C-PACE solution has nothing at all to do with the EB-5 program CONTINUE READING →

Published on:

24 April 2019

LOS ANGELES—JMBM’s Global Hospitality Group® will host Meet the Money® national hotel finance and investment conference May 6-8 at the Hyatt Regency LAX in Los Angeles.  Now in its 29th year, this annual event will bring together hotel owners, operators, developers, consultants, investors, brands, lenders and other capital providers to discuss current developments in the industry as well as strategies for the future.

“Our line-up of more than 70 speakers include top hospitality leaders who will share their expertise and deliver essential information for maximizing potential opportunities,” said Jim Butler, Chairman of JMBM’s Global Hospitality Group®. “Attendees will also have the opportunity to meet some of the most active capital providers in the market for both existing and new hotel construction,” he said.

Free to all who register is a special pre-conference session on Monday afternoon May 6th – Meet The Equity: Investment Bootcamp – Preparing and Executing the Capital Raise. This interactive workshop will be led by Jonathan Falik of JF Capital Advisors, Guy Maisnik, Vice Chair of JMBM’s Global Hospitality Group®, and private equity experts who will explain how they evaluate requests for capital, what makes certain deals attractive to them, and why they reject projects.

Some of this year’s panel discussions and special presentations, include:

  • Views from the Executive Suite: What’s Important Now?
  • Creative Financing: Mezz and Beyond
  • Is Select Service Still Everyone’s Favorite? Where Does it Go from Here?
  • Developing, Redeveloping and Repositioning to Optimize Value
  • Winning Strategies for Buying and Selling Hotels
  • Construction Financing Today

“Our speakers are passionate about the hospitality industry and we look forward to the enthusiastic exchange of ideas that happens every year at Meet the Money,” said Butler. “We look forward to seeing our long-time industry friends and making new ones.”

Registration can be made through the Meet the Money® website. CONTINUE READING →

Published on:

17 September 2017

EB-5, Mixed-Use Development and Deal Making: See you at the 2017 Lodging Conference

The Lodging Conference is taking place at the Arizona Biltmore in Phoenix, October 30-November 2, 2017, and hotel lawyers from JMBM’s Global Hospitality Group® will be there to visit our friends in the hospitality industry, share our knowledge, learn from the experts (and do some deals!).

At the conference, I will moderate the panel,  Navigating the EB-5 Landscape taking place at 4:00 pm on October 31st. Funding obtained through the EB-5 Immigrant Investor Visa program continues to play a vital role in the capital stack for new hotel development and we will provide up-to-the-minute information on the status of the program, as well as share some great success stories. To get up to speed on what’s happening with EB-5, check out my recent blogs.

Also from our team, JMBM Global Hospitality Group’s  Vice-Chair Guy Maisnik will speak on the panel Structuring Mixed-Use Development on November 1st at 11:30 am. Guy has represented developers and owners of hotel mixed-use properties for decades, and he will share his experience in financing, management agreements, and other critical issues. CONTINUE READING →

Published on:

07 September 2017
Click here for the latest articles on EB-5 Financing. 

President Trump’s budget deal with Congress includes extension of EB-5 through December 8, 2017

In a message to members of the Public Policy Committee today, the IIUSA confirmed the extension of the EB-5 regional center program as part of the budget deal struck yesterday by President Trump and Congressional leaders.

IIUSA message on EB-5 extension

The IIUSA is one of the leading EB-5 industry trade groups. Here is the text of the message from the IIUSA we received today:

Dear IIUSA Public Policy Committee,

As we are sure you’ve seen in media outlets, there is important news regarding government spending, and in turn, EB-5 reauthorization.

EB-5 Extension thru 12/8 Part of Congress/White House Spending Deal

Yesterday, Congress reached a deal with the White House that, once passed at some point this September, would extend existing funding levels and other program authorizations (such as EB-5) included on the last “continuing resolution” (“CR”) through 12/8/17.

The EB-5 authorization comes in Section 105 text of the deal released yesterday which:

Continues all authorities, requirements, and limitations from 2017 appropriations Acts through the date in section 106. Allows for valid obligations and expenditures during the period of the Continuing Resolution (CR).

Section 106 verifies the date:

Continues appropriations through December 8, 2017, or the enactment of the pertinent appropriations Act.

CONTINUE READING →

Published on:

 
15 August 2017
Click here for the latest articles on EB-5 Financing. 

JMBM’s Global Hospitality Group® and EB-5 Finance Group™ are pleased to announce the publication of The Developer’s EB-5 Handbook for EB-5 Construction Financing, a “must-read” resource for developers who are considering using EB-5 financing to complete or enhance their capital stack for construction projects . This is the much talked-about and often (inappropriately) maligned EB-5 program, also known as the immigrant investment visa program.

While there are many pending developments that could affect the EB-5 program, this is still a good time to learn how the program works and why so many developers have used EB-5 financing as part of the capital stack for their new projects. The Global Hospitality Group has developed an approach to guide clients through the EB-5 process with a minimal amount of financial risk to find and evaluate the reliable players and execute financing with a high degree of confidence.

The Developer’s EB-5 Handbook is written to help developers assess the potential opportunities for EB-5 financing while avoiding potential traps for the unwary. Written by legal and business advisors to top developers with great projects in the United States, the Handbook includes articles addressing the following topics: CONTINUE READING →

Published on:

 
06 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published on HotelLawBlog.com on 15 December 2014.

 
What JMBM does for developers with EB-5 financing
by
Jim Butler, Hotel & EB-5 Finance Lawyer

Focus on helping developers

Client confidentiality precludes us from listing clients and projects we have assisted with this program, but suffice it to say that some of the best known names in the business are tapping into this funding source to fill out their capital stack at a favorable cost. And we have helped some of the biggest and highest profile players.

JMBM has closed more than $1.5 billion of EB-5 financing and has sourced more than half of that for our development clients.

We specialize in representing developers and projects that we believe can qualify for “preferred” status. This concept is discussed in great detail in this article: “Development financing: How to win the race for EB-5 capital.

For developers and projects that qualify for “preferred” status, we provide business and legal advice to guide the developer through the entire capital raising process. This includes validating that the developer can qualify for the favorable financing and actually sourcing the capital.

Here is a more complete list of how we can usually assist: CONTINUE READING →

Published on:

 
04 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published about 3 years ago on HotelLawBlog.com on 30 July 2014.

 
Why you do NOT want to form your own regional center
by
Jim Butler, Hotel & EB-5 Finance Lawyer

How should developers pursue EB-5 financing?

Although the EB-5 immigrant visa program has been around since 1990, the current trend of using it as a source of financing for hotel and other real estate started 20 years later – around 2010. We worked on one of the first hotel EB-5 financings for the W Hotel & Residences in Hollywood, and we have since worked on more than 100 EB-5 projects all over the country. Now, the use of EB-5 financing for construction has gone mainstream. High profile EB-5 financing closings include $450 million for the Century Plaza Los Angeles, $100 million for the Ritz Carlton & JW Marriott in downtown Los Angeles, $150 million for the Waldorf Astoria in Beverly Hills, and $1 billion for the Silverstein project at the World Trade Center 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.

This advice may work well for the EB-5 advisors (in that they may get $100,000 or more in fees) and for certain hotel developers. But 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 “Development financing: How to win the race for EB-5 capital.”

Restricted capacity in channels for accessing EB-5 capital

As hotel developers compete in a very crowded field seeking the finite amount of EB-5 funding available each fiscal year (because there are only 10,000 visas available per year), there is something of a “race” to gain access to the limited resources for tapping EB-5 capital. CONTINUE READING →

Published on:

 
4 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published about 3 years ago on HotelLawBlog.com on 25 July 2014.

The 5 questions every developer
is asking about EB-5 financing
by
Jim Butler, Hotel & EB-5 Finance Lawyer

EB-5 financing has gone mainstream for hotel development

The use of EB-5 financing has exploded over the past 8 years as an important funding source for new development – particularly for hotel developments. It is clearly now part of the “mainstream.” It is used by many institutional players, including government entities such as port authorities, major hotel brands like Marriott and Hilton, and some of America’s most successful and respected companies, such as Great Wolf Resorts, the Related Companies, and Silverstein Properties.

As lawyers who have worked on more than 100 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 hospitals, senior living, restaurants, solar farms, and infrastructure projects.

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

Our developer clients say their top concerns in pursuing EB-5 financing is to quickly and reliably determine the answers to the following 5 questions below before they spend substantial time and money or forego other opportunities. They don’t want to waste their time on a wild goose chase. We think every developer considering EB-5 financing should be asking the same 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:

 
01 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published on HotelLawBlog.com on 05 December 2014.

 
JMBM’s EB-5 construction financing program terms
for top developers
by
Jim Butler, Hotel & EB-5 Finance Lawyer

EB-5 financing comes in many colors and shapes

JMBM believes that for most developers, EB-5 financing is best structured as mezzanine debt or preferred equity, to optimize the total amount of financing and reduce the cost of the capital stack. Normally, senior construction debt (secured by a first priority lien) will be significantly cheaper than EB-5 money, but senior lenders (particularly if the subject project is a hotel) rarely lend more than 50% to 55% of the total cost of construction. Most of our clients like to use this cheap senior debt and then add some low-cost EB-5 mezzanine debt on top of it to get total loan-to-cost ratios up to 80% or more.

We also find that the structure outlined above is popular with the most experienced and reliable regional centers in the business (many of whom we have worked with). JMBM has closed more than $1.5 billion of EB-5 financing and has developed an expertise in structuring the EB-5 financing to address our client’s needs and goals. The highlights of the current market terms for this financing are described below.

JMBM is sourcing low-cost mezzanine capital for new construction through EB-5 financing for its top developer-clients.

To qualify for this program, the borrower must be an experienced developer with a superb track record, a superior reputation and a great project. If you do not meet those threshold requirements, then you don’t need to read any further, because this program likely is not suitable for you.

If you might benefit from mezzanine financing with an all-in cost to you of approximately 7% to 8% per annum, then you may want to consider JMBM’s “preferred” EB-5 financing program, which is summarized below. CONTINUE READING →

Published on:

 
01 August 2017
Click here for the latest articles on EB-5 Financing.

This article is an updated version of the one that was originally published approximately three years ago on HotelLawBlog.com on 14 August 2014.
FAQs: Essentials of EB-5
construction financing for developers
by
Jim Butler, Hotel & EB-5 Finance Lawyer

Below are some of the most Frequently Asked Questions (FAQs) and answers regarding EB-5 funding for developers (click the link for answer, or scroll down)

1What is EB-5?
2Why is there so much interest in EB-5 financing?
3Is EB-5 funding available for new construction?
4Can I use EB-5 funding to buy an existing project?
5Is there any limitation on the kind of project funded with EB-5?
6How much does EB-5 money cost?
7How do I know if EB-5 will work for me and my project?
8What is a regional center and do I need one?
9Why is getting the “right” regional center so critical?
10Should I form my own regional center?
11What is a TEA?
12How much money can I raise?
13What are the 6 biggest mistakes developers make with EB-5?
14What does JMBM do to help developers with EB-5 financing?

FAQs (with answers)

1.               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” to US citizenship if they make a minimum investment of $500,000, and create a minimum of at least 10 new jobs in the United States. 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 and more expensive from other sources.

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2.               Why is there so much interest in EB-5 financing?

In the last 5 years, EB-5 financing has become extremely popular in development circles for financing projects in the United States, and it is being widely used by mainstream, institutional players including government entities such as port authorities, major hotel brands like Marriott, Hyatt, and Hilton, and some of the largest owners of hotels and restaurants. EB-5 financing has provided low-cost, non-recourse, 5 to 7 year term financing for the development and construction of new projects and offers a number of advantages to developers. For the past few years, the demand for EB-5 funding has exceeded the 10,000 annual visas available to raise such capital from immigrant investors and/or the capacity of the fund raising channels (mostly regional centers and marketing agents).

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3.               Is EB-5 funding available for new construction?

Generally, YES. CONTINUE READING →

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