Articles Posted in Hotel Development

Published on:

20 July 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 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:

08 May 2017

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

As of January 31, 2017, JMBM’s team has closed more than $1.5 billion of EB-5 financing and sourced more than half of that for our clients!

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

EB-5 financing is an important and viable source of construction financing for hotels, hotel enhanced mixed-use, and other development projects. Seven or 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, and 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 well-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 and A below.

Q: How much EB-5 financing has JMBM provided to its clients?As of January 31, 2017, our 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. CONTINUE READING →

Published on:

05 May 2017

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

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

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

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:

7 November 2016

Hotel Lawyer on multi-branded hotels.

Hotels with more than one brand are increasingly common, but it wasn’t always so. Although some compelling advantages are driving this trend in many situations, developers and owners should weigh the advantages against other considerations.

My partner Bob Braun is a senior member of our Global Hospitality Group® and has experience with many hundreds of hotel management and franchise agreements. Bob is also co-author of the Hotel Management Agreement & Franchise Agreement Handbook (3rd edition), and has first-hand experience with branding and management for every major traditional hotel brand, including a number of multi-branded properties. Today he explores the phenomenon in greater detail.

Dual-branded & multi-branded hotels:
Opportunities and challenges
by
Bob Braun, Hotel Lawyer

The trend of dual-branded and multi-branded hotels

Over the past few years, the popularity of multi-branded properties has exploded. Less than a decade ago, a dual-branded hotel was an oddity. Then dual branding became more common, and some properties began to use more than two brands, so “multi-branding” was born in the hotel industry. In the early days, multi-branding resulted from unique circumstances. Today, it is driven by a number of factors discussed below, and there are nearly 100 properties with multiple brands and nearly that many again in construction. CONTINUE READING →

Published on:

 

Most of the people we talk to in the hotel industry believe that consolidations, such as the recent Marriott-Starwood and Accor-Fairmont mergers, will have a big effect on their own hotel investments and other stakeholders in the hotel industry.

JMBM’s Global Hospitality Group® would like to know what you think about these events. Please click on the link below to tell us how these mergers will impact your business with this 6-question survey that should take you less than 3 minutes to complete.

Click here to take our survey.

We will share the survey results (on an anonymous and aggregated basis only) with everyone who completes the survey. The results should be interesting . . .

Published on:

08 August 2016

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

A primer on EB-5 and key issues in its renewal

 

What is the EB-5 Immigrant Investor Visa Program?

The EB-5 immigrant investment visa program provides a “fast track” to obtain permanent U.S. residency (a “green card”) to qualified foreign investors who satisfy specified requirements, including investing at least $500,000 in a U.S. enterprise or project that creates at least 10 new permanent jobs for U.S. citizens, and otherwise comply with the immigration visa process.

The regional center pilot program

In addition to the basic permanent EB-5 legislation, a “pilot program” regarding Regional Centers (or RCs) was adopted in 1992. Although it has never lapsed, the Regional Center provisions have typically been renewed for relatively short periods (e.g. 1 to 5 years). The current authorizing legislation for this Regional Center aspect of the program is set to expire or “sunset” September 30, 2016.

Before the Regional Center pilot program expired last year in September, a bi-partisan effort in both houses of Congress worked with industry leaders to propose legislation with a broad consensus of stakeholders that would have addressed a full range of issues concerning the EB-5 program. But at the proverbial 11th hour, Congress dropped the comprehensive reform and decided to renew the existing law (without change) for 12 months (expiring September 30, 2016).

Now that the sunset date is approaching again, many stakeholders in the EB-5 process are working with Congress for a better and longer-lasting resolution of the EB-5 issues.

none of the experts we talk to believe that the EB-5 program will be allowed to lapse

Some of the proposals to revise EB-5

Although a review of last year’s drafts of legislation may be helpful in understanding the “big picture issues,” the political environment is different this year, particularly with election-year dynamics. It is too early to predict what approaches and proposals will succeed, but there is almost universal belief that a workable resolution will be achieved for all legitimate stakeholders. Some of the major proposals are listed below.

JMBM’s EB-5 Financing team follows these developments closely, and you should talk with us to get the latest update.

  • How long should the re-authorization last? After almost 25 years, hasn’t the Pilot Program shown results justifying making it permanent or doing away with it? Why is it permitted to become a political football every year or two? Why does it need to come up for renewal?
  • What is the required investment for an EB-5 visa applicant? Currently the minimum investment is $500,000, and more than 90% of all EB-5 visa immigrants have qualified for this amount. Only 10% have used the $1 million investment level. Should one or both investment levels be raised (e.g. to $800,000 and $1.2 million)? Should there just be one level of investment? Should the difference between the lowest and highest investment requirements be reduced?
  • What does it take to qualify for the lowest investment requirement? Currently, only projects in Targeted Employment Areas or “TEAs” (rural locations or areas with high unemployment equal to 150% or more of national unemployment levels) qualify for the lower investment of $500,000. Should rural areas be more strictly defined? Should national standards be imposed to replace the current state-by-state approach to TEA designation based on unemployment? What should those standards be?
  • How do you calculate job creation? To obtain an EB-5 visa, each investor must invest the required minimum and that investment must create at least 10 new permanent jobs. Certainly it is easy to calculate the number of direct employees — those with W-2s, but what else counts? Construction jobs? Indirect and induced jobs (not direct or W-2 employees but workers servicing the project such as an outside laundry service for a hotel, the window washers for the building, the workers in the restaurants and retailers who reside in the project). Currently, indirect and induced jobs can be included in the job count when calculated by one of the four established USCIS-approved formulas – should this approach be changed? Should the job count requirement be changed?
  • How many visas should the program permit and how do you count them? Is the current 10,000 EB-5 visas per year the right amount or should it be increased? Should any of those visas be set aside or earmarked for certain projects such as projects in rural areas of public infrastructure? Should the permitted number of visas (10,000 or whatever it may be changed to) count only the EB-5 investors, or should it include the investor’s spouse and minor children? Should unused EB-5 visa allocations accumulate from year to year or be spread amongst all employment based immigration programs?
  • Should something be done about the “aging out” problem? Is it appropriate to exclude minor children from the benefits of EB-5 when they exceed the age of minority because of long delays — up to several years — by the U.S. immigration service in processing the visas?
  • Should Regional Centers be charged an annual fee? Should there be an annual fee for a Regional Center to retain its designation? Should that be $25,000, $50,000 or some other number? Do we want to discourage inactive RCs and those who just “bought a charter” for speculation with no intention to use it for the intended purpose? What should these fees, if any, pay for?
  • Should there be more Federal oversight? Proposals in this area have included greater reporting, oversight and involvement by a host of federal government agencies such as the SEC, FBI, NSA, and Homeland Security. Such proposals also generally include civil and criminal penalties for noncompliance. Nobody in the EB-5 industry favors fraud or terrorism, but is there really enough of a problem to warrant this attention? Aren’t current laws adequate? Could this be over-regulation?

These 8 broad areas of inquiry about the EB-5 program are worth discussing and, in fact, have been discussed at length for some time. (See our December 8, 2015 blog for changes that almost went into effect in 2016.)

Time to evaluate the right EB-5 strategy for you?

We have a lot of practical experience in helping our developer clients raise EB-5 funding. If you would like some help to evaluate whether EB-5 could work for you, or what strategy is best for you, then give us a call. There is no cost for an initial discussion.

Jim Butler, +1-310-201-3526 or jbutler@jmbm.com

David Sudeck, +1-310-201-3518 or dsudeck@jmbm.com

 

Other articles on EB-5 Financing

To access our rich library of articles on EB-5 financing, go to www.HotelLawyer.com, scroll down the right-hand side under LEARN MORE ABOUT and click on “EB-5 Financing.” For your convenience, here are a few popular EB-5 articles that may be of interest:

EB-5 funding for new development: JMBM has closed more than $1.5 billion of EB-5 financing.

EB-5 extended without change: President Donald Trump signs bill

What’s happening with EB-5 financing for new development projects? Is it still available?

JMBM’s “preferred” EB-5 construction financing program for top developers and projects.

FAQs about EB-5 project financing for new hotel development

Hotel development & EB-5 financing: Why you don’t want to form your own regional center

Financing hotel development today: The 5 questions every hotel developer is asking about EB-5 financing

Picture of Jim Butler
This is Jim Butler, author of
www.HotelLawBlog.com and hotel lawyer. We represent hotel owners, developers and investors. We have helped our clients find business and legal solutions for more than $71 billion of hotel transactions, involving more than 3,800 hotels. As of January 31, 2017, we have closed more than $1.5 billion of EB-5 financing for our clients’ projects, and sourced most of that. I invite you to contact me to explore how our experience and resources might help you accomplish your goals. 310.201-3526 or jbutler@jmbm.com
Published on:

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

Patrick Hogan, CEO of CMB Regional Centers, speaks with David Sudeck, senior member of JMBM’s Global Hospitality Group® at JMBM’s 2016 Meet the Money® – the national hotel finance and investment conference. They discuss the evolution of the EB-5 Immigrant Investment Visa Program, indirect jobs, completion guarantees, and taking care of the investor.

A transcript follows the video. See other videos in this series on the Jeffer Mangels YouTube channel.

David Sudeck: Hi, I’m David Sudeck, I’m here at the 26th annual Meet the Money® Conference with Pat Hogan, CEO of CMB Regional Centers. Welcome Pat. And thanks again for participating this year. You were on stage earlier on the CEO panel and you did a fantastic job.

Patrick Hogan: Well thank you, I’m pretty excited to be here. It’s an interesting group of people.

David Sudeck: EB-5 is hot right now. I was wondering if you could tell us a little bit about the roots of CMB, how things have changed from the 1990s to today, and what you see as your current platform.

Patrick Hogan: We started in 1994, before regional centers were ever involved.

The EB-5 program is actually a permanent program. Most people don’t know that because everybody does business with the regional center. But I started in 1997, getting my first regional center, and we actually got an approval in the year 2000. But as you know, fraud crept into that particular program and I just couldn’t take it anymore. It wasn’t really a business at that point in time. So I just said, “Okay, I quit, and until Congress can put some reforms through, I don’t want to do it anymore.”

David Sudeck: So you were pushing for regulation?

Patrick Hogan: Yes, even back then. So, fast forward to today – and we’ve been rocked with all kinds of scandals and things like that within EB-5 – which you would expect. Because if you go back to 2007 there were eleven regional centers, and maybe five of us doing something. And then to go to today where you have 800 regional centers – there’s bound to be some individuals that don’t have a clue.

David Sudeck: Do you have any sense as to how many of those 800 actually do business of any kind? CONTINUE READING →

Published on:

18 December 2015

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

Hotel lawyer with great news for developers: the EB-5 immigrant visa financing program has been renewed — approved by Congress and signed by the President. It is being continued without change through September 30, 2016.

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

A funny thing happened on the way to the 2016 Federal budget approval last week. One of the “riders” to the omnibus appropriations bill was the EB-5 legislation sponsored by Senators Leahy and Grassley. For months preceding the scheduled Congressional action, many stakeholders in the EB-5 industry spent untold hours in negotiating complex provisions to deal with certain concerns regarding the program. These negotiations resulted in multiple drafts of the proposed legislation being exchanged between Congressional staff and industry leaders, with the “final” draft receiving the unanimous approval of the trade organization for regional centers, the Invest in the USA or IIUSA. It was a good compromise on many knotty issues.

Then at the proverbial 11th hour . . . on Wednesday, December 16, the elaborate “final” compromise proposal was jettisoned in favor of a simple extension of the expiration date for the Regional Center program to September 30, 2016, without any other changes to the program.

The EB-5 regional center program is extended without any other changes.

Yes. That is right. After all the discussions and proposals, THE ONLY CHANGE IN THE LAW IS AN EXTENSION OF THE EFFECTIVE DATE FOR THE PROGRAM THROUGH NEXT YEAR.

Now, as the program has been renewed without a single change, lenders and foreign investors are now rushing to fill the pipeline again. And it is much more desirable to be at the front of the line, rather than at the back of the line.

Nothing was done about any other issues, including the following: CONTINUE READING →