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EB-5 Financing For Hotels is Now Mainstream Institutional
Sep 13, 12 | 12:02 am
For the most recent update on this topic, click here
Hotel Lawyers: EB-5 financing is gaining widespread recognition and institutional approval
We have been telling our friends and clients for some several years that EB-5 financing is "real" and legitimate. And we have been helping developers take advantage of this opportunity where appropriate.
Although it has been around since 1990, it is only in just the past few years that EB-5 financing has really taken off in terms of financing hotel development. In the past 18 months, developers for Marriott, Hilton, Hyatt and Starwood have used EB-5 financing. In July, FelCor Lodging Trust announced that is using EB-5 to raise $45 million through EB-5 as part of its capital for a planned $230 million redevelopment of the Knickerbocker Hotel in Times Square. And Marriott has endorsed the program for developers in at least 14 projects including downtown Seattle, downtown Milwaukee, a Courtyard by Marriott in Midtown Manhattan and a $168 million dual branded Marriott near the Staples Center in Los Angeles.
In other words, in a very short time EB-5 financing for hotel development has moved from obscurity to the limelight, from summer stock to Broadway, from Little League to the Majors, from somewhat eclectic to institutional mainstream. We expect it to continue growing in importance and public profile for some time to come. It is not too late to take advantage of EB-5 financing for hotel development.
Hotel Lawyers in the New York Times: "Visas-for-Dollars Program a Boon to Hotel Developers"
This major paradigm shift, putting EB-5 in a new role for financing hotel development was recently confirmed by a New York Times article written by Janet Morrissey.
The hotel lawyers at JMBM's Global Hospitality Group® are frequently called on by the media to provide expert commentary on current issues and events that impact the hospitality industry. It is always a pleasure to be called upon by reporter Janet Morrissey, whose coverage of the industry includes leading-edge issues and is always insightful.
In Morrissey's article, "Visas-for-Dollars Program a Boon to Hotel Developers" published in the September 6, 2012 issue of the New York Times, my partner, Catherine Holmes commented on the growing practice of raising hotel development funds through the EB-5 Immigrant Investor Visa Program. A senior partner with the Global Hospitality Group®, Catherine has significant experience in hotel and mixed use development, financing, management and acquisitions. She has worked on EB-5 financing for hotel, assisted living and other development projects all over the United States.
A relatively cheap source of hotel financing
As the article points out: "It has proved to be a relatively cheap source of financing. Hotel developers can raise money through the EB-5 program by offering returns of less than 4 percent. In contrast, the interest rates on debt starts at 6 percent, with some riskier forms of financing running at 10 percent or higher. Investors who take an equity stake in a hotel project aim for returns of 20 percent."
JMBM's Global Hospitality Group® and Chinese Investment Group® have been at the forefront of handling U.S. hotel development projects that include EB-5 program funds, which is why Ms. Morrissey called on us for commentary. As Catherine Holmes mentions in the article, we are currently working on 40 projects that utilize EB-5 financing.
"We would go to conferences and talk about the program, and people just didn't believe it was real -- they didn't believe you could raise that much money," said Catherine D. Holmes, partner at the law firm Jeffer Mangels Butler & Mitchell. Once Marriott was in the picture, "people started to take it more seriously," said Ms. Holmes, whose firm is helping clients use EB-5 financing for 40 different hotel projects. New York Times, September 6, 2012
How to find out if EB-5 financing could work for your hotel development project
Yes, EB-5 financing is real! In an time where debt is difficult to secure, it can play a meaningful role in the capital stack. But EB-5 financing must be used appropriately and its requirements (set forth by the U.S. Citizen and Immigration Services or USCIS) are very specific.
My partners, Catherine Holmes and Victor Shum, have written some great articles on various key aspects of the EB-5 Immigrant Investor Visa Program and regularly help hotel developers take advantage of this opportunity where it is appropriate. We invite you to take a look at the free information on EB-5 financing for hotel development and to call us if you would like to discuss it further.
To learn more, go the HotelLawyer.com. Scroll down on the home page until you see "EB-5 financing" on the right side and click there. You will then see all the EB-5 articles we have posted.
Alternatively, here are links to a few of the articles in the collection.
About the Author
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who's your hotel lawyer?
Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,300 properties all over the world. For more information, please contact Jim Butler at firstname.lastname@example.org or +1 (310) 201-3526.
Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment GroupTM. 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.
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