Hotels Growing in Popularity with use of EB-5 Financing

(Source: Ali Brodie, Greenberg Traurig)  Although the program has been around for a number of years, it is only recently that EB-5 financing has become popular for hotel development with major flags including Marriott, Starwood, Hyatt, and Hilton successfully utilizing this alternative form of financing.  With traditional construction financing difficult to obtain, many hotel developers have turned to EB-5 financing, realizing its benefit as both a creative way of attracting financing from foreign investors, and marketing hotel brands internationally.  Hotel developers favor raising capital through the EB-5 program as it is considered a relatively cheaper source of financing, frequently offering returns of less than 4%, when compared with higher interest rates on debt and other riskier forms of financing.  From the investor’s perspective, the United States is attractive because of its political and economic stability, healthcare, and educational opportunities for children.  The investors, the majority to-date being Asian, are primarily concerned with obtaining a green card through investing in a regional center project that creates the requisite 10 new jobs per investor and will return their funds (capital at risk) within 5 years, not necessarily with the return on investment.   Many investors select EB-5 regional center hotel projects because they identify with the property operated by an internationally recognized hotel brand, and they see the increasing profitability and stability of the U.S. hotel industry.  We suggest the following tactics for EB-5 hotel developers to make your project competitive: It is critical to obtain strong branding by associating with a brand that is recognizable in the investor’s home country.  This adds to the credibility of the project.  Investor’s favor investments with brands which are both familiar and prestigious. Similar to hotel branding is the developer’s track record.  Investors have to trust the developer of the project investment.  Experienced developers should provide investors with information relating to past successes in order to gain investor trust. Ensure that your project is located in a Targeted Employment Area (TEA).  The TEA designation allows the qualifying investment to be reduced from $1 million to $500,000.  The majority of EB-5 projects being marketed to investors are at the $500,000 threshold, and to be competitive in the marketplace, it is crucial that the hotel project be located in a TEA. Geographic location of the project should also be considered, understanding that investors often times will invest in projects located in cities that are centers of commerce, appealing, and easy to visit.  The capital stack must include more than just the EB-5 funds.  Investors like to see that the developer has some skin in the game.  Likewise, projects that have too much EB-5 financing are perceived as riskier in the event the developer is unable to raise the required amount of EB-5 capital. Job creation is critical to the investor being able to obtain a permanent green card.  The developer should work closely with an economist to determine the projected job creation and the corresponding number of investors allowed for EB-5 funding.  Each investor is required to create 10 full-time jobs.  It is always recommended to create more jobs than required in order to have a job creation cushion. Every investor will want to understand the exit strategy associated with their investment.  While EB-5 financing can count as a meaningful part of the capital stack, it is important that the EB-5 funds are used appropriately in accordance with requirements established by the U.S. Citizenship and Immigration Services.   Article here: http://www.eb5investors.com/

EB-5 Investor Immigration Visa Program Growth

With the increasing number of EB-5 visa being issued and only a limited amount will result in more competition for gathering investors in the EB-5 industry. The chart below shows how the EB-5 program has shown an increase of visas being processed and received since 2008 and representing projections for the years to come.

For more information on the USCIS EB-5 Immigration Investor program and investment options,

CONTACT EMPIRE STATE EB5 REGIONAL CENTER TODAY!

2815 Monroe Avenue, Suite 2100

Rochester, New York 14618

Tel: (866) 763-6515

                                                     EMAIL HERE or WEBSITE HERE

Funding Hotel Development Projects with EB-5 Capital

[Source: ILW.com]

When the financial crisis made it more difficult to acquire financing through traditional venues, hotel developers started turning to the Federal  USCIS EB-5 program for sources of capital. Since 2008, developers for hotel chains such as Hilton Worldwide, Hyatt Hotels, and Starwood Hotels & Resorts Worldwide, have taken advantage of the influx of foreign funds made available through the EB-5 program. 

There are two ways for a foreign entrepreneur to obtain an EB-5 investment visa: investing $1 million into a new commercial enterprise to be run directly by the foreign national in the U.S., or to invest into a “regional center.” The latter is an economic unit that is privately owned or sponsored by the government, and will manage the investment, assisting the investor in complying with U.S. Citizenship and Immigration Services (USCIS) requirements—including job creation.  Since most regional centers are located in “Targeted Employment Areas,” they usually qualify for the lower investment amount of $500,000, another reason that they are attractive to the EB-5 investor. Regional Centers also have a less stringent job creation requirement that allows for indirect job creation. 

Since hotels create both, direct jobs (managers and house keeping for example) and indirect jobs (suppliers of towels and soaps), they are a good fit for foreign investors whose permanent resident status is dependent on meeting the USCIS requirements. Pairing with a regional center also benefits the hotel developers since they assist with business plans and help to attract foreign investors. 

<<<READ FULL ARTICLE HERE>>> 

Hotel Developers or Project Developers contact us directly with interest or more information to how EB-5 financing can be a part of you next venture.

CONTACT EMPIRE STATE EB5 REGIONAL CENTER TODAY!

2815 Monroe Avenue, Suite 2100

Rochester, New York 14618

Tel: (866) 763-6515

                                              EMAIL HERE or WEBSITE HERE

More than a Green Card for Sale, the EB-5 Program is Good for America!

(Author: K. Lara Baharlo, Esq., Of Counsel, Wolfsdorf Immigration Law Group, Original article HERE) 

In 1990 Congress created the employment-based fifth preference visa category (EB-5) category for foreigners seeking to invest in a business that will benefit the US economy and create or preserve at least 10 full-time jobs for qualified US workers. The amount required to invest is $1 million or $500,000 if the investment is made in a high unemployment or rural area.

Some portray the typical EB-5 investor as an ultra-rich Chinese businessman in the market for a prestigious US green card. One restrictionist group describes EB-5 as a “tacky, troubled program that doesn’t do much for economic development.” Others say the EB-5 program “let[s] the guys in with the money and leave[s] the best and brightest waiting in line.” Meanwhile, participants in the program have their own criticisms, alleging that US Citizenship and Immigration Services (USCIS) is hostile toward EB-5 because it is viewed as a “green card for sale” program that denigrates the US immigration system, and is essentially bad for America.

A fundamental tenet of the EB-5 program is job creation, which is often minimized by program critics. There are economic citizenship programs available in some countries through which an individual can buy a passport for a price. However, the EB-5 program requires much more in that the investment required to put one on the path to permanent residency must, amongst other things, create jobs and be at risk. As such, the “green card for sale” concept is flawed and oversimplifies the EB-5 process.

According to statistics published by IIUSA, the industry trade association for the EB-5 Regional Center Program, almost 100,000 jobs have been created for US workers through the EB-5 program, with nearly $5 billion in capital infused into job creating enterprises in the United States since 2005. These figures should be viewed against an increasingly common backdrop of outsourcing and offshore back-office operations. Should we not welcome a program that creates US jobs and infuses a lagging economy with much needed capital? Already, the US must compete with investor programs that are more attractive due to better administration and less stringent requirements. Although some of these programs are more expensive, they can offer passive investment opportunities and shorter processing times with a higher degree of certainty that the investor will achieve his or her goal of residency.

Yes, the EB-5 program has endured fraud and abuse, but scams and deception are not unique to EB-5. Yes, some Regional Centers have failed to deliver on their promises, and investors and projects have suffered. However, the need for weeding out bad actors must be balanced by the need to provide a predictable and stable program for those with legitimate interests so that the United States can continue reaping the significant benefits of attracting foreign investors, particularly during this time of economic struggle and uncertainty.

America is no longer the overwhelmingly dominant global superpower, and cultural arrogance is not a platform from which to operate a congressionally mandated program. However, the United States is still considered the “land of opportunity” throughout the world and can provide excellent educational and quality of life options for high net worth individuals and their families. Although painful to admit, the US cannot afford to deter the billions in capital and hundreds of thousands of jobs that result from EB-5 investment.

Now is the time for the United States to encourage entrepreneurs, capital inflow and job creation. The EB-5 program is smart business, and the United States should be a world leader in attracting immigrant entrepreneurs who are ready and willing to take on the challenge of making it as investors and job creators in America.
 (Ms. Baharlo can be contacted at lbaharlo@wolfsdorf.com; Original article HERE)

New EB-5 Program Office to be Established in Washington, DC

(By Douglas Hauer on December 3rd, 2012/Mintz Immigration Law)


During today’s EB-5 Stakeholder’s Meeting, USCIS announced the creation of a new EB-5 Program Office in Washington, DC. The Chief of the new EB-5 Program Office will report to the Deputy Director of USCIS. This is a significant realignment, which USCIS intends to accomplish within four to six months. According to USCIS, this reallocation of resources is targeted at ensuring that the Program Office addresses adjudications more effectively. The new EB-5 Program Office will handle adjudications, legislative affairs and policy, in addition to having full-time staff devoted to identifying fraud. One goal of the new EB-5 Program Office will be to move from the current RFE (“request for evidence”) model to a more dynamic email approach, where adjudicators handle complex communications directly with the public. Direct communication with decision-makers might result in fewer denials and RFEs over issues that could be resolved through the EB-5 Program Office communicating with an attorney.

Currently, USCIS adjudicates EB-5 petitions and benefits at the California Service Center. Processing times for benefits are very unpredictable. This leaves investors insecurely waiting, at times for more than six months, for resolution of their cases. Hopefully a new EB-5 Program Office will allow USCIS to accomplish the goal of a more efficacious and fair adjudications process. Until USCIS announces a change to filing procedures, the status quo is in place and all filings should continue to be channeled to the California Service Center. With the new EB-5 Program Office, USCIS will have an ambitious goal of adjudicating EB-5 benefits in 90-120 days.