News for the Hospitality Executive
Finally, Some GOOD NEWS from Washington, DC
Butler and the Global Hospitality
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.
Alert: Congress approves 3 year extension for regional centers
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?
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.
Financing for Hotels is Now Mainstream Institutional / Jim Butler /
Chinese Investment Group Happenings and Events / Jim Butler /
Act Presents Hotels with Decisions on Credit and Debit Card Charges
/ Jim Butler & Robert Braun / August 2012
Restructuring, Workouts, Receiverships and Bankruptcy. The Art of Heavy
Lifting. / Jim Butler / August 2012
to Buy a Hotel Handbook: Franchise issues in hotel purchase and sale
transactions / Jim Butler / August 2012
Lawyer: Experts Share Top 5 Tips on Picking the Right Hotel Operator
and Brand for Your Hotel / Jim Butler & Robert Braun / July 2012
the Expectation of Privacy bit by bit, byte by byte / Jim Butler
and Mark Adams / July 2012
to Buy a Hotel Handbook: Labor and Employment Tips; Buying a hotel -
the Hotel Purchase Agreement documentation and process / Jim
Butler, Catherine DeBono Holmes and Marta M. Fernandez / July 2012
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
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
to Finance Hotel Development in 2012....Alternate financing for new
hotel construction in a brave new world / Jim Butler / June 2012
Accessibility' is the New Frontier for ADA Lawsuits. Your Next DOJ
Investigation or ADA Class Action Could be Just a Mouse Click Away!
/ Jim Butler / June 2012
Compliance and Defense Lawyer: ADA Experts Discuss Hottest Issues
Facing the Hotel Industry Today / Jim Butler / May 2012
Launches; Portal to Knowledge for the Hospitality Industry; JMBM's
Global Hospitality Group® of Hotel Lawyers Provide Comprehensive
Hospitality Resource / May 2012
on California's EB-5 Policy Regarding Designation of Targeted
Employment Areas or TEAs / Jim Butler / May 2012
Joint Ventures for Hotel Development, Acquisition and Financing /
Jim Butler / May 2012
Lawyer: Clarification on the DOJ's Amendment to the Pool Lift Extension
/ Jim Butler / May 2012
Lawyer from Meet the Money® - Lodging Industry Investment Council
(LIIC) Announces its Top 10 Challenges for Hotel Industry in 2012 /
Jim Butler / May 2012
the Money® Conference Talks about Hotel Loans and Equity
Investment, Creating Value with Hotel Value-add and Repositioning,
Hotel Opportunistic Investment, Deal Making and Much More / Jim
Butler / May 2012
Compliance and Defense Lawyer Alert: Charles Schwab settles claim over
website accessibility / Jim Butler / May 2012
ALERT: California's New TEA Approach will Discourage EB-5 Investment in
California / Jim Butler / May 2012
is One of 20 Hottest Law Firms in the U.S. Per the National Law
Journal's Latest List / April 2012
Labor Lawyer: California Supreme Court Finally Gives Employers Some
Good News in Brinker Restaurant Corporation v. Superior Court / Jim
Butler & Travis Gemoets / April 2012
to Negotiate a Hotel Management Agreement. 10 Tips for a Smoother
Process / Jim Butler / March 2012
Defense Lawyer: What does the ADA pool lift compliance extension mean
to you? / Jim Butler / March 2012
Turnabout: Pool lift compliance deadline extended to May 15 / Jim
Butler / March 2012
Things to Remember when Buying Hotel Notes / Jim Butler / March 2012
Defense and Compliance Lawyer: More clarification or confusion on March
15 ADA standards? / Jim Butler / March 2012
ALERT - A Call to Action Before the March 15, 2012 ADA Deadline /
Jim Butler / February 2012
Interviews JMBM's ADA Defense and Compliance Lawyers: Hotels Handle
Pool Lift Regulations / Jim Butler / February 2012
Tips for Hotels; How to spot terrorists and what to do. / Jim
Butler / February 2012
Defense and Compliance Lawyer Advisory: DOJ Clarifies March 15, 2012
Mandatory Pool Lift Requirement! (Uh-oh!) / Jim Butler & Martin
Orlick / February 2012
Can You Pass This 3-Question ADA Pop Quiz? / Jim Butler / January
Lawyer in Los Angeles: ALIS - What's the commotion all about? Closing
the conference hotel to outsiders. / Jim Butler / January 2012
Management Contract Disputes: Importance of 'Fiduciary' Duties in
Owner-Operator Lawsuits / Jim Butler / January 2012
and Disputes Between Hotel Owners and Operators are on the Rise? Why?
/ Jim Butler / January 2012
Defense Lawyer: New ADA Regulations Kick in Soon. Say goodbye to
'grandfathering' under the ADA / Jim Butler / November 2011
Lawyer in Washington D.C. - Why the Lodging Industry Will Continue to
Do Well Despite Bumpy Markets and More / Jim Butler / November 2011
Investment in U.S. Hotels: What the Real Estate Professionals Want to
Know / Jim Butler / October 2011
Lawyer in Dallas Listening to the Special Servicers / Jim Butler /
Lawyer with Optimism for the Hotel Industry from the Dallas Lenders
Conference, Fishing for Solutions 2011 / Jim Butler / October 2011
Service Animal Policies of Your Hotel or Other 'Place of Lodging' /
Jim Butler, Martin Orlick and David Sudeck / October 2011
Industry Alert: Some things to feel (very) good about! / Jim Butler
/ September 2011
Lawyers in Phoenix: It's not just me. The market has changed in just
the last 60 days! / Jim Butler / September 2011
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
Franchise Lawyer: Hotel Franchise Agreements and the 5 Biggest Mistakes
a Hotel Owner Can Make / Jim Butler & Robert Braun / September
Labor and Employment Lawyer Alert: The NLRB is making it harder to stay
union free / Jim Butler & Scott Brink / September 2011
from Hotel Franchise and Management Lawyers: Beware the Trap of
Changing Brand Standards / Jim Butler & Robert Braun /
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
Lending Lawyer: What every hotel lender needs to know about hotel due
diligence / Jim Butler & Guy Maisnik / September 2011
Lending Lawyer: What every hotel lender needs to know about Cash
Controls / Jim Butler & Guy Maisnik / August 2011
Lawyers on Terminating Hotel Operators: M Edition Lawsuit Against
Marriott Has a New Twist Marriott is Replaced Overnight / Jim
Butler / August 2011
Lawyers on Terminating Hotel Operators: Turnberry Resort Drops Fairmont
Flag / Jim Butler / August 2011
Lending Lawyer: What every hotel lender needs to know about SNDA's
/ Jim Butler & Guy Maisnik / August 2011
Lending Lawyer: What every hotel lender needs to know about HMAs and
hotel franchise agreements / Jim Butler & Guy Maisnik / August
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
Lawyer on the Fiduciary, Contractual and Agency Duties of Hotel Brokers
- Host Hotels & Resorts LP v. Molinaro Koger Litigation / Jim
Butler / August 2011
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
Investment: Why Asian investors are targeting U.S. hotels for purchase
and investment, and what could it mean for you? / Jim Butler /
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
to use the EB-5 Immigrant Investor Visa Program for financing / Jim
Butler / July 2011
Announces Formation of the Chinese Investment Group™ - Hotels, Real
Estate, EB-5 Immigrant Investor Visas / July 2011
Lawyer: How do you know when you should set up a captive insurance
company for your hotel? Take our "litmus test". / Jim Butler &
Gordon Schaller / July 2011
Lawyer: What you need to know about the "ancillary benefits" of setting
up a captive insurance company / Jim Butler & Gordon Schaller /
Lawyer: Are you thinking about setting up a captive insurance company?
Maybe you should be. . . / Jim Butler & Gordon Schaller / June
Lawyer in New York with pre-NYU industry forecast: Sunny with
occasional clouds and NO storms on the horizon / Jim Butler / June
Lawyer with the Executive Roundtable Results; Debt is returning, equity
is out looking, and we've passed the bottom of the trough. Why now is
the time to purchase a hotel. / Jim Butler / June 2011
Defense Lawyer: How to Quickly Lose Business. (No ADA-Compliant
Reservation System) / Jim Butler & David Sudeck / May 2011
Lawyer with Fresh Perspectives on the Hotel Industry from Smith Travel
/ Jim Butler / May 2011
Lawyers with PKF and Mark Woodworth's Lodging Overview / Jim Butler
/ May 2011
Lawyers' Updates on Capital and Debt Markets for Hotels, Transaction
Sales Data and Financings / Jim Butler / May 2011
Lawyer with Updates on Hotel Cap Rates, Values and Transactions /
Jim Butler / May 2011
Lawyer with nuggets from JMBM's Meet the Money® 2011 / Jim
Butler / May 2011
Lawyer: The hotel transaction market is heating up! / Jim Butler /
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
the Money®: Hotel Financing Renaissance is Underway! / Jim
Butler / April 2011
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 /
a Hotel? Don't Buy an ADA Lawsuit or DOJ Investigation / Jim Butler
/ March 2011
Lawyer on Hotel Management Agreements: Exculpation Clauses for
Protecting the Owner's Assets / Jim Butler / February 2011
Defense Lawyer: How to handle an ADA lawsuit....and How not to do it
/ Jim Butler / February 2011
Lawyer: 5 Key Elements for Good Hotel Management Agreement Budget
Provisions / Jim Butler / February 2011
improving fundamentals make 2011 the year of "Great Expectations" for
the Hotel Industry / Jim Butler / February 2011
the Hotel Lawyer: 2011 is starting as the year of "Great Expectations"
for the hotel industry! / Jim Butler / January 2011
ADA Defense Lawyer: How a recent ADA case affects all hotels but
particularly conference centers and meeting hotels / Jim Butler /
Lawyer: So, You Think You Want to Buy a Hotel? For savvy investors, the
time could be right / Jim Butler / January 2011
Universal Hotel Sale Facilitated by JMBM's Global Hospitality Group®
/ Jim Butler / January 2011