Articles Posted in EB-5 Financing

Published on:

 
25 July 2017
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The article below was updated in July 2017 based upon an earlier version which appeared on HotelLawBlog.com.

The EB-5 immigrant investor visa program has provided billions of dollars of affordable construction financing for a wide variety of projects ranging from high tech and alternate energy to traditional types of commercial real estate.

Over the last decade, EB-5 investors have overwhelmingly chosen real estate projects, particularly those with hotel, multifamily, senior living, and mixed-use components. While the enabling legislation for the program does not limit the type of project financed, it does require that at least 10 new jobs be created in the United States for each investor seeking a visa.

This article discusses why hotels are consistently among the investments most favored for EB-5 financing, and why they are likely to remain so for some time to come.

Are hotels still the darling of EB-5 financing?
by
Jim Butler, Hotel & EB-5 Finance Lawyer

As EB-5 financing has become an important part of new development and construction financing over the past 5 to 10 years, EB-5 investors and EB-5 lenders have shown a strong preference for hotel projects. Here are some of the reasons that hotels continue to be the “darling” of EB-5 financing: CONTINUE READING →

Published on:

20 July 2017
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The article below is updated as of July 2017. It first appeared on HotelLawBlog.com on 8 May 2017.

 

EB-5 generates billions of dollars of affordable construction financing for developments located in the United States that create new jobs for US citizens. JMBM’s EB-5 financing group has closed more than $1.5 billion of EB-5 financing for our clients’ development projects, and we sourced more than half of that amount.

Although there are many exciting success stories, we see developers frequently blundering into a small number of easily avoided mistakes, which can be very costly. So here is our short list of the mistakes and tips to avoid them.

 

Tips to avoid the 6 most common
mistakes developers make with EB-5
by
Jim Butler, Hotel & EB-5 Finance Lawyer

There are a number of mistakes developers often make with EB-5 financing. Here are a few tips to avoid 6 of the most common mistakes: CONTINUE READING →

Published on:

23 July 2017
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This article is an updated version of the one that was originally published on HotelLawBlog.com on 08 May 2017.

JMBM has closed more than $1.5 billion
of EB-5 financing for development projects
by
Jim Butler, Hotel & EB-5 Finance Lawyer

EB-5 is a proven means of financing for development projects.

EB-5 financing is an important and viable source of construction financing for hotels, hotel enhanced mixed-use, and other development projects. Eight years ago, when JMBM started helping hotel developers with EB-5 financing, many worried about whether this is a legitimate and reliable financing source.

Now, after billions of dollars of development have been funded with EB-5, this type of financing is regarded as 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 an active source of EB-5 funding for select developers, JMBM’s Global Hospitality Group® team has been busy too. We caught up with Jim Butler and David Sudeck for an update on recent developments in this area as summarized in the Q & A below.

Q: How much EB-5 financing has JMBM provided to its clients?

By mid-2017, the JMBM Team has closed more than $1.5 billion in EB-5 financing for our clients’ development projects, and we sourced more than half of that amount.

Over the last 8 years, we have worked on more than 100 EB-5 projects, primarily representing developers in securing and closing their EB-5 financing projects all over the country; this includes high profile locations in California, Florida, New York, and Texas, but also in more bread-and-butter locations including Georgia, Nebraska and Maryland. CONTINUE READING →

Published on:

05 May 2017

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EB-5 extended through September 30

Just after noon on Friday, May 5, 2017, President Donald Trump signed the Consolidated Appropriations Act, 2017. The new law approves $1.1 trillion in Federal appropriations through September 30, 2017.

One of the provisions of the bill extends the EB-5 Regional Center program without change through the same date.

Although the Consolidated Appropriations Act did not change any provisions of the EB-5 program, we expect further Congressional and regulatory efforts in the very near future.

As we said yesterday,

Industry leaders view this extension of the program as the necessary threshold to achieve a long-term legislative solution to the issues that have been raised about the EB-5 program before any regulatory changes are implemented and before the next sunset date of September 30, 2017.

We expect all stakeholders in the EB-5 business to be pushing very hard toward this end.

CONTINUE READING →

Published on:

04 May 2017

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We are getting a lot of calls from our developer clients and friends asking about the status of the EB-5 Regional Center authorization that was about to sunset on May 5, 2017, along with appropriations for the Federal Government.

A “clean extension” for EB-5

Early on Monday morning, May 1, 2017, the House Appropriations Committee approved a $1.1 trillion budget to fund the government through September 30, 2017. That proposed bill includes a “clean extension “(i.e. no amendments) to the EB-5 Regional Center program through the same period.

On May 3, the House passed the spending bill, and on May 4, the Senate gave its approval. The bill now goes to President Trump who is expected to sign the new budget into law.

If expectations are met, the government shut down will be avoided and the EB-5 Regional Center Program will continue without interruption. CONTINUE READING →

Published on:

22 March 2017

Unless Congress acts in time, a critical part of EB-5 financing will lapse on April 28, 2017

The Regional Center program was enacted in 1992 as a “pilot project.” Since then, it has been renewed or extended many times by Congress, with the current extension due to sunset April 28, 2017. Combined with some negative comments by a few foes of the program, some have begun to wonder out loud if the end of EB-5 financing is near. And, if Congress does not act soon, it would have a serious impact on the program.

What will likely happen if Congress lets the EB-5 program sunset on April 28

Most people involved with the EB-5 industry believe there is little chance the program will not be extended or made permanent. This “pilot program” has been renewed for more than 20 years, and in the last five years has provided hundreds of thousands of jobs for US citizens, and billions of dollars of vitally needed capital for both public and private facilities that would not otherwise have been feasible.

The breakthrough on resolution could come next week (the week of March 27)

Since President Trump’s inauguration, the Administration and Congress have been focused on transition matters, appointments and confirmations, and related issues. However, insiders now believe that by the last week of March, EB-5 industry groups will be able to meet with members of Congress and work through some reasonable resolution of all concerns. A new bill is likely to be introduced shortly thereafter. CONTINUE READING →

Published on:

12 December 2016

EB-5 financing for developers extended. Obama signs “Continuing Resolution”

On December 9, 2016, President Obama signed the “Continuing Resolution” passed by Congress to extend funding of the federal government until April 28, 2017, by which time it is expected that Congress will have approved a budget for the full fiscal year.

EB-5 Regional Center program also extended to April 28, 2017

As with several prior budget extensions, the Continuing Resolution included an extension of the EB-5 program’s Regional Center provisions, validating expectations of industry experts.

This means that developers who followed our advice to “get in line” with their projects last fall (when some concerns over EB-5 renewal were raised) have either raised their EB-5 capital by now or should have plenty of time to do so before the current extension signed by President Obama runs out next April.

Why NOW may be the best time for developers to start EB-5 financing

Developers who followed our advice last fall have been well served. On August 16, 2016, we published a blog article entitled “Why NOW may be the best time for developers to start EB-5 financing.” We feel the same way today.

In our earlier article, we warned that there is always some uncertainty in predicting what Congress will do. However, all people that we know who are knowledgeable about the EB-5 program and the political environment believe that EB-5 will be renewed and continued in a viable form. Some developers are uncomfortable with the uncertainty created by short-term legislative sunsets on the extensions, and on accepting predictions that Congress will continue the program we have maintained since 1992 — almost 25 years. These developers want to wait until everything has settled down and has more certainty.

We believe the “wait and see” approach is a mistake for many developers — particularly those who are ready to start construction now. Here is why: CONTINUE READING →

Published on:

7 October 2016

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Los Angeles—The Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP is pleased to announce the recent closing of two hotel deals for their clients, Great Wolf Resorts and Wurzak Hotel Group. Jim Butler, Chair of the Global Hospitality Group®, and David Sudeck, a senior member, led the transactions and associated EB-5 financing.

Great Wolf Resorts recently closed the purchase of property in LaGrange, Atlanta, for a resort that will include a 93,000 square foot water park, several restaurants, and 456 suites. Butler and Sudeck helped their client secure financing through the EB-5 Immigrant Investor Visa Program.

Another JMBM client, the Philadelphia-based Wurzak Hotel Group, recently purchased a property in downtown Fort Lauderdale, Florida, and is under construction on a 24-story, dual-branded hotel. The 323-room hotel project will include The Dalmar, a Starwood Tribute Portfolio, and an Element hotel, which will feature retail, meeting facilities, and a rooftop lounge. Butler and Sudeck assisted Wurzak in sourcing EB-5 financing for the project, as well as negotiating and closing the deal.

CONTINUE READING →

Published on:

3 October 2016

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Déjà vu all over again?

Last Thursday, President Obama signed the Continuing Resolution, or CR, passed by Congress for the principal purpose of avoiding the shutdown of the Federal government by continuing to fund government operations and most of its agencies at 2016 levels through December 9, 2016. It is hoped that at that time, Congress and the President will be able to agree upon the budget for the entire fiscal year ending September 30, 2017.

As last year, the Continuing Resolution is a temporary solution, continuing funding only through December 9, 2016. A host of various programs are included in the Continuing Resolution, including the EB-5 Regional Center program, and most other Federal programs and agencies, plus a few additional items such as relief for Flint Michigan.

What does this mean for EB-5? CONTINUE READING →

Published on:

16 August 2016

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Is there a serious risk that EB-5 will expire September 30, 2016?

Anything is possible when Congress is in session, but none of the experts we talk to believe that the EB-5 program will be allowed to lapse.

As discussed below, certain key provisions of the EB-5 program dealing with regional centers will “sunset” or expire on September 30, 2016. And, as part of the effort to extend the regional center program or make it permanent, there are some proposals to modify potentially significant aspects of the EB-5 program.

No one should be complacent about Congressional “renewal”, but the industry fully expects the EB-5 program will be reauthorized on terms that maintain the viability of program. Some proposals are more or less attractive to certain affected parties, but we expect the final resolution to be satisfactory.

With Congress likely to act soon, should any developers start EB-5 financing now? YES!

Amidst the uncertainty of when and how the EB-5 renewal legislation will be finally resolved, some developers have decided to do nothing with the EB-5 financing opportunity until all the dust settles. Such timing is not certain.

Developers who want to take advantage of EB-5 funding should get started now

Many hope that Congress will act before September 30, 2016. Others think that with election-year turmoil, as it did last year in the budget stalemate, Congress may “kick the can down the road” with one or more interim extensions of the EB-5 program.

We believe the “wait and see” approach is a mistake for many developers — particularly those who are ready to start construction now. Here is why: CONTINUE READING →