Driftwood Hospitality cuts hotel development costs with EB-5 funds
Driftwood Hospitality Management is doing more than simply taking checks from foreign investors seeking to buy residency in the United States through the EB-5 visa program.
The North Palm Beach-based company, which develops, manages and acquires hotel properties across the country and beyond, says it's using its EB-5 division in South Florida to build relationships and form future partnerships with wealthy visa-seekers. The goal is to churn out two hotels or more a year.
"The issue is that there’s a lot of people asking for EB-5 [funds] without having the proper amount of capital. They are expecting to capitalize their deals through these investors," said Carlos J. Rodriguez, executive vice president at Driftwood. "In those kinds of deals, the investor is running the risk. For us, EB-5 just lowers costs. We have the capital no matter what."
Driftwood is also associated with two other EB-5 projects: it's co-developing a DoubleTree property in Doral, and is in negotiations for the mixed-use Douglas Station project, which will include a hotel.
Once Driftwood finds an investor — typically from Latin America — who is willing to put down $500,000 to $1 million in a real estate project that creates jobs in exchange for a U.S. green card, the company hopes to retain a long-term relationship with them after citizenship. The investors could potentially become future partners, the executives say.
"We're not just pooling together faceless investors," said Carlos Rodriguez Jr., Driftwood's vice president of new development. "We're taking on the marketing ourselves, we're gaining these relationships one-on-one. That's the difference."
Meanwhile, massive South Florida developments being partially funded with EB-5 funds are competing for the same 10,000 investors across the world allowed to receive visas from the program each year.
Developers seeking EB-5 funds are not unique to South Florida. In total, there are about 900 entities (called regional centers) across the country seeking EB-5 money for their job-creating developments. The majority typically market to Chinese visa-seekers because they represent the largest number of EB-5 visa awardees.
"We're definitely exploring the China market," Rodriguez Jr. said.
The company hopes to supplement about 40 percent of its hotel development costs through the program. It's actively looking for sites in Fort Lauderdale, Coral Gables, Miami's Edgewater and Key West.
Thinking about running your own EB-5 show for the extra cash? Carlos J. Rodriguez' advice: "Developers really need to do their homework before they get into the program. It's a lot more money and time upfront than you would expect."
Driftwood Hospitality's portfolio includes more than 40 hotel properties across 13 states and Costa Rica. The company has about 50 executives based in offices in North Palm Beach and Coral Gables. Across its lodging properties, the company has about 4,300 employees.
- Driftwood Hospitality Management LLC
- Carlos Rodriguez
- Carlos Rodriguez, Jr.
- Residence Inn by Marriott Flagler Station
- Canopy by Hilton in West Palm Beach
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