Jobs Fund 6
EB5 Capital’s San Jose Marriott Hotels project (Jobs Fund 6) was our second partnership with Marriott International and our first project located in the state of California under our USCIS-designated California Regional Center. The project originated in 2012, prior to EB5 Capital’s expansion into California. The development of San Jose Marriott Hotels was also impacted by the recession and its consequences on the economy and market. The developer of this project, Huntington Hotel Group, had been planning on partnering with another sponsor to fund the project. However, as a result of the recession, they were unable to successfully raise the necessary funds and Marriott needed a new partnership in order to proceed with the project. The underwriting and due diligence team at EB5 Capital were approached by Marriott with the proposal of pairing up on the development of their new dual-branded hotel complex located in Silicon Valley, half a mile from the airport. The Marriott hotel would be comprised of a 175-unit Residence Inn and a 146-unit SpringHill Suites. As a preferred partner of Huntington Hotel Group and Marriott International, San Jose Marriott Hotels was an ideal segue for EB5 Capital’s expansion into California. In June 2012, EB5 Capital submitted an application to USCIS for a California Regional Center and received the official approval notice on April 7th, 2014.
San Jose is the San Francisco Bay area’s largest city and is the third largest city in California. It is known for its central location within the rapidly advancing technology industry and is informally called the “capital of Silicon Valley.” Given San Jose’s size and importance, it seems unusual that its general expansion did not include a corresponding increase in new hotel development. However, this oversight can be explained by the way that the airports operate in California. Many areas with several airports in close proximity operate under the management of an airport authority, and so they are able to share airline carriers. This is the case in the Washington, D.C. metro region, where airports in D.C., Maryland, and Virginia are all operated under the Metropolitan Washington Airports Authority. The San Jose airport, however is an entirely separate entity from the San Francisco International Airport, and unlike San Francisco, the airport in San Jose did not have any international airline carriers. With all domestic flights, San Jose could not compete with the San Francisco International Airport located under an hour away. As a result of this gap in San Jose’s development that overlooked the importance of transportation, the hotel industry was also left behind.
Recognizing this oversight and hoping to correct it, the city of San Jose enlisted the assistance of SelectUSA. President Obama established SelectUSA within the Department of Commerce in order to attract foreign investment in the United States and increase employment and economic development. EB5 Capital’s Founder and President, Angel Brunner, was already familiar with the success of SelectUSA in facilitating foreign investment, and has had the opportunity to speak at SelectUSA’s annual Investment Summit on multiple occasions. In collaboration with the U.S. Department of State, SelectUSA helped San Jose find an international airline partner by introducing the city to different airlines in Asia. In 2011, a Japanese airline called All Nippon Airways (ANA) agreed to initiate flights between Tokyo, Japan and San Jose a few times a week. The flight route was met with such great success that within the first six months of the partnership, ANA increased the flight frequency schedule from a few days a week to daily international routes running seven days a week. The success of San Jose’s newly international airport led the silicon-valley based Google Corporation to construct its own private carrier at the airport, serving thousands of Google employees and partners around the world. Since then, hotel occupancy rates for the San Jose area have dramatically increased, reaching 86 percent in 2012, a six percent increase in the span of one year. With hotel occupancy rates on the rise and the rate of increase well above the national average, San Jose Marriott Hotels is expected to see similarly high occupancy upon opening in 2015.