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How to use the EB-5 Immigrant Investor Visa Program for financing

By Jim Butler and the Global Hospitality Group®, 
Author of
July 12, 2011

Hotel Lawyer: Chinese investment in hotels, restaurants, and other commercial real estate is becoming an important potential capital source for development, acquisition and renovation

Although it has been around for many years, the U.S. EB-5 visa immigrant investor program is now becoming an exciting potential source of capital for hotel development, acquisition and renovation projects. Some high-profile hotel projects are now being funded using this program, such as portions of the W Hotel and Residences Hollywood, one of the largest public-private partnership in California, and a stunning mixed-use project with 305 luxury rooms, 143 private residences, a 5,500 square foot Bliss spa, restaurants and 24,720 square feet of meeting space.

At the W Hollywood, we worked on a complex $20 million EB-5 financing to fund the opening of a Las Vegas-style Drai's rooftop nightclub (with an 8,450-square foot rooftop nightclub and an additional 2,482 square feet of dining space) and the Delphine Restaurant (the Hotel's lobby-level signature restaurant able to accommodate up to 275 patrons in its 6,162 square feet plus 826 square foot adjacent terrace).

Elsewhere, approximately $118 million in financing is now being raised using the EB-5 investment program to finance construction of a 377-room hotel tower now being developed adjacent to L.A. LIVE to house both a Courtyard by Marriott® and Residence Inn by Marriott. In New York, another EB-5 investment program is seeking to finance a new Westin Hotel in the Flushing area of New York City. These are just a few examples of how the EB-5 investment program could provide much needed financing to help new hotel projects get off the ground.

An old program with a new Chinese twist

As noted, although the EB-5 immigrant investor visa program is not new, in the past two years, the popularity of the program with investors -- particularly investors from mainland China --has grown exponentially. According to the U.S. Citizenship and Immigration Services ("USCIS"), applications for EB-5 visas have increased to 1,927 for the just the first half of the 2011 fiscal year, over 70% of which were from mainland China, compared to 1,885 for the entire 2010 fiscal year. The good news for hotel developers and owners is these EB-5 investors are most interested in real estate development projects. And hotel development is one of the best investment options for the EB-5 investment program. That is because hotels create jobs in the U.S. (which is one of the key criteria for an EB-5 investment), and because hotels are an attractive asset class to the Chinese investors that currently are the majority of all applicants for the EB-5 visa program.

In this article, my colleagues Catherine Holmes and Eudeen Chang discuss the fundamentals of the EB-5 investment program, including what it is and how it works. Cathy and Eudeen, along with our other interdisciplinary team members who make up our Chinese Investment Group™, Jim Butler, Guy Maisnik, Mark Adams, Ben Reznik, David Sudeck, Victor Shum, Monica Vu and Amy Tsai-Shen, help clients insure that their investments or projects will meet the EB-5 standards, run investments through a rigorous due diligence checklist, structure and document compliant EB-5 investments and guide the project developers through the process. Our Chinese Investment Group™ members, together with our well-established JMBM Global Hospitality Group®, work together as a team to provide a gateway for Chinese investment in the United States -- whether for EB-5 purposes or otherwise. In some cases our team represents the inbound Chinese investors and in other cases we represent U.S.-based owners and developers seeking EB-5 capital.

In later articles we will go into more depth about issues that are most important for designing an investment program for hotel development that will meet the EB-5 investment program criteria.

EB-5 Immigrant Investor Visas - The Fundamentals of EB-5


Catherine Holmes | Hotel Lawyer, JMBM Global Hospitality Group®
Eudeen Chang | Hotel Lawyer, JMBM Global Hospitality Group®

What is an EB-5 Visa?

EB-5 is an immigrant investor visa category created in 1990 for foreign nationals who invest in a new commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. The name comes from the fact that this visa is the 5th category of employment based (EB) visas. Ten thousand visas are set aside annually for investors and their immediate family members under the EB-5 visa program. An EB-5 applicant will receive a visa for himself or herself, his or her spouse, and all of their children under the age of 21.

The U.S. Citizenship and Immigration Services ("USCIS") will issue a conditional visa within about five months of application by an EB-5 investor, as long as the investor and the project they invest in are qualified. If the investment project fulfills the job creation criteria after two years, the investor can obtain permanent resident status, and can apply for U.S. citizenship in five years. This makes the EB-5 program a very attractive means of obtaining a U.S. visa for foreign investors.

What Are the Basic Criteria Required for an EB-5 Visa?

In order to qualify for an EB-5 Visa, an investor must invest at least $1,000,000, or $500,000 for a project in a "targeted employment area" (as discussed below), in an enterprise that will create at least 10 new full-time jobs for U.S. citizens and legal residents. The entire amount invested by the EB-5 investor must be invested in the business within two years, and all fees must be paid from other funds of the investor.

If the project is an existing business, the 10 new jobs have to be in addition to the existing jobs in the business. The investor usually purchases a limited partnership interest in a limited partnership made up of multiple investors seeking EB-5 visas. Limited partnerships are almost always used, because EB-5 regulations require the EB-5 investor to control the business, unless the investor is a limited partner in the business. Each limited partnership generally invests in a single project, either as an equity investor in or a lender to a special purpose entity established for the project controlled by the developer.

How Are Jobs Counted for the EB-5 Visa?

The jobs requirement must be met by the direct employment of at least 10 full-time employees for each EB-5 investor, unless the project is part of an approved Regional Center, in which case both direct and indirect job creation within the designated geographic area of the Regional Center will be counted. Approximately 90% to 95% of all EB-5 visa investments are made through Regional Centers.

What is a Regional Center?

A Regional Center is an entity created by either a public or private group to sponsor projects for EB-5 investors. There are currently about 150 approved Regional Centers, but many more applications are pending with the USCIS and are expected to be approved if their business plans are considered feasible and meet the job creation criteria. According to the trade association IIUSA, Regional Centers have invested over $2.0 billion of foreign capital, creating over 50,000 jobs in the U.S.

Any business owner can create their own Regional Center for one or more projects within a designated geographic area, but it currently takes at least nine months for the USCIS to approve each application. However, the USCIS has issued a proposal to provide "premium processing" for Regional Centers for "shovel-ready" projects, and we anticipate that this proposal will be approved relatively soon.

When premium processing is made available, it will take only a few weeks to obtain approval for a Regional Center - provided that it has a solid and sufficiently detailed business plan that shows what projects will be undertaken, what the costs will be and what direct and indirect jobs will be created as a result of the Regional Center's projects.

How Do You Find EB-5 Investors?

EB-5 investors can come from any country outside the U.S., and can even include people who are in the U.S. legally under a temporary visa. In the first three quarters of fiscal 2011, over 70% of all EB-5 investors have come from mainland China. There is a well developed network of brokers and licensed emigration agents in China who work with U.S. business owners to raise financing for EB-5 projects, usually through seminars attended by individual Chinese investors in cities throughout China.

What Are EB-5 Investors Looking for in an EB-5 Investment?

Most importantly, EB-5 investors are looking for assurance that the project they invest in will qualify them for a permanent U.S. visa, which means that the project must be able to prove that it created the number of jobs promised in the business plan. For a Regional Center, rather than counting the actual direct and indirect jobs that have been created, the USCIS requires evidence that the Regional Center actually carried out all of the material aspects of the business program it proposed in its approved application.

The second most important feature of an investment for the EB-5 investor is a reasonable likelihood of receiving a return of his or her original investment within a period of about five years. The EB-5 investor is not looking for a high return on their investment - - some investments offer only a 1% return on the investment - - just a return of their original capital.

Almost all EB-5 investors will want to invest at the $500,000 level, which means that a hotel owner or developer will have to have a project in a "targeted employment area."

What is a Targeted Employment Area?

A targeted employment area is any city, county, census tract or other geographical area accepted by the USCIS that has an unemployment rate over 150% of the national average rate, or a "rural area." A rural area is an area outside a metropolitan statistical area or outer boundary of any city or town having a population of 20,000 or more. Since most EB-5 investors are looking for investments at the $500,000 level, this means that for purposes of finding investors, a project will generally need to be located in one of these targeted employment areas.

What is the maximum size of the EB-5 investment available for your hotel?

While most investors want to make the minimum $500,000 investment required to get their green card, that is too small an investment to be of much use for most hotel developments, acquisitions, or renovations. Fortunately, there is no limit on the number of investors who can be aggregated into a limited partnership or other appropriate investment vehicle in order to make a bigger investment. And as a result there is no limit on the size of the EB-5 investment that can be made, as long as solid deal structuring and documentation are prepared, and as long as 10 jobs are created for every EB-5 individual investor.

That's how our W Hotel and Residences project was able to raise $20 million in EB-5 financing, and even bigger EB-5 financing projects have been done and are now underway.

Related articles

In future blogs, we will talk more about how to structure EB-5 investments, how to apply for Regional Center status, and other topics of interest to hotel owners, developers, lenders and foreign investors.


Catherine Holmes is a transaction and finance expert with JMBM's Global Hospitality 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 310.201.3553 or [email protected].

Eudeen Chang is a litigation and business expert with JMBM's Global Hospitality Group® specializing in contract disputes, trade secrets, patent issues, products liability, class actions, real estate, hospitality, construction defect litigation, and employment matters. He has particular interest and focus in assisting Asian American businesses and organizations, and with his Mandarin language fluency he is a trusted counselor of Chinese business owners newly arrived in the U.S. on their personal and business matters. For more information, please contact Eudeen Chang at 949.623.7232 or [email protected].


About JMBM's Chinese Investment Group

The Chinese Investment Group™ is a dedicated team of hotel and real estate lawyers in JMBM's Global Hospitality Group® that provides a gateway for Chinese investment in the United States. Using experience gained from more than $60 billion in hotel transactions, involving more than 1,300 properties worldwide, together with substantial experience in general real estate transactions, the Group provides Chinese investors with legal and business advice to make prudent and economically successful hotel and real estate investments in the United States.

The Group and its network of reliable professional resources help Chinese investors identify, analyze, evaluate, validate, acquire, finance and manage hotel and real estate opportunities. The Group does not receive any finder's fees, incentive fees, commissions or payments from any promoters, and provides independent advice to Chinese investors regarding all hotel and real estate opportunities. The Group also represents selected hotel, restaurant and other real property owners and developers in structuring investments for foreign investors -- particularly Chinese investors -- using the EB 5 immigrant investor visa program.

Click here to learn more about JMBM's Chinese Investment Group™.

Click here to download a PDF file about the Chinese Ivestment Group™.


This is Jim Butler, author of and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. 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 [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.

JMBM’s Global Hospitality Group®
The hotel lawyers in the Global Hospitality Group® of Jeffer Mangels Butler & Mitchell (JMBM) comprise the premier hospitality practice in a full-service law firm and are the authors of the Hotel Law Blog. We represent hotel owners, developers, investors and lenders and have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,000 properties worldwide. For more information about the Global Hospitality Group®, go to For more information about full range of legal services provided by JMBM, go to

Jim Butler
[email protected]


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