The developer behind a plan to bring the first Waldorf Astoria hotel to the West Coast is trying to leverage the strength of the storied brand in order to raise financing from Chinese nationals.
Hotelier Beny Alagem is looking to raise $150 million in financing for the project through the EB-5 program, a visa program that allows foreign investors to obtain green cards by investing at least $1 million, or $500, 000 in high unemployment or rural areas, in businesses that will create U.S. jobs, The Real Deal has exclusively learned.
The program is used predominantly by wealthy Chinese nationals seeking permanent U.S. residency for themselves and their families. The $150 million, which is being raised through the California Real Estate Regional Center, would be structured as mezzanine financing, said Marie Garvey, a spokesperson for Alagem.
The developer hopes to have raised the money by this fall. “There are various advantages to using the program, ” Garvey said. The main reason is access to cheaper capital, sources said. A typical mezzanine loan can come with an interest rate in excess of 10 percent, while EB-5 capital can cost just half that. Investors use the program to get a green card rather than to make significant returns on their investments.
Read the full story at The Real Deal, by Katherine Clarke