By Jim Butler and the Global Hospitality Group®
09 December 2014
Click here for the latest articles on EB-5 Financing.
JMBM is sourcing low-cost mezzanine capital for new construction through EB-5 financing for its top developer-clients.
To qualify for this program, the borrower must be an experienced developer with a superb track record, a superior reputation and a great project. If you don’t meet those threshold requirements, then don’t read any further, because this program does not apply to you.
If you are still reading, the question is: “Can you benefit from mezzanine financing with an all-in cost to you of approximately 6 – 7% per annum?”
If so, you may want to look into JMBM’s “preferred” EB-5 financing program which is summarized below.
Highlights of JMBM’s Preferred EB-5 Financing Program for new construction & development
Financing type: Mezzanine debt or preferred equity
Cost: 6 – 7% per annum, all-in cost to the developer
Loan size: $20 million – $200+ million
Term: 5 – 6 years
Portion of the capital stack: 30 – 40% of the total project cost (excluding land)
Exactly what can JMBM do to help me with EB-5 financing for my development project?
Client confidentiality precludes us from listing clients and projects we have assisted with this program, but suffice it to say that some of the best known names in the business are tapping into this funding source to fill out their capital stack at a favorable cost. And we have helped some of the biggest and highest profile players.
In 2014, we represented clients in identifying, obtaining and closing more than $200 million of EB-5 funding, and as of December 2014, we have commitments for more than $300 million in the pipeline for 2015.
We specialize in representing developers and projects that we believe can qualify for “preferred” status. This concept is discussed in great detail in this article: “Hotel development financing: How to win the race for EB-5 capital.”
For developers and projects that qualify for “preferred” status, we provide business and legal advice to guide the developer through the entire capital raising process. This includes validating that the developer can qualify for the favorable financing and actually sourcing the capital. Here is a more complete list of how we can usually assist:
- Source EB-5 financing
- Evaluate EB-5 threshold feasibility
- Optimize developer profile and project structure
- Assemble the right “EB-5 team” with best players
- Help size and structure the capital stack
- Negotiate optimal deal terms with current input on what is “market”
- Negotiate and finalize funding documents with the capital source
- Validate EB-5 funding strategy
- Oversee issues in the capital raising process
- Close the financing
As the developer’s Counselor, we negotiate a fairly complex loan or preferred equity transaction in a regulatory environment that requires compliance with USCIS, SEC, & FINRA. This process also necessitates identifying, selecting, negotiating and coordinating with an immigration law firm, an economist, various hotel consultants and one or more regional centers to get your loan properly sized and documented.
From TEA designation through loan closing
As part of the financing process, for each EB 5 financing project we work with each client and appropriate members of the EB-5 team to do the following:
- Obtain a TEA map and letter of authorization from an economist
- Manage “new job count” issues for direct, indirect, and induced jobs to ensure compliance with EB-5 requirements of the USCIS to support the size of your EB-5 financing
- Assist in developing the proper business plan for your project
- Verify calculations from the economist and regional center and strategize best way to maximize loan size and terms for the developer
- Drive loan size to maximize the financing opportunity for the developer and optimize the capital stack
- Negotiate loan commitment and loan documents that reflect proper collateral, have appropriate escrow release provisions and security so terms will be acceptable to both the developer and to traditional construction lenders who may be in a senior lien position
- Negotiate and finalize inter-creditor agreements, escrow agreements, completion guarantees, various security agreements (depending upon collateral provided by the developer), and other related financing documents
If you are an experienced developer with a great track record and project, we may be able to help you qualify for “preferred” status. If you would like to explore this EB-5 financing opportunity now, please contact Jonathan Bloch or Jim Butler at the contact points listed below.
Other articles on EB-5 Financing
To access other articles on EB-5 financing, go to www.HotelLawyer.com, scroll down the right-hand side under LEARN MORE ABOUT and click on “EB-5 Financing.” For your convenience, here are a few popular EB-5 articles that may be of interest:
FAQs about EB-5 project financing for new hotel development
Hotel development & EB-5 financing: Why you don’t want to form your own regional center
Hotel development financing: How to win the race for EB-5 capital
Executive Summary of the EB-5 Immigrant Investor Program
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $68 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who’s your hotel lawyer?
