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Finally, Some GOOD NEWS from Washington, DC

 
By Jim Butler and the Global Hospitality Group®
Hotel Lawyers
| Authors of www.HotelLawBlog.com
September 17, 2012

Hotel Lawyer with some good news from Washington, DC. With the continuous flow of depressing news from Washington, it is nice to see some good news for a change. And that is what we got yesterday on the EB-5 front.

Here is the latest update on the developments.

EB-5 Alert: Congress approves 3 year extension for regional centers
by
Jim Butler, Catherine Holmes and Victor T. Shum | Hotel Lawyers

EB-5 program regional centers have been re-authorized until 2015.

EB-5 regional centers play an important role in raising EB-5 financing for new hotel development, and there has been some concern among investors and project developers that the federal regulations authorizing EB-5 regional centers were set to expire on September 30, 2012. We have been expecting that this portion of the EB-5 program would be reauthorized for some time, but we are now able to announce that an important step in the reauthorization has now been accomplished. Yesterday, the U.S. House of Representatives passed S. 3245 (412-3) - which includes a three year re-authorization of the EB-5 Regional Center Program through September 2015. The U.S. Senate previously approved the reauthorization on August 2, and the bill will now be submitted to President Obama for signature. His approval is expected.

EB-5 Regional Centers are an important part of the EB-5 financing program.

As our readers know, over 90% of all EB-5 visas are issued in connection with projects sponsored by regional centers, and there are several reasons for that. First, offerings sponsored through regional centers are permitted to count indirect, as well as direct, job creation for determining how much EB-5 financing can be raised for a project.

The basic requirement for an EB-5 financing is that, for every investor who invests $1,000,000 or $500,000 if the project is located in a targeted employment area (TEA), there must be 10 new permanent, full-time jobs created. In a direct EB-5 offering that is not sponsored by a regional center, the only jobs that can be counted are the direct permanent jobs created when a project is complete and in operation. So, for example, a hotel with 100 employees located in a TEA could only raise a maximum of $5 million, using the ratio of 10 jobs per $500,000.

However, if the hotel developer can count not only the direct jobs, but indirect jobs created from the construction of the hotel, and operations of the hotel, there will be a much larger number of jobs available to be counted, which has the effect of multiplying the amount of financing that can be raised in an EB-5 financing by several times the number of direct jobs.

Experienced EB-5 regional centers also provide a valuable source of experience and credibility in the market for investors.

Persons who invest in an EB-5 offering generally live outside of the U.S., and do not have knowledge
or prior experience in the U.S. markets. A reputable EB-5 regional center with a track record of successful projects (approved I-526 and I-829 petitions and repayment of investors' capital) will provide a valuable source of credibility in marketing projects overseas. This is particularly important in China, because more than 70% of all EB-5 visas have been issued to investors from China for the past two years.

Experienced regional centers have established marketing networks that can help sell large EB-5 offerings.

As we tell our clients, once we know that a project will meet the eligibility criteria for an EB-5 offering, the most important issue is whether the offering can be successfully marketed and sold overseas. This requires personal relationships with brokers in the areas where a project is being marketed. Experienced regional centers have established these networks, and are able to use these relationships for each new project that they bring to market. Therefore, experienced regional centers can offer developers more assurance that they can complete an EB-5 offering.

The reauthorization of EB-5 regional centers will have a positive effect on new project financing and new job creation in the U.S.


We have been reporting for some time that the EB-5 financing program is an important way of raising financing for new hotel development, primarily because traditional construction financing has not been available since the end of 2008. Over the last year in particular, the number of hotel projects using EB-5 financing has increased substantially, and it has now gained acceptance in the mainstream of the hospitality industry, including with major hotel developers and hotel brands. (See our posting from September 9, which includes the New York Times Article "Visas - for - Dollars Program a Boon for Hotel Developers".) We have participated in a number of EB-5 offerings that have raised hundreds of millions of dollars in financing for hotel development, and we are continuing to see strong demand for EB-5 financing, both on the developer and investor side.

Thank you to the IIUSA and its member for their efforts in reauthorizing this valuable program.

The Association to Invest In the USA (IIUSA), which is the organization of EB-5 Regional Centers, played an important role in educating Congress about the benefits of the EB-5 program and getting the reauthorization passed. The members of this organization are the most experienced and professional group of regional centers in the U.S. today, and it is largely due to their efforts that the EB-5 program has become such an important financing source for U.S. businesses today. We applaud the efforts of all of the members of IIUSA in obtaining the reauthorization of the EB-5 regional center program, and in making the EB-5 program a success.

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.
_________________________

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?

Catherine Holmes is a transaction and finance partner with JMBM's Global Hospitality Group® and Chinese Investment Group™ and specializes in resort and hotel purchase and sale transactions, resort and urban mixed-use financing and development, hotel management and franchise agreements, and hospitality asset workouts. With her background in securities transactions, she also assists hotel developers with public and private offerings of securities. For more information, please contact Catherine Holmes at +1 310.201.3553 or [email protected].

Victor Shum is a corporate and securities partner in JMBM's Global Hospitality Group® and Chinese Investment Group™. He has advised clients on EB-5 matters since 1999 and assists hotel developers on EB-5 financing as well as public and private securities, mergers and acquisitions, cross-border issues, and other strategic business transactions, including real estate transactions and intellectual property and technology licensing matters. For more information, please contact Victor Shum at +1 415.984.9611 or
[email protected].
 
___________________________

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 [email protected] or +1 (310) 201-3526.
 
Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. 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.

 

Contact:

Jim Butler
[email protected]
310.201.3526


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JMBM's Chinese Investment Group Happenings and Events / Jim Butler / August 2012

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Hotel Restructuring, Workouts, Receiverships and Bankruptcy. The Art of Heavy Lifting. / Jim Butler / August 2012

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How to Terminate a Hotel Management Agreement: A Tale of Two Hotels - Marriott's Edition Waikiki and Fairmont's Turnberry Isle Resort; Two owners terminate long-term hotel management agreements, seize control of their hotels from branded operators, and then settle their litigation / July 2012

EB-5 Lawyer Alert #3: Update on California TEA designation procedure. What's the problem in California! / Jim Butler, Catherine DeBono Holmes and Victor T. Shum / June 2012

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Update on California's EB-5 Policy Regarding Designation of Targeted Employment Areas or TEAs / Jim Butler / May 2012

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EB-5 ALERT: California's New TEA Approach will Discourage EB-5 Investment in California / Jim Butler / May 2012

JMBM is One of 20 Hottest Law Firms in the U.S. Per the National Law Journal's Latest List / April 2012

Hotel Labor Lawyer: California Supreme Court Finally Gives Employers Some Good News in Brinker Restaurant Corporation v. Superior Court / Jim Butler & Travis Gemoets / April 2012

How to Negotiate a Hotel Management Agreement. 10 Tips for a Smoother Process / Jim Butler / March 2012

ADA Defense Lawyer: What does the ADA pool lift compliance extension mean to you? / Jim Butler / March 2012

DOJ Turnabout: Pool lift compliance deadline extended to May 15 / Jim Butler / March 2012

5 Things to Remember when Buying Hotel Notes / Jim Butler / March 2012

ADA Defense and Compliance Lawyer: More clarification or confusion on March 15 ADA standards? / Jim Butler / March 2012

ADA ALERT - A Call to Action Before the March 15, 2012 ADA Deadline / Jim Butler / February 2012

GlobeSt.com Interviews JMBM's ADA Defense and Compliance Lawyers: Hotels Handle Pool Lift Regulations / Jim Butler / February 2012

FBI Tips for Hotels; How to spot terrorists and what to do. / Jim Butler / February 2012

ADA Defense and Compliance Lawyer Advisory: DOJ Clarifies March 15, 2012 Mandatory Pool Lift Requirement! (Uh-oh!) / Jim Butler & Martin Orlick / February 2012

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Hotel Labor and Employment Lawyer Update: Controversial Union Rights Notice Subject to Legal Challenge - Employers Should Not Rush To Post It / Jim Butler & Scott Brink / September 2011

Hotel Franchise Lawyer: Hotel Franchise Agreements and the 5 Biggest Mistakes a Hotel Owner Can Make / Jim Butler & Robert Braun / September 2011

Hotel Labor and Employment Lawyer Alert: The NLRB is making it harder to stay union free / Jim Butler & Scott Brink / September 2011

Tips from Hotel Franchise and Management Lawyers: Beware the Trap of Changing Brand Standards / Jim Butler & Robert Braun / September 2011

Labor and Employment Alert: New Law Requires Employers to Post Employee Rights Notice by November 14, 2011; NLRB Publishes Final Rule for Notification of Employee Rights / Scott Brink , JMBM / September 2011

Hotel Lending Lawyer: What every hotel lender needs to know about hotel due diligence / Jim Butler & Guy Maisnik / September 2011

Hotel Lending Lawyer: What every hotel lender needs to know about Cash Controls / Jim Butler & Guy Maisnik / August 2011

Hotel Lawyers on Terminating Hotel Operators: M Edition Lawsuit Against Marriott Has a New Twist Marriott is Replaced Overnight / Jim Butler / August 2011

Hotel Lawyers on Terminating Hotel Operators: Turnberry Resort Drops Fairmont Flag / Jim Butler / August 2011

Hotel Lending Lawyer: What every hotel lender needs to know about SNDA's / Jim Butler & Guy Maisnik / August 2011

Hotel Lending Lawyer: What every hotel lender needs to know about HMAs and hotel franchise agreements / Jim Butler & Guy Maisnik / August 2011

Hotel Lawyer on the Importance of Brands - Intellectual Property Rights and What They Mean: Family Suites Resorts v. Viacom International d/b/a MTV Networks - a Suit Over Branding / Jim Butler / August 2011

Hotel Lawyer on the Fiduciary, Contractual and Agency Duties of Hotel Brokers - Host Hotels & Resorts LP v. Molinaro Koger Litigation / Jim Butler / August 2011

M Waikiki's Edition Lawsuit Against Marriott International and Ian Schrager - an Owner's HMA Dispute with Marriott and What it All Means / Jim Butler / August 2011

Hotel Investment: Why Asian investors are targeting U.S. hotels for purchase and investment, and what could it mean for you? / Jim Butler / August 2011

Hotel Developers: Why a "regional center" may be the key to financing your next hotel development or expansion. And what you need to know... / Jim Butler / July 2011

How to use the EB-5 Immigrant Investor Visa Program for financing / Jim Butler / July 2011

JMBM Announces Formation of the Chinese Investment Group™ - Hotels, Real Estate, EB-5 Immigrant Investor Visas / July 2011

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Hotel Lawyer: What you need to know about the "ancillary benefits" of setting up a captive insurance company / Jim Butler & Gordon Schaller / June 2011

Hotel Lawyer: Are you thinking about setting up a captive insurance company? Maybe you should be. . . / Jim Butler & Gordon Schaller / June 2011

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ADA Defense Lawyer: How to Quickly Lose Business. (No ADA-Compliant Reservation System) / Jim Butler & David Sudeck / May 2011

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Hotel Lawyers' Updates on Capital and Debt Markets for Hotels, Transaction Sales Data and Financings / Jim Butler / May 2011

Hotel Lawyer with Updates on Hotel Cap Rates, Values and Transactions / Jim Butler / May 2011

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Hotel Lawyer: The hotel transaction market is heating up! / Jim Butler / April 2011

Hotel Lawyer with good news! A new federal court decision upholds condo hotel structure. No "securities" involved as structured. Disgruntled condo hotel unit purchaser lawsuit dismissed. / Jim Butler / April 2011

Meet the Money®: Hotel Financing Renaissance is Underway! / Jim Butler / April 2011

JMBM’s Global Hospitality Group® announces publication of The HMA Handbook, a FREE practical guide for negotiating Hotel Management Agreements for Hotel Owners, Developers, Investors and Lenders / March 2011

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ADA Defense Lawyer: How to handle an ADA lawsuit....and How not to do it / Jim Butler / February 2011

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