19 Jun Hotel Construction Sees Rise in EB-5 Investments
As the US economy turns a new leaf in the financial world, business is beginning to bud and new construction is returning to American soil. After the economic bust four years ago, hotel development is happening again, and the pace is picking up. However, because loan to cost ratios remain at 50%; equity providers demand extremely high returns and most cities and states have halted providing public funding, projects tend to stall as developers search for feasible funding sources. Many builders and contractors are learning about the possibilities and benefits of combining funding, including EB-5 investments sourced from Regional Centers.
In most cases, the project developer is responsible for putting financing together in advance, before construction begins. This means obtaining financing commitments from each financing source, ensuring financing conditions are met and that proving there is enough financing to complete the project. Regional Centers, which are organizations that seek out and provide opportunities for foreign investors and their families to obtain permanent US residency through the EB-5 Visa program, are beneficial to both finance seeker and financier. Through partnering with Regional Centers, developers are able to obtain foreign investments as well as connections to community outreach and improvement campaigns, due to the nature of the EB-5 loan requirements.
Because EB-5 investments require a minimum of $500,0000 (or $1M) and the creation of 10 jobs for US Visa approval, projects completed with EB-5 investments tend to display longevity and profit. Projects require a secure and realistic business plan; proof of financial stability; a conservative job creation analysis; on-time construction and knowledgeable and experienced attorneys in construction, development and immigration.
Over the past two decades, the EB-5 immigrant investor program has raised billions of dollars in financing for job-creating U.S. businesses, and is poised to surpass all annual records for financing in 2012. As of March 20, 2012, there were already 2,405 EB-5 visas issued. With a limit of 10,000 annual EB-5 visas issued, the program is targeted to reach its quota before the end of the year.
Developers interested in obtaining EB-5 funding must prove their projects meet requirements for investors. They must first decide how many jobs the project will create. For every 10 new or saved employees, one EB-5 investor is qualified. Furthermore, investors are given a minimum quote of $500,000 in investment for a project located in a “targeted employment area,” or low-employment zone. Dependent upon the amount of jobs to be created by each project, EB-5 financing will cover between 20%-70% of the project.
Regional Centers are excellent resources for generating investments for hotel developers as the economy continues to develop. With access to investors, city and state officials and other securities, the organizations are able to spearhead projects that may otherwise sit on the sidelines.
*This story is brought to you by Florida Regional Center.
Florida Regional Center was established as an agent of the 1990 Congress-approved EB-5 Regional Center Program. Based in Palm Beach Gardens and representing development projects in the South Florida area, Florida Regional center works with foreign investors to obtain EB-5 Visas and permenant residency in exchange for community-developing and job-creating investments. Other projects Florida Regional Center is using EB-5 Visa funding for include the Water Pointe Project, ESI Jupiter Technology Park Project and the Tequesta Village Center project.
For more information on EB-5 Visas and the EB-5 Visa Program, to learn about Florida Regional Center or to speak with a representative from Florida Regional Center, visit visaeb-5.com.