Kindred Resort at Keystone is a luxury ski-in/ski-out condominium and hotel development located in Keystone, Colorado.
This article demonstrates why Kindred Resort at Keystone is one of the most compelling rural EB-5 projects available today.
- Comparing Risks in Different Types of Rural EB-5 Projects
- Benefits of Selecting a Rural EB-5 Project Apply for EB-5 Visa
- Strong Financials
- Proven Hotel and Condominium Market
- Most EB-5 Jobs Already Created
- Remarkable Financial Security
- Experienced Development Team
- Experienced Hotel Manager
- An Experienced, Independent Regional Center
Overview of the Kindred Resort at Keystone EB-5 Project
Secured EB-5 Loan Structure. The Kindred Resort at Keystone offering is structured as a secured loan. Initially, the EB-5 loan is secured by a 100% equity pledge in the project company. Once the senior construction loan is repaid and the hotel component of the project is complete, the EB-5 loan will record a senior mortgage on the property. EB-5 loans with security like this are extremely rare and virtually non-existent for rural EB-5 projects.
Individual EB-5 Investor Loan Tranches. The EB-5 loan is composed of individual $800,000 tranches for each foreign investor. Each EB-5 investor’s $800,000 loan tranche will become due five years after being released from escrow and advanced to the project.
Rural TEA Designation. The project is in a rural targeted employment area (TEA). Investing in a rural TEA project qualifies EB-5 investors for a reduced minimum investment of $800,000. Investors in rural TEA projects also qualify for priority processing of Form I-526E and access to EB-5 visas reserved for rural investments. These set-aside rural EB-5 visas make up 20% of the total EB-5 visa supply.
Significant Number of Jobs Already Created. Construction is well underway. Out of the 1,000 jobs required for Kindred Resort at Keystone’s EB-5 investors, more than 740 positions have already been created as of September 2023. This is enough jobs to fully satisfy the EB-5 program immigration requirements for a permanent green card for the first 74 EB-5 investors in the project.
I-526E Approval Refund Guaranty. If an EB-5 investor’s Form I-526E petition is denied by USCIS, the project provides for faster repayment of that investor’s $800,000 investment.
Independent EB-5 Oversight. EB5AN controls both the project’s regional center sponsor and the general partner of its EB-5 investment fund. EB5AN is unaffiliated with and 100% independent from the developer. Independent third-party oversight of the EB-5 project prevents a conflict of interest between the developer and the EB-5 investment parties. This structure reduces risk for EB-5 investors.
Excellent Developer Track Record. The Kindred Resort at Keystone project is being developed by experienced industry professionals. Together, the developer group has done more than $4 billion in development. Past work includes residential, hospitality, and luxury resort projects.
Proven Market Demand for Condominiums. Condominiums are presold with nonrefundable deposits. The project has already sold 67% of its condominium units. Presales show clear market demand and reduce financial risk as revenues from sold units help offset development costs. Kindred Resort at Keystone stands out among competitors for its proximity to Denver and its prime location just 55 feet from the main Keystone ski gondola.
With these features, Kindred Resort at Keystone stands out in the market today. This is a best-in-class rural EB-5 project. These top features are examined in greater detail below.
Understanding EB-5 Investment Financial Risk
To qualify for Green Cards, EB-5 investor funds must be considered “at risk” by USCIS. This means that EB-5 investor’s entire $800,000 investment must be at risk of loss. No EB-5 project can be entirely risk free and remain compliant with the EB-5 program.
The risk of potential loss, however, does not have to be high. Many EB-5 projects are far more financially risky than required. Many EB-5 investors are unaware of the level of financial risk before investing. Unfortunately, high-risk projects sometimes result in EB-5 investors losing their money and failing to qualify for a permanent Green Card.
Although EB-5 projects should be transparent, EB-5 investors need to carefully examine projects before investing. Few projects offer EB-5 investors any real financial protections. But some do.
Following are several EB-5 project characteristics that help reduce financial risk:
Financial Transparency. A project should give prospective investors access to documents that prove its financial claims. For example, if a project claims to have a senior construction loan, EB-5 investors should be given access to a copy of the loan agreement prior to investing. Financial statements and sales data for the project development company should also be available for review. When an EB-5 project is not willing to share these vital documents, they may be hiding key information from investors. EB-5 investors should be suspicious of any project that is not transparent.
Loan Security. Typically, EB-5 loans are not secured by any kind of collateral. Projects may have equity pledges, which are better than nothing. But a lower-risk EB-5 loan will be secured by sufficient collateral to cover the loan’s entire balance through a mortgage or repayment guaranty.
I-526E Approval Refund Guaranty. If USCIS denies an EB-5 investor’s Form I-526E petition, that investor will no longer be able to pursue a Green Card through the EB-5 program. Despite this, his or her $800,000 investment may have to remain in the EB-5 project. To account for this possibility, the best EB-5 projects offer EB-5 investors a refund guaranty that accelerates the return of funds for denied investors.
Individualized Loan Term. Most EB-5 loans have one term and maturity date for all investors. A loan’s term may not begin for a year or more depending on its start conditions. While uncommon, the best EB-5 loans have individual terms for each EB-5 investor that starts when his or her investment moves out of escrow.
EB-5 investors should always evaluate the financial risks of a project before investing. By understanding project risks and asking good questions, EB-5 investors can make informed decisions that limit their exposure to risk.
Understanding Rural TEA Designation
To qualify as a TEA, an area must be rural or have a high unemployment rate. Certain public infrastructure projects also qualify for TEA benefits.
To qualify as a rural TEA, an area cannot border or be within a city that has a population of more than 20,000 people. Also, an area within a metropolitan statistical area (MSA) does not qualify as a rural TEA. Applications for rural TEA status must show that an area qualifies based on evidence from the most recent 10-year U.S. census data.
EB-5 projects in rural TEAs qualify EB-5 investors for significant benefits. First, the minimum EB-5 investment for TEA projects is $800,000 instead of $1,050,000. Second, foreign nationals who invest in rural TEA projects qualify for set-aside EB-5 visas, which may let the investors complete the EB-5 process more quickly. Finally, rural TEA investments qualify EB-5 investors for faster Form I-526E processing. Form I-526E is the immigrant petition that starts the EB-5 immigration process.
Along with these major benefits, rural EB-5 projects can carry risks that are different from urban projects. To make informed decisions, EB-5 investors need to evaluate projects to understand its specific risks.
Comparing Risks in Different Types of Rural EB-5 Projects
All EB-5 investments expose investors to risk. But some project types are generally riskier than others. Before investing in an EB-5 project, a foreign national needs to understand the specific risks of that project. When comparing rural and urban projects, those in rural locations can carry more risk, but not always. Some kinds of projects are not as well suited to rural areas. And some kinds of projects are perfectly suited to rural areas.
Following is a brief analysis of how a rural setting might impact the risk profiles of three common types of EB-5 projects. These include hospitality, manufacturing, and condominium developments.
1. Risks in Rural EB-5 Hospitality Projects
Hospitality businesses like hotels depend on travel, tourism, and spending. As a result, these types of businesses can be sensitive to changes in the economy. When the economy slows down, many people choose not to travel; those who do may look for cheaper options.
With lower local populations and a reliance on travelers, rural hospitality projects may not experience enough market absorption to become profitable. In some cases, market data may be unavailable or limited for rural areas. Without sufficient data, developers can only guess what impact a new hospitality business will have on the local economy. If a developer cannot accurately predict how well a hospitality project will do, the financial risk to EB-5 investors is high.
But not all rural hospitality projects are high risk. When a developer has plenty of data to rely on and the project is in a proven market niche, investment in the project may actually be lower risk. The key for EB-5 investors is to look carefully at a rural hospitality project. EB-5 investors should only consider projects that can show real, proven demand in the area, that are being built by reliable developers, and that will be operated by experienced management companies already operating successful hospitality projects nearby like Vail’s RockResorts.
2. Risks in Rural EB-5 Manufacturing Projects
Rural manufacturing has been declining. According to the U.S. Department of Agriculture, from 2001 to 2015, total U.S. employment experienced a nearly 7% growth rate. During that same time, manufacturing job growth fell by 21%. In other words, rural manufacturing job growth went down while overall U.S. manufacturing job growth grew.
Rural manufacturing plants generally need to run at full capacity to be profitable. As a result, most plants cannot scale back production and succeed. Like hotels, during slow economies, such plants may be forced to close or operate at a loss. Rural plants are highly sensitive to economic downturns. For EB-5 investors, investments in rural manufacturing plants tend to be higher risk.
Also like hotels, manufacturing plants require far more time and spending upfront than other project types. Manufacturing plants require substantial spending years before they begin to see revenues. Over this long development timeline, cost may increase. Any growth in the budget may result in insufficient funds to complete the project. Raising more funds could take time or be impossible. Any delays may negatively impact EB-5 job creation.
As a result of these factors, EB-5 investments in manufacturing projects entail a greater risk that EB-5 funds will not be repaid.
3. Risks in Rural EB-5 Condominium Projects
Rural condominium development projects can also be vulnerable to economic downturns. Slow condominium sales may directly impact construction activities. Delays in construction could affect EB-5 job creation.
Like hospitality projects, condominium development projects are high risk if reliant on assumptions. If sales projections are based on actual local market data, however, condominium projects can be low risk.
Unlike hospitality and manufacturing projects, however, condominiums are often presold with deposits. Buyer deposits can help offset costs during construction. Financial risk is reduced since short-term investments are directly tied to revenue cash flows.
For these reasons, condominium development projects may carry lower financial and immigration risks for EB-5 investors.
Kindred Resort at Keystone is a luxury condominium and hotel development project.
Although many rural hospitality projects are higher risk, Kindred Resort at Keystone is different. It is the first ski-in/ski-out hotel at Keystone Ski Resort, one of the most popular mountain resort destinations in the United States. Demand for hotel accommodations at this resort are consistently high, and Kindred Resort at Keystone is expected to command strong market share.
Similarly, the condominium component of Kindred Resort at Keystone is distinct from most other rural TEA projects. Demand for these condominiums is high, and 64 of the 94 units have already presold with 20% nonrefundable deposits.
Benefits of Selecting a Rural EB-5 Project
Although some rural EB-5 projects are more risky for EB-5 investors compared to similar urban projects, others are lower risk. For many EB-5 investors, even if a rural EB-5 project is more risky, the benefits of investing in rural projects are worthwhile.
The lower $800,000 amount for investments in TEA projects helps offset financial risks.
EB-5 investors who invest in rural TEA projects also gain access to reserved EB-5 visas. These special EB-5 visas are set aside and not subject to any backlogs, which makes them especially helpful for investors from countries where demand for EB-5 visas is greater than the supply (known as visa retrogression). Reserved EB-5 visas allow investors to avoid the long waits associated with visa retrogression. Foreign nationals with reserved EB-5 visas can often immigrate to the United States years earlier than those without reserved visas.
Under the EB-5 Reform and Integrity Act of 2022, 32% of all EB-5 visas are set aside. Of these, 20% are set aside for rural TEA investors. At 20%, the rural category is the largest of the reserved visa categories. Visas reserved for investments in high-unemployment TEAs and those for infrastructure investments represent just 10% and 2% of all EB-5 visas, respectively.
EB-5 investors who invest in rural TEA projects also benefit from Form I-526E priority processing. Priority processing means USCIS must process rural TEA investor applications ahead of others.
Evaluating Rural EB-5 Projects
Some basic research can help EB-5 investors avoid risky projects.
EB-5 investors should thoroughly vet project developers. Investors should confirm that the team developing the project has experience with similar projects and a record of success. One effective way to get a sense for the strength of a developer is to check whether the project is funded by a major institutional lender. If a bank or major mortgage lender has provided financing to the project, the project is safer because lenders conduct their own careful due diligence.
Investors also need to look at how much third-party equity the developer and other institutional investors have invested in the project. If there is little equity invested in a project, this means more risk for all the other sources of financing, including EB-5.
EB-5 investors should also find out whether the developer intends to use EB-5 funds to replace or recapitalize its own equity. If a developer plans to repay its equity, its risk is reduced while EB-5 investor risk is increased. Such projects should be avoided.
Another key factor to consider is the type of a project and its location. As discussed above, different project types carry different risks in rural locations. For example, a hotel project in a low-traffic, low-tourism town is higher risk, but the same kind of project in a rural tourism hotspot may be very low risk. EB-5 investors need to research potential projects to learn whether they are viable under current market conditions.
Also, the regional center that is sponsoring the EB-5 project should have a strong reputation. It should be led by experienced, knowledgeable industry professionals. The regional center should be 100% independent from the developer. A skilled and trustworthy regional center sponsor is more important now than ever. The EB-5 program is in a state of continued transition with the recent passage of the EB-5 Reform and Integrity Act of 2022. This bill changed compliance and reporting requirements and altered how rural TEAs work. Beyond this, USCIS has not issued guidance on how it will interpret most of the changes in the reform bill. Inexperienced EB-5 regional centers with no real record of success pose significant risks to EB-5 investors.
Kindred Resort at Keystone Is a Best-in-Class Rural EB-5 Project
Kindred Resort at Keystone is a unique rural EB-5 project with features that reduce its EB-5 investors’ financial and immigration risks. The project is being developed by a highly qualified team with extensive local and global experience. It also offers investors remarkable financial safety. A proven luxury ski resort market, an independent regional center, and more than enough jobs to meet the EB-5 job creation requirement for all investors make Kindred Resort at Keystone one of the most compelling rural EB-5 projects on the market.
Developer equity is a key part of Kindred Resort at Keystone’s total funding. The project has received a mortgage from Romspen, a major institutional mortgage lender. Additionally, major investment firm Enhanced Capital has invested in Kindred Resort at Keystone.
A key component of the project’s financing is presale deposits on condominium units. As of September 2023, 67% of the project’s condominium units have presold with buyer deposits of 20% of the sales cost. Current condominium presales represent more than $110 million dollars in value.
While EB-5 funding is important to the project, Kindred Resort at Keystone is not dependent on EB-5 investment. No minimum amount of EB-5 funding needs to be raised. This lowers EB-5 investor risk.
Proven Hotel and Condominium Market
Kindred Resort at Keystone is strategically located just 55 feet from the ski resort’s main gondola. The project’s hotel component will be the first ski-in/ski-out hotel at Keystone. The Keystone Ski Resort is the fourth-most visited mountain resort in the United States, with consistent, high demand for accommodations. The resort is operated by Vail Resorts (NYSE: MTN), which has the 5th largest market share within the hotels and tourism market behind only Marriott, Hilton, Hyatt, and IHG.
As mentioned above, condominiums for the project are mostly presold, with only 31 units remaining out of 94. Condominium sales are being handled exclusively by Sotheby’s International Realty, which operates 36 sales offices in Colorado alone. Since presales began, sales prices have steadily grown.
Most EB-5 Jobs Already Created
To meet the requirements of the EB-5 program, each EB-5 investor must show that his or her investment created at least 10 new, full-time jobs for U.S. workers. Regional center projects can count both direct jobs and indirect jobs that result from both construction expenses and revenues.
As of September 2023, Kindred Resort at Keystone has already created more than 740 jobs. The project needs to create only 1,000 jobs to support the maximum number of EB-5 investors. Ultimately, the Kindred Resort at Keystone project is expected to create a total of 2,334 qualifying jobs for EB-5 investors, which would be about 23 jobs per investor. As a result, investors in Kindred Resort at Keystone will enjoy an ample job creation cushion. This means a higher chance of a successful immigration process.
Remarkable Financial Security
As discussed above, most EB-5 loans are entirely unsecured. Kindred Resort at Keystone is different.
EB-5 funds will be invested in Kindred Resort at Keystone as a secured loan. The EB-5 loan will initially be secured with a 100% equity pledge. Once the senior construction loan is repaid and the hotel component of the project is built, the EB-5 loan will record a senior mortgage on the property. This senior mortgage will help ensure the prompt and complete repayment of the EB-5 loan.
The project also features an I-526E approval refund guaranty. As described above, this kind of guaranty provides for accelerated repayment in the event an EB-5 investor’s Form I-526E is denied by USCIS. For a denied investor, instead of being stuck in the project, he or she will promptly be repaid.
Experienced Development Team
The Kindred team is comprised of seasoned professionals, including a longtime Colorado developer with experience building hospitality, residential, and mixed-use projects. The developer group also includes Interland, a global developer with more than 45 years of experience in the United States and Mexico. Together, the development team has been responsible for more than $4 billion of development, including projects similar to Kindred Resort at Keystone.
Experienced Hotel Manager
The Kindred Resort at Keystone hotel will be managed by RockResorts, an independent subsidiary of Vail Resorts (NYSE: MTN). RockResorts has a proven record of managing some of the most iconic hotels and resort properties in the world, including The Arrabelle at Vail Square, The Osprey at Beaver Creek, and One Ski Hill Place at Breckenridge.
RockResorts will employ its proprietary management strategy to drive room sales. It will also provide its successful booking services and brand-wide marketing.
RockResorts hotels significantly outperform the overall market.
An Experienced, Independent Regional Center
EB5AN is the regional center sponsor for Kindred Resort at Keystone. EB5AN is totally independent from the developer, which means it can focus on meeting the needs of its EB-5 investors without conflicts of interest. EB5AN is an experienced EB-5 regional center operator. It has facilitated more than $1 billion of investment under the EB-5 program, and its total project development costs exceed $4.1 billion.
EB5AN’s world-class, low-risk investment offerings have served more than 2,300 immigrant investors from more than 60 countries.
Kindred Resort at Keystone: A Unique, Low-Risk Rural EB-5 Project
No EB-5 project can totally remove all risks to its investors. Financial and immigration risks are a part of the EB-5 program. But some projects are simply lower risk than others.
Kindred Resort at Keystone offers several unique features that mitigate financial and immigration risks to its EB-5 investors.
For more information on the Kindred Resort at Keystone project or other rural area projects, please schedule a one-on-one call with EB5AN or send an email to info@EB5AN.com.