Investors’ Guarantees – The Reserve Hotel

Prepared by RCP Hotel EB-5 Investors, LLC., the “Company”

Protection or Guarantee Document Description
I-526 Developer Refund Guarantee Refund Insurance Policy / PPM / Operating Agreement The I-526 Refund Insurance Policy is provided by a rated A+ insurance company. The investor and the Company will share equally in the premium to obtain the Refund Insurance Policy.

Until such time the Company obtains such Refund Insurance, the I-526 Developer Refund Guarantee is a guarantee provided by the Developer that provides that if the EB-5 investor’s I-526 petition is denied then the investor’s investment capital will be returned to them within the specific time frame. The terms of the guaranty vary by project but typically cover any project related denial where the EB-5 Regional Center failed to structure a project correctly for the investor’s proposed investment to meet USCIS investment and job creation requirements. Some projects have carve-outs where the guarantee is not valid if the denial is a source of funds related failure, fraud, or something that is beyond the scope of the Partnership’s Developer. For a detailed explanation of the terms and scope of the I-526 Developer Refund Guarantee, refer to the Private Placement Memorandum and Organizational Documents and read the Risk Factors in their entirety. Please note that the investments are an at-risk investment to the investors and any repayment is after the investor is no longer a participant in the EB-5 program and no longer seeking immigration benefits due to a denial. Investors have no redemption provisions individually as per USCIS EB-5 policy.

Construction Completion Guarantee PPM / Construction Completion Guarantee The Borrower of the loan will provide a Completion Guarantee for the Project that would cover any cost overruns or funding shortfalls.

For construction related projects, the construction completion guaranty is a promise that the project will be completed on a “lien-free” basis and not left unfinished for any reason. The construction completion guaranty is also required by the construction lender so it is commonly found in most construction related projects. The construction completion guarantee provides investors a certain level of safety knowing that regardless of the market conditions, they will essentially have a completed and functioning asset that will have met the job creation requirements.

Guaranteed Maximum Price (GMAX) Construction Contract PPM / Construction Contract The Guaranteed Maximum Price (GMAX) Construction Contract provided by the credit-worthy General Contractor sets a maximum price for the scope of construction, and any non-approved expenditures are the responsibility of the General Contractor. A GMAX contract lowers the risk that additional capital would be needed in order to complete the project, because any non-approved expenditures would be paid by the General Contractor and not the Borrower or the Company. This guarantee is typically secured by the balance sheet of the General Contractor.
Equity Pledge Agreement PPM / Equity Pledge Agreement An Equity Pledge Agreement is a covenant related to the Borrower’s interest in the Project. The Borrower covenants that its Combined Indebtedness shall not exceed the indebtedness amount as described in the PPM, and the Borrower shall not pledge its equity to secure any debt in excess of this amount. Therefore, the Company is assured that the Borrower will not increase Combined Indebtedness above the levels disclosed in the PPM.
Repayment Guaranty PPM / Repayment Guaranty A Repayment Guaranty is a financial guaranty that the Borrower will repay the loan to the lender and is based on the balance sheet and creditworthiness of the Borrower. Repayment Guaranty of the Loan from the Borrower does not constitute as a repayment guarantee to the individual investor. As per USCIS EB-5 policy, the investment remains at-risk for the investor because the repayment provisions are executable at the Borrower level and any investor has no ability to execute any repayment guaranty themselves.
  1. Guarantees come in many forms, none of which remove the at-risk provision required by USCIS for EB-5 investment. Please refer to any projects Offering Memorandums and thoroughly read the Risk Factors in their entirety before engaging in any investment decisions.