COMPREHENSIVE BUSINESS PLAN
Pursuant to 8 CFR §204.6(j)(4)(B) and Matter of Ho
Marysville Hilton Home2 Suites Plaza
EB-5 Investment Company:
Washington Hotel and Restaurant Investment Fund, LLC
Pursuant to 8 CFR §204.6(4)(B) and Matt
Sponsored by:
Greater Seattle Regional Center*
A USCIS Designated Regional Center
1530 140th Ave NE Suite 111
Bellevue, WA 98005
(425) 231-2211
GSRC@gmail.com
*Greater Seattle Regional Center is a wholly-owned operation of EB-5 Blaine Tomorrow Regional Center, LLC
(“EBTRC”). EBTRC is an USCIS-designated EB-5 Regional Center
Table of Contents
SECTION
TITLE
PAGE
1.
Executive Summary
2
2.
Organizational and Investment Structure
8
3.
Hilton Home2 Suites Description
14
4.
Hilton Home2 Suites Construction Costs
18
5.
Estimated Hilton Home2 Suites Performance
20
6.
Hilton Home2 Suites Job Creation Estimates
23
7.
Hotel Market
26
8.
Full Service Restaurant: Four Seasons Asian Cuisine
31
9.
Marysville, WA
48
10.
Development Timeline
56
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
1
1
Executive Summary
Subject of the
Business Plan
Washington Hotel and Restaurant Investment Fund, LLC (“WHRI”) is a
Washington Limited Liability Company and New Commercial Enterprise
(“NCE”) formed for the purpose of funding the development of multiple
hospitality projects. WHRI intends to use EB-5 funding in conjunction with
developers’ funds to capitalize the development of a three-star hotel and a
retail plaza with a full-service restasurant, WHRI’s funds will be invested in an
EB-5 project located in Marysville, in the County of Snohomish, in the state of
Washington.
Target Industry
Cluster
This business plan will focus on the development and operation of multiple
hospitality-related enterprises. These enterprises and the industries in which
they operate are defined by the North American Industry Classification System
(“NAICS”).
The identifying codes for these enterprises include the following:
NAICS 7211
– Hotel;
NAICS 7225/7222 – Limited Service Restaurant;
NAICS 7225/7221 – Full Service Restaurant.
NAICS 44-45
– Retail Trade
Additional non-enterprise NAICS codes include the following:
NAICS 2362 – Non-Residential Construction;
NAICS 5413 – Architecture and Engineering Services;
NAICS 4232 – Furniture and Home Furnishing Merchant Wholesalers.
Development
Strategy
This business plan proposes a three-star hotel development with restaurant
and retail plaza at 4070 116th St. NE, Marysville, WA, 98271. Working
closely with Hotel Valuation Services (“HVS”), an industry leader in
hospitality management and consulting, the owners and developers of the
proposed Marysville hotel have designed a comprehensive approach to hotel
development. Future modifications to the size of the proposed hotel may
result in a change of the total room count to accommodate a range between
90 and 104 rooms.
Hilton Hotels & Resorts have approved a franchise application for use of their
Home2 Suites extended-stay hotel product at Marysville. The data-set and
economic assumptions used to demonstrate projected revenue and occupancy
for the proposed Marysville hotel are based on the most conservative hotel
product in the market with regard to expected revenue and occupancy: a
franchise-operated extended-stay model. Relative to traditional limitedservice hotel products in the three-star category that typically display a higher
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
2
turnover in guests, this business plan uses the extended-stay hotel with its
more sedentary guest profile as the starting point from which to base all hotel
performance evaluations. By taking this approach, the expected performance
of the hotel carries with it the potential for increased revenue and occupancy.
This point is further supported by the expected increases in occupancy which
derive from the national reservation system used by Hilton. EB-5 investors are
assured that the estimations of the hotel’s performance and capacity to create
EB-5 qualifying jobs are based on sound and reliable evidence.
Project Goals and
Location
This business plan will explain the following in support of WHRI’s intention
to fund the development of hotels and related food services in Snohomish
County, Washington State:
Construction costs and detailed building specifications
Labor market capacity for WHRI’s investment region
Regional economic indicators signaling the need for new hotels and
related food services in Snohomish County, WA
Beneficial impact on current and future economic trends resulting from
job creation and stable operation of hotels and related food services.
The Marysville development envisions construction and operation of a 104unit hotel, with various features and a full-service restaurant and retail plaza.
The combined project will be named the Marysville Hilton Home2 Suites
Plaza (“Project”). Upon successful financing, WHRI will finance the
development company, Washington Hotel and Restaurant Development, LLC
(“WHRD”). WHRD has entered into a franchise agreement with a Hilton for
the express purpose of operating a Hilton brand hotel.
After carefully considering the state of the hospitality industry market in
Western Washington, and conferring with professional experts from HVS
Global Hospitality Services, WHRI has chosen Snohomish County as the
location for its project. The hotel will be located in the city of Marysville, a
prosperous community north of Everett and adjacent Boeing’s main
manufacturing site, Paine Field. The proposed hotel model is an extended-stay
hotel, which is well situated to receive out of town business travelers to the
Boeing site in addition to patrons of the nearby Tulalip Casino and Seattle
Premium Outlets. Bookings are likely to be made by families and individuals
traveling Interstate 5 between Canada and the American west coast, as well as
service members and government contractors visiting the nearby Everett
Naval Station.
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
3
WHRD aims to complete construction of the hotel and restaurant plaza within
15 months. Preliminary planning, licensing and permitting for all projects are
currently underway. WHRD has estimated that the hotel and related services
described in this business plan will become operational no later than 30 days
from the conclusion of construction.
As required by USCIS (pursuant to 8 CFR §204.6(j)(4)(B) and the precedent
administrative decision of Matter of Ho] this business plan constitutes a
“comprehensive business plan” that details how the businesses will result in the
creation of jobs consistent with the economic methodology approved by
USCIS.
The Company and
New Commercial
Enterprise
WHRI is a Washington Limited Liability Company organized on November
14, 2013. The Company shall be deemed a New Commercial Enterprise for
EB-5 program purposes and shall be capitalized with EB-5 investment funding,
as well as additional non-EB-5 funding where required. This pool of capital
funds shall in turn be directed toward job-creating activities under the Job
Creating Enterprise (“JCE”), WHRD.
The Job Creating
Enterprise
WHRD is the Job Creating Enterprise (JCE) per EB-5 rules and regulations.
WHRD shall be the owner and operator of the Marysville Hilton Home2
Suites Plaza.
Regional Center
Affiliation and NCE
Management
Greater Seattle Regional Center (“GSRC”) is the USCIS-designated regional
center that will act as the sponsor of WHRI’s EB-5 Investment project. The
manager of WHRI is Washington Regional Center Management, LLC
(“WRCM”). GSRC and WRCM will combine their professional expertise to
ensure that all EB-5 compliance matters with respect to the offering are met
with all the rights and responsibilities accorded under the laws of Washington
State. WRCM is the Managing Member and shall hold a 1% ownership
interest in WHRI when the offering is completed.
Use of EB-5
Investment
Proceeds
Equity investment in WHRI will be used to make a loan to WHRD for the
purpose of financing the construction and operations of the job-creating hotel
and related restaurant and retail plaza. WHRD shall be the named owner of
the hotel, restaurant and retail plaza.
EB-5 Administrative
Costs
Pacific Northwest Consulting Group (“PNCG”) is a facilitator of EB-5 related
services. For each $500,000 EB-5 investment, there will be a $50,000 fee paid
to PNCG for EB-5 for expenses including, without limitation, the initial
professional, administrative and marketing expenses associated with formation
of the Company and the offering of the Units.
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
4
Loan Repayment
WHRI will finance the development of the Project by providing a loan to the
developer, WHRD. The loan shall reflect the number of EB-5 investors who
commit an at-risk investment of $500,000. The project developer anticipates
a preferred offering amount of 15 such investors for the entire Project,
amounting to $7,500,000 in EB-5 capital. A maximum offering amount may
include 24 total membership units. Any shortfall in capital shall be substituted
with non-EB-5 private equity.
The loan terms as set forth between WHRI (the EB-5 funded lender) and
WHRD (the borrower and project developer) shall include the following:
A preferred loan amount of $7,500,000
A maximum loan amount of $12,000,000
An interest rate of 0.5% per annum on a non-compounded basis.
Repayment terms: may be payable from available cash from operations
and/or the sale or refinancing of the hotel, but not later than five (5)
years from the close of the offering, subject to a one (1) year
extension (the maturity date) and not earlier than the end of the
conditional residence period of all members.
The loan will be secured by a deed of trust.
Return on
Investment
Investors may receive a preferred rate of return on their investment, payable
only from the profits of WHRI. Distributions from net cash flow of WHRI
may be payable from operations and/or the sale of the underlying hospitalityrelated projects, but not later than five (5) years from the close of the
offering, subject to a single 1 (one) year extension and not earlier than the end
of the conditional residence period of all members. Interest on the loan will be
calculated on a non-compounded basis.
Development Costs
Total development costs for the hotel and restaurant are approximately $14.2
million, including land. Comprehensive costs (including allocated land costs)
for the hotel and restaurant are approximately $11.8 million and $2.4 million,
respectively.
WHRI will raise a preferred $7.5 million of capital from EB-5 investors.
However WHRI may raise a maximum of $12 million. The preferred amount
will be combined with developers’ and non-EB-5 equity of approximately
$6.7 million including allocated land costs, or $4.9 million excluding allocated
land costs.
All funds EB-5 funds allocated for the development of the project will be
committed and immediately available at the time of I-526 submission.
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
5
The Developers &
Non-EB-5 and
Developers’ Equity
Rongfang Chan, Un Kuan Chan, Golden Echelon Investment, LLC, and
Texsun (USA) Investment, Inc. are the principal owners of the development
entity WHRD, and they will contribute financially to developer’s equity.
Their affiliated and family-owned company, Zhongzhen (USA) Investment
Ltd., will contribute the land with entitlements. They will also be responsible
for the costs associated with obtaining the entitlements to the land on which
the Project will be built. Mr. and Mrs. Chan may also accept participation in
the project from other qualified non-EB-5 investors. All non-EB-5 developer’s
equity will be committed and immediately available at the time of I-526
submission.
Capitalization
The total capitalization requirements for the hotel will be met through a
combination of EB-5 loan financing, non-EB-5 financing and developer equity.
The developer may seek other sources of financing to include, without
limitation, bridging construction loans or additional private equity
investments. The managing member of WHRI, Flora Chan, shall have the
authority to sign on WHRI’s behalf any documents necessary to effect either
the refinancing or subordination of EB-5 loans per the following nonexhaustive list of events: in the event of a shortfall in funding or difficulty
raising EB-5 capital from the number of investors stated herein; if there are
cost overruns and additional funds are required to complete the project; if the
market or financing requires Developer to expand the nature and size of the
project using Non EB-5 capital. In any and all of these events, the developer
may (1) borrow up to a maximum of $6.8 million as a bridge loan and thereby
grant the lender security interests senior to those of the members of the
Company in order to complete the project, or (2) secure private equity
funding to cover any shortfall. All such funding shall be committed and
immediately available at the I-526 stage.
Project
Development
Schedule
WHRD intends to start construction on the Marysville Hilton Home2 Suites
Plaza in November 2014. Completion is scheduled for February 2016. The
hotel will open for business by March, 2016.
Job Creation
Projections
According to the Estimate of Economic Impacts: Hilton Hotel & Neighboring
Restaurant Plaza provided by David G. Schneider, the hotel will create
approximately 150.8 permanent jobs.
TEA Designation
According to current Washington labor statistics, the census tract in which the
facility is located will qualify as a Targeted Employment Area (“TEA”).
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
6
Total Development
Capitalization
The table below identifies the source and allocation of both the EB-5 investor
funds as well as Developer and Non-EB-5 equity used to develop the
Marysville Hilton Home2 Suites Plaza. At a preferred $7.5 million of EB-5
funds, this EB-5 project expects to subscribe a preferred 15 investors at
$500,000 each to create up to 150.8 EB-5 qualifying jobs.
1-1 Total Development Capitalization
Source of Funds by %
EB-5 Loan
Financing from
WHRI
$7,500,000
Developer and Non
EB-5 Equity
$4,895,325
Developer’s
Allocated Land
Value + Fee (paid)
13%
EB-5 (WHRI)
34%
53%
$1,795,000
Non EB-5
Land & Fee
Total Capitalization $14,190,325
A Hilton Home2 Suites Hotel
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
7
EB-5 Investment Structure: Marysville Hilton Home2 Suites Plaza
Greater Seattle Regional Center
(EB-5 Project Sponsor)
GSRC
EB-5 Investors
Members of WHRI
EB-5 Project Sponsor
Washington Regional Center Management, LLC
(Managing Member of WHRI)
WRCM
$7.5 Million
In At-Risk
Equity: 15 Units
Washington Hotel and Restaurant Investment Fund, LLC
Managing Member’s Ownership: 1%: EB-5 Investor Ownership 99%
WHRI, The Company and NCE
$7.5 Million Loan Finance
Developer Equity / Non EB-5
Equity / Bridge Loan
Loan repayment
with 0.5%
interest payable
from net cash
flow of hotel and
restaurant
operations
$4.9 million private equity
investment and $1.79 million in land
equity
Washington Hotel and Restaurant Development, LLC
(The Hotel, Restaurant and Retail Plaza Owner)
WHRD, The Owner/Developer and JCE
$12.4 Million Capitalization
(Excluding Combined Allocated Land Costs and Franchise Fee of
$1,795,000)
Marysville Hilton Home2 Suites Plaza
The EB-5 Investment Project
Washington Hotel and Restaurant Investment Fund, LLC –Marysville Hilton Home2
Suites Plaza – (rev. 3/14/2014)
10