Due Diligence Report: Hale Malana
Thank you for showing interest in the following due diligence report. This report offers a detailed overview of the project and investment, highlighting both its strengths and potential risks. If you have any questions or need further information, please contact our team.
Investment Overview
This project consists of the construction of a 210-room hotel, Hale Malana, a Curio Collection by Hilton Hotels & Resorts, located in Kauai, Hawaii. The project includes a three-meal restaurant, a pool, 2,000 sqft of indoor meeting space, 25,000 sqft of outdoor event venues, a fitness center, and the pro shop for the 18-hole Jack Nicklaus Ocean Course at Hokuala. At completion, the area is expected to feature a private residence club, luxury whole ownership residences, custom golf course home sites, a retail shopping village, multiple dining options, pools and multiple wedding venues, and more.
The Project (JCE)
Project Details
The Hale Malana hotel is a distinguished member of Hilton’s Curio Collection, a curated portfolio of unique hotels, each selected for its ability to offer guests extraordinary experiences in some of the world’s most coveted destinations. Every hotel in the Curio Collection tells its own story through exceptional architecture, inspired design, world-class dining, and thoughtfully curated experiences. With 172 hotels currently operating across 42 countries, including the United States, France, Spain, Colombia, the United Arab Emirates, Greece, Ireland, Portugal, the Dominican Republic, Taiwan, the Maldives, Puerto Rico, and more, the collection continues to grow, with 84 additional properties under development, including Hale Malana. Once completed, Hale Malana will become only the second Hilton-branded hotel on Kauai. Hilton’s commitment to this project is further underscored by its $8 million key money investment, reflecting the company’s confidence in the project and its strategic goal of expanding its presence on the island.
Hale Malana will feature 210 thoughtfully designed guestrooms and suites, including 187 standard rooms averaging 387 square feet (with 155 King rooms and 32 Queen/Queen rooms) and 23 suites averaging 778 square feet. The hotel will offer a wide range of premium amenities, including direct access to the beautiful Kalapaki Beach, an outdoor pool and whirlpool, a state-of-the-art fitness center, and the 18-hole Jack Nicklaus Ocean Course at Hokuala, with a Golf Pro Shop managed by Timbers Kauai. Guests will also have access to 130 surface parking spaces. The hotel’s meeting facilities include 2,000 square feet of indoor meeting space, complemented by additional pre-function space and an outdoor terrace. An expansive 4,000 square-foot outdoor event lawn will be available for weddings, parties, and large corporate events. The hotel’s food and beverage offerings will include a restaurant with both indoor dining and outdoor patio seating, a standalone pool bar with food service, in-room dining options, and comprehensive banquet services.
Located within Hokuala, a 450-acre oceanfront luxury resort community on Kauai’s southeast coast in Lihue, Hale Malana is part of a master plan that includes the ownership of whole and fractional condominium units, townhomes, and future phase lot sales, offering a diverse range of luxury living options in one of Hawaii’s most stunning settings.
The Location
The project is located at 3291 Kalapaki Circle, Lihue on the island of Kauai in Hawaii. Kauai, often called the “Garden Island,” is famous for its unparalleled natural beauty and landscapes. The island is renowned for its lush rainforests, towering waterfalls, and dramatic cliffs, particularly those along the Nā Pali Coast, which are accessible only by boat, helicopter, or hiking trails. Kauai is also home to Waimea Canyon, often referred to as the "Grand Canyon of the Pacific." Pristine beaches, such as Hanalei Bay and Poipu Beach, attract visitors seeking both adventure and relaxation. Kauai's unique charm lies in its commitment to preserving its natural environment; much of the island remains undeveloped, with 90% of the land inaccessible by road, providing a serene escape that feels worlds away from the bustle of modern life. This commitment to preservation, along with its stunning landscapes, has made Kauai a favorite destination for nature lovers, filmmakers, and travelers seeking an authentic Hawaiian experience.
The project site is conveniently located less than two miles from the Lihue Airport, the only major airport on the island. Further, the project is located near the scenic 18-hole Ocean Golf Course at Hokuala, the longest continuous stretch of oceanfront golf in Hawaii, attracting thousands of visitors each month. The project is also located in close proximity to the cruise ship terminal and the Royal Sonesta, one of the most popular resorts on the island.
Job Creation
With 125 EB-5 investors and 10 jobs required per investor, the project is required to provide 1250 jobs. The project is estimated to create at least 2170 jobs, surpassing the job requirement by 74% with an additional 920 jobs. More than 132% of the required jobs are expected to be satisfied by the construction phase of the project. Vermillion Consulting, a third-party, independent econometric consultant, used the RIMS II Regional Input-Output Modeling System to estimate this number. This modeling system is used widely by regional centers when estimating job creation for EB-5 projects and has been accepted by USCIS.
Targeted Employment Area
The project is located in Kauai County, Hawaii, which qualifies as a rural area under EB-5 Program rules due to its population of 8,004 and location outside of a Metropolitan Statistical Area. This designation allows investors to benefit from priority processing and a reduced investment amount of $800,000. To qualify, investments must be made within the two-year validity period following USCIS approval of the TEA designation for the project.
Legal Overview
The project has met all the legal requirements of an EB-5 offering, ensuring compliance with the relevant statutes and regulations. Notably, the project’s I-956F, Application for Approval of an Investment in a Commercial Enterprise, was submitted to USCIS in April 2024. Approval of this application will confirm that the project satisfies the stringent criteria set forth by the USCIS to qualify as an EB-5 offering. Furthermore, the project aligns with the requirements of the Reform and Integrity Act (RIA) of 2022, which mandates enhanced transparency and integrity measures for EB-5 projects. In addition to regulatory compliance, the project is on track to meet the job creation requirements stipulated by the EB-5 program, demonstrating a robust plan to generate the necessary employment opportunities for U.S. workers. This adherence to legal and job creation standards underscores the project's viability and commitment to fulfilling the objectives of the EB-5 program.
Market Opportunity
Kauai’s primary economic driver is its robust tourism industry. Each year, over one million visitors are drawn to Kauai’s natural beauty, contributing more than $1 billion in annual spending. Lodging represents the largest share of tourist expenditures, accounting for nearly half of daily visitor spending according to a 2023 report by the Hawaii Tourism Authority. The hospitality sector on the island has seen record-breaking performance, with both average daily rates and revenue per available room (RevPAR) surpassing pre-pandemic levels, making it an attractive market for hotel development.
However, entering Kauai’s hospitality market poses significant challenges. Only 5% of land in Kauai is zoned for development, and the permitting process is notoriously lengthy and complex, as exemplified by the six-year permitting timeline for Hale Malana. Additionally, Kauai’s remote location in the Pacific Ocean adds substantial costs for capital, materials, and construction—particularly for luxury hotels. These barriers limit competition and increase the value of well-positioned projects.
Civitas is uniquely equipped to capitalize on these opportunities. With significant financial reserves and all necessary permits secured, Civitas is strategically positioned to navigate the logistical and labor challenges of hotel development in Kauai. This advantage enables the Project to achieve a per-room investment that is twice the spending rate of comparable Curio Collection hotels on the mainland United States. The Project will operate under NAICS industry cluster 721110: Hotels, a category aligned with Kauai's primary market demand and economic growth sectors.*
*The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.
By addressing the significant demand for high-quality lodging in Kauai while overcoming the hurdles of land scarcity, regulatory delays, and high costs, Civitas is positioned to deliver strong financial returns and contribute meaningfully to the island’s economy.
Marketing Plan & Advertising Strategy
The advertising strategy for the hotel will leverage Kauai’s global reputation as a premier tourist destination, targeting affluent travelers seeking luxury accommodations in a unique and remote setting. A multi-channel approach will be employed, combining digital marketing, social media campaigns, and strategic partnerships with travel agencies and tourism boards. The hotel will focus on creating a strong online presence through high-quality visual content and storytelling that highlights the property’s unique amenities, cultural experiences, and connection to Kauai’s natural beauty. Collaborations with influencers and travel bloggers will amplify the hotel’s reach, particularly among niche markets such as honeymooners. Additionally, the hotel will invest in direct booking incentives and loyalty programs to build a base of repeat customers. Advertising efforts will be strategically aligned with peak tourism seasons, ensuring maximum visibility and engagement during periods of high demand.
Timeline
All construction permits and entitlements have been obtained, and construction began in Q3 2024.
The EB-5 Investment (NCE)
The NCE (new commercial enterprise) for the project is Civitas Hawaii Fund, LP. The NCE is responsible for the EB-5 loan raise. The loan will be provided to Silverwest Hawaii Holdings, LLC, the JCE. The JCE is owned by Blackstone Strategic Real Estate VII, LP (40%), affiliates of Goldman Sachs (35%), and affiliates of Silverwest Hotels (25%).
Capital Stack
The project is raising a total of $202.9 million for the construction of the Hale Malana hotel, comprising a well-structured combination of debt and equity. This consists of a Senior Loan of $150 million, consisting of both EB-5 and bank contributions, and $44.9 million in equity. The expected contribution from EB-5 Investors is $100,000,000, with $50,000,000 expected from the bank lender.
Use of Funds
A significant part of the budget is allocated to Land & Development Costs, covering expenses like preparing the site, installing necessary infrastructure, and meeting local regulations to ensure the project is ready for construction and operation. Funds are also set aside for Senior Financing and Interest Reserve, which involves obtaining senior debt and keeping an interest reserve to manage financial obligations during construction, reducing the risk of cash flow issues. Lastly, a Post-Opening Interest Reserve is included to support the project during its early operational phase, ensuring financial stability and helping it transition smoothly as revenue grows. This careful allocation demonstrates the project’s focus on solid financial planning and risk management.
Investment Duration and Investor Returns
The initial loan maturity is set for 2028, with provisions for optional 12-month extensions if additional time is required to meet repayment obligations. EB-5 investors will receive an annual return of 0.5%, which is typical for this type of investment. While the loan structure provides flexibility through extension options, the relatively low return rate highlights the conservative nature of the investment's financial benefits. These terms reflect a balance between the project's financing needs and the commitment to meeting repayment schedules.
Administrative Fee
The administrative fee for the project is $80,000. This fee is in addition to the capital contribution of $800,000.
Security & Collateral
The loan is secured by a first lien on the property. In addition, during the construction period, the borrower will provide a net worth and liquidity covenant to the lender of $65,000,000 and $10,000,000 respectively. Furthermore, Hilton has agreed to provide $8 million in key money, reflecting Hilton’s confidence in the Project and its strategic intention of boosting Hilton’s presence in Kauai.
Investment Structure
The NCE was formed for the purpose of facilitating EB-5 investment in the project. It serves as the primary entity through which funds from EB-5 investors are pooled and directed to the JCE, responsible for executing the project. The table below represents the investment structure of the project, with the red arrows representing the flow of funds from EB-5 investors.
The EB-5 Investment Process
The following flow chart provides a basic explanation of the EB-5 investment process, from the creation of the NCE to verification of jobs.
Financial Projections
The graph below details the financial projections for the project over the first five years, outlining key revenue, expense, and profit expectations. The project is projected to generate over $51 million in annual revenue by year five, reflecting its growth trajectory as it progresses from development to full operational capacity
Exit Strategy
The proposed exit strategy for EB-5 investors includes either a sale of the project upon completion or post-construction recapitalization. The project may be sold to third parties, such as private investors or REITs, after achieving key performance metrics like stabilized occupancy and market valuation. This involves engaging brokers, conducting valuations, and timing the sale for optimal returns. Alternatively, the project’s financial structure may be restructured through refinancing or new equity investment to replace EB-5 funds. This strategy depends on demonstrating financial stability and market competitiveness.
Both strategies align with EB-5 timelines for capital return and are supported by market analysis and risk mitigation measures to ensure investor protection.
Management
The Regional Center: Civitas Capital Group
Civitas Capital Group (“Civitas”) has been a leading manager of regional centers nationwide for over a decade, with a proven track record of successful EB-5 projects. The firm has served over 1,400 investors from more than 40 countries, offering expertise in identifying high-quality investment opportunities that adhere to the EB-5 program's job creation and regulatory requirements. Civitas applies institutional-quality financial analysis to ensure that each investment meets stringent standards, offering both security and growth potential for EB-5 investors. To date, Civitas has managed more than 47 EB-5 funds and deployed over $700 million in EB-5 capital across the United States, contributing to the development of numerous successful projects. Key achievements of Civitas include:
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100% I-829 approval rate.
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100% project approval rate, ensuring all managed projects have met EB-5 program requirements.
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Over $400 million in capital returned to investors.
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More than 800 green cards issued to EB-5 investors across all projects, underlining the firm’s success in helping investors achieve their immigration goals.
Civitas has consistently demonstrated its capability in delivering strong financial performance and investor satisfaction. Recent successful projects managed by Civitas include:
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Terraces at Tree Farm: A 72-unit Class A active adult community in Basalt, Colorado, which raised $36.8 million in EB-5 funds from 46 investors.
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Bent Tree Flats: A 183-unit Class A multi-family community in Dallas, Texas, which raised $5.6 million in EB-5 funds from 7 investors.
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Chronos Portfolio: A collection of five garden-style apartments (1,070 units) in the Dallas-Fort Worth area, Texas, raising $24 million in EB-5 funds from 48 investors.
These projects, along with many others, underscore Civitas’s ability to consistently manage large-scale EB-5 investments, driving successful outcomes for both investors and the communities they help build.
The Developer: Silverwest Hotels
Silverwest Hotels, LLC is an investment and management company established in 2013 by experienced hotel and resort executives Edward Mace and Charles Peck. With a strong focus on hotel and resort operations, Silverwest has rapidly expanded its portfolio, owning and managing a growing number of properties in key destinations across the U.S., including Colorado, California, Missouri, Iowa, and Hawaii. Silverwest holds a 25% equity position in Silverwest Hawaii Holdings LLC, contributing its deep industry knowledge and operational expertise to the project. The company’s track record of successful hotel developments and operations has positioned it as a key player in the hospitality sector.
Equity Partner: Blackstone Strategic Partners
Blackstone Strategic Partners Real Estate VII, LP, an affiliate of Blackstone Strategic Partners, holds a 40% equity position in Silverwest Hawaii Holdings LLC. As the world's largest alternative asset manager, Blackstone oversees more than $1 trillion in assets across multiple sectors. With a portfolio of over 12,500 real estate assets and 230+ portfolio companies, Blackstone leverages its global presence and expertise to invest in dynamic, high-growth sectors. Its strategic investments are aimed at creating lasting value for institutional and individual investors alike, further strengthening the financial foundation of the Silverwest Hawaii Holdings project. Blackstone’s involvement brings unparalleled financial backing and an established reputation for successful investments.
Equity Partner: Goldman Sachs
Goldman Sachs holds a 35% equity position in Silverwest Hawaii Holdings LLC. One of the world’s leading investment banks and asset managers, Goldman Sachs oversees more than $2 trillion in assets as of December 31, 2022. The firm provides comprehensive investment and advisory services to institutions, financial advisors, and individuals across global markets. Goldman Sachs’ Alternative Investments team, which includes over 1,300 professionals operating across 31 offices worldwide, brings significant expertise and resources to the project. The firm’s involvement enhances the project's financial credibility and provides access to a broad network of strategic opportunities, supporting its long-term growth and success.
Interior Design: Looney & Associates
Looney & Associates is an interior design firm specializing in compelling projects for the hospitality industry. With offices in Dallas, Chicago, and Honolulu, Looney & Associates' staff includes registered Architects and Interior Designers who provide consistently high-quality design services from planning through installation.
Founder and CEO Jim Looney is a registered Architect and Interior Designer with over 35 years of experience. Jim established Looney and Associates in 1995, and since that time has experienced consistent growth by continuing a tradition of integrity, quality and service. Eighty percent of Looney & Associates work is performed for repeat clients, including such owners and operators as Blackstone Real Estate Advisors, Ritz Carlton, Marriott International, Hilton Worldwide, Hyatt Hotels Corporation, Strategic Hotels and Resorts, Benchmark Hospitality, Forest City Commercial Group, Omni Hotels, and Silverwest Hotels. For more information on Looney & Associates, please visit their website at https://www.looney-associates.com/.
The Contractor: Nordic PCL Construction Inc
Nordic PCL Construction, Inc. is a member of the 112-year-old PCL Construction, a 100% employee-owned independent group of companies with 32 offices in North America, the Caribbean, and Australia. As one of the most established contractors in Hawaii, Nordic is familiar with navigating construction challenges unique to Hawaii, including warehousing construction materials off the island and sourcing and housing labor. Nordic PCL Construction has worked with nearly every luxury hospitality and gaming brand, including Hilton, Marriott, Hyatt, and Disney, and completed numerous luxury hospitality developments in Hawaii, including two Four Seasons Resorts, a Ritz‐Carlton, the Westin Maui, and a Rosewood Resort.
Nordic PCL has completed over 1000 projects, has more than 80 years of experience, and has created $8 billion in projects since 2010. Nordic PCL projects in Hawaii include the Four Seasons Resort Lanai at Manela Bay, the Four Reasons Resort at Ko Olina, the Ritz-Carlton Club & Residences at in Maui, the Aulani Disney Report and Spa in Oahu, and the Westin Maui Resort and Spa in Lahaina.
Architect: AHL
AHL focuses on serving clients' needs from new projects to small renovations and large-scale additions. AHL's services range from master planning to all phases of design and construction administration. AHL's large experienced staff enables AHL to consistently deliver award-winning fast-track complex projects.
AHL has a long history of working on Kauai. AHL's most recent project completed was the construction of Phase Ill of Koloa Landing in Poipu - a large resort and condominium complex, and before that, the Shops at Kukui'ula, also on the South Shore, which is home to dozens of designer boutiques, galleries, and eateries. For more information, please visit AHL’s website: www.ahl.design
Concept Architect: Hart Howerton
Hart Howerton ("HH") is a global team of professionals with headquarters in New York and San Francisco. HH's architects, landscape architects, interior designers, planners, and strategists have brought an interdisciplinary perspective to some of the world's most sensitive environments, creating sustainable places that become successful hospitality ventures for their investors and lasting legacies as resorts and resort communities. From residences and private communities and clubs, to hotels and resorts, HH creates places of uncompromising detail that reflect a deep understanding of the lifestyle and expectations of the client. Successful projects from HH include: the Mandarin Oriental Hotel & Residences in Honolulu; the Hualalai Four Seasons Resort in Kailua-Kona; Mauna Lani Resort in Kohala Coast, and more. For more information visit HH’s website: www.harthowerton.com/
Strengths
Strong Regional Center Track Record
Civitas Capital Group is a well-established and respected Regional Center in the EB-5 Industry. With over $400 million returned to EB-5 investors and more than 1,000 I-526E approvals, Civitas has consistently demonstrated its ability to deliver results and meet investor expectations. The firm has managed over 47 EB-5 funds and deployed more than $700 million in EB-5 capital, supporting a wide range of successful real estate and hospitality projects across the United States.
High Demand and Recession Resistant Project in a Prime Location
The EB-5 project’s location in Kauai—a region characterized by high demand and low supply for hotels—presents a compelling advantage for investors. Kauai's scarcity of available hotel properties combined with robust visitor demand creates a highly favorable market environment. This imbalance ensures that new hotel developments are likely to achieve strong occupancy rates and commanding room rates, translating to potentially higher returns on investment. The limited supply of hotel space in such a desirable destination not only enhances the project's revenue prospects but also positions it as a premium offering in a competitive market.
Completion Guaranty
This project has a completion guaranty, meaning that the development will continue regardless of the amount of funds raised through EB-5 investors. This guarantee ensures that the project will be finished on time and to the specified standards, reducing the risk of delays or substandard execution. For investors, this means a higher degree of confidence that their investment will yield the anticipated returns and meet the requirements for the EB-5 visa program. A completion guarantee also demonstrates the developer's commitment and financial stability, as it often requires substantial backing and assurance from the project's stakeholders.
Equity Funding
The project’s equity funding significantly mitigates risk for investors. With a large percentage of the project's capital provided through equity, the reliance on debt financing is considerably reduced, which enhances financial stability and project resilience. This substantial equity commitment not only demonstrates strong investor confidence and a solid financial backing but also ensures that the project is well-positioned to absorb unforeseen challenges without jeopardizing its completion or operational success.
Strong Developer Track Record
A strong and experienced developer is crucial to the success of any real estate project, and Silverwest Hotels brings a wealth of expertise to this venture. With years of experience in both Hawaii and the mainland USA, Silverwest has established itself as a reliable and capable developer of high-quality hotels and resorts.
Rural TEA - Expedited Processing & Set-Aside Visa Category
This project qualifies as a rural project under the 2022 RIA. Rural projects offer two primary benefits to investors:
Strong Operational Track Record
The hotel’s affiliation with Hilton and its inclusion in the prestigious Curio Collection is a significant strength for the project. Hilton is a globally recognized and trusted hospitality brand, offering the project access to its extensive reservation network, loyalty program, and established reputation for quality and service. The Curio Collection, known for its unique and carefully curated properties, enhances the hotel’s appeal by combining Hilton’s operational excellence with a boutique, locally inspired experience that resonates with modern travelers. This affiliation not only boosts the project’s marketability and visibility but also ensures high operational standards, attracting both leisure and business travelers seeking a premium experience. Such a partnership underscores the project’s potential for sustained occupancy and revenue growth.
1) Investors are eligible for priority processing, which may reduce I-526E processing times from multiple years to a year or less.
2) 20% of the annual 10,000 EB-5 visas are reserved for Investors in rural projects. Investors in rural projects may by-pass visa retrogression and receive an immediately available visa, even if they are from a backlogged country.
Risks
The purchase of units in an EB-5 investment involves a high degree of risk and is suitable only for persons of substantial means who can bear the risk of loss of their entire investment and who have no need for liquidity in their investment. All prospective investors should carefully consider the following risks and consult their own legal, tax, and financial advisors prior to the purchase of units.
No Investment Diversification
Unlike a diversified portfolio that spreads investments across various assets to mitigate risk, an EB-5 investment is typically concentrated in a single project or business. This lack of diversification means that the success of the investment, and thus the fulfillment of visa requirements, is entirely dependent on the performance of that single venture. If the project fails or underperforms, investors not only face financial loss but also the potential risk of not meeting the criteria necessary to obtain permanent residency.
Success is Dependent upon the Successful Implementation of the Business Plan
The success of the company will largely depend upon the Borrower’s success in implementing the Business Plan for the benefit of the Borrower. Because many of the factors necessary for success are beyond the control of the Borrower, there can be no assurance that the Borrower will be able to successfully implement the Project Business Plan or carry out the Project Business Plan as circumstances require. Through its equity investment in the Project, however, the Borrower is incentivized to effectively carry out the Project Business Plan. The project is subject to insurance risks and distributions are not guaranteed.
The Investment is Illiquid
There is no established market for the Unit. There are a limited number of investors and strict restrictions on the transferability of Units. No complete assurance can be given that the Loan will be repaid or when it will be repaid.
Regulatory Risks
Potential changes in the EB-5 program regulations can directly impact investor opportunities and project feasibility. Legislative amendments or shifts in policy by the United States Citizenship and Immigration Services (USCIS) could alter investment requirements, processing times, or the criteria for job creation and project eligibility. Any regulatory changes that slow down the visa approval process may delay investors' ability to obtain green cards. The EB-5 program is currently authorized until September 2027. Changes to American political leadership may also alter the current and/or future state of the program.
Market Risk
Success of the project will, in part, depend on the local, national and global economies. An uncertain economic outlook may adversely affect consumer spending on residential housing, as consumers spend less in anticipation of a potential further economic downturn. Considering the current economic climate, several market risks need to be carefully evaluated, such as interest rate volatility, which can impact affordability, and inflationary pressures that may drive up construction costs. Additionally, changes in employment rates, regulatory policies, and global economic or political factors could further influence project demand and profitability.
Limited Transferability of Units
The units are not readily transferable and no transfer of Units may be made by Investors. Once you subscribe to the project, you may not transfer your units to another individual. The Units are being sold in reliance on exemptions from the registration requirements of the Securities Act provided by Regulation S and/or Section 4(a)(2) of the Securities Act or Regulation D, and may not be transferred or resold except as permitted under such laws.
Operational Risks
Delays in the construction timeline can lead to increased costs and missed deadlines, potentially jeopardizing project viability. The performance of contractors is also pivotal; inadequate workmanship, resource mismanagement, or financial instability among contractors can severely disrupt progress. Moreover, unforeseen environmental issues, such as adverse weather conditions, can cause significant setbacks and necessitate costly remediation efforts.
Possible Cost Overruns
Cost overruns may be encountered as a result of numerous factors. The increase in the domestic inflation rate, and the resulting increase in the federal interest rate, will increase construction and operating costs. Furthermore, other unforeseen issues may be encountered that otherwise require an increase in the development budget that have not otherwise been reserved for in the contingency fund. The timeline for completion of this project is uncertain, any delays could result in a cost overrun.
Exit Strategy Risks
If the project fails to sell units as anticipated, it can lead to delays in generating the necessary revenue to repay investors. This shortfall can result from market fluctuations, increased competition, or misalignment with consumer demand. This shortfall can result from market fluctuations, increased competition, or misalignment with consumer demand. Such scenarios could lead to extended holding periods for your investment or reduced returns.
Conflict of Interest
The Project Companies, the Borrower, the Common Member, the Mezzanine Lender, the Manager, and the Fund are all under the same control. Because the owners of the Common Member and the Manager have significant financial interests in both the Project Companies and the Project, the personnel of the Common Member and the Manager may be motivated to act in ways that benefit their interests. This could lead them to delay or avoid taking actions that would be advantageous to the Preferred Members, such as exercising the Fund’s rights against the Borrower under the Loan Documents.
Lawful Source & Path of Funds
EB-5 Investors are required to provide documentary evidence showing the legal source of their funds and its pathway to the EB-5 investment. An investor may be unable to provide sufficient evidence for their funds and may not receive I-526 approval for this reason.
Limited Rights to Participate in Management
EB-5 investors will not make decisions with regard to the management and operations of the project. EB-5 Investors will have no role in the management or operations of the project.
No Assurance of Visa
There is no guarantee that an EB-5 investor will receive I-526E petition approval. The EB-5 Program has many requirements that must be met to the satisfaction of USCIS. The failure to meet even one of
these requirements to the satisfaction of USCIS may result in the denial or revocation of an I-526E Petition.
USCIS regulations governing lawful permanent residence for investors do not state specifically all the criteria that USCIS must apply to determine eligibility for the removal of conditions to lawful permanent resident status. Even after I-526E Petition approval, there can be no assurance that the Investor, his or her spouse or any of their minor, unmarried children will be granted lawful permanent residence. The grant of such immigration status is dependent, among other things, upon the personal and financial history of each applicant. Any one of the several government agencies may determine in its discretion, sometimes without the possibility of appeal, that an applicant for lawful permanent residence is excludable from the United States.
Investor Suitability
As a potential EB-5 Investor, understanding the risks and benefits of the EB-5 program is essential to determine if it is a suitable investment for you and your family. The EB-5 program is most suitable for investors who are seeking permanent residency in the United States. An investment in an EB-5 project is long-term, illiquid, high-risk, and has a low rate of return. The primary benefit of an EB-5 investment is permanent residency in the United States. The following pages will detail these points:
Foreign Nationals Seeking Permanent Residency in the United States
The primary benefit of the EB-5 program is permanent residency in the United States. This project and investment is most suitable for foreign nationals seeking a path to permanent residency and citizenship for themselves, their spouse, and any family members under the age of 21. Investors who wish to permanently relocate to the United States with the freedom to live, work, and study without restrictions are well suited to this investment.
Long-Term Commitment and Illiquidity
This investment is particularly suitable for investors who do not require immediate liquidity. The nature of EB-5 investments necessitates a long-term commitment, often spanning several years from the initial application to the final approval of permanent residency. Investors should be prepared for their capital to remain tied up in the project throughout the conditional residency period and beyond. This investment is non-transferable and highly illiquid, meaning you cannot sell the investment or transfer it to another investor.
This characteristic aligns well with the investment goals of individuals who can afford to allocate a portion of their portfolio to a non-liquid asset, focusing on the long-term benefits of U.S. residency rather than short-term financial returns. The potential for eventual returns on investment, coupled with the immigration benefits, makes this an ideal opportunity for those with the financial flexibility to sustain a longer investment horizon. If you are concerned about whether or not an EB-5 investment is appropriate for your specific financial situation, please speak to one of our registered broker-dealers to help evaluate your suitability for the EB-5 program.
Reduced Investment Threshold
Investing in a rural EB-5 project offers the benefit of a reduced investment threshold compared to urban projects. The minimum required investment for rural projects is $800,000, compared to $1,050,000 for non-rural projects. This lower threshold reduces the financial burden on the investor, while still providing the same potential benefits in terms of residency and return on investment.
Risk Tolerance
The EB-5 program requires that the invested capital be at risk to qualify, meaning there is no certainty of financial returns or even the return of the principal investment. This investment is suitable for investors who possess a high tolerance for risk, as there are no guarantees associated with EB-5 investments. Additionally, the success of the immigration process hinges on the project's ability to meet job creation requirements and other regulatory criteria. Investors must be comfortable with these uncertainties and should be prepared for the potential of financial loss. Those who can accept and manage these risks, while focusing on the long-term goal of obtaining U.S. permanent residency, will find this investment opportunity aligns well with their risk profile and strategic objectives.
Low Rate of Return
This project offers investors a rate of return at 0.5%. This is a fairly low rate of return in comparison to other investment types. However, it is important to consider that the primary benefit of the EB-5 program is not the return on investment, but the opportunity to gain US permanent residency. The value of this opportunity extends far beyond financial gains, as it opens doors to a host of benefits, including access to educational, professional, and lifestyle opportunities in the United States. This investment opportunity is particularly suitable for investors who prioritize the attainment of U.S. permanent residency over seeking a high rate of return on their investment.
Source of Funds
Ensuring that your EB-5 investment is well-documented and originates from a legal source of funds is imperative for compliance with program requirements and immigration laws. Detailed documentation demonstrating the lawful accumulation and pathway of funds provides transparency and strengthens the investor's application, mitigating the risk of delays or denials. Investors unable to demonstrate the legality of their investment funds are not suitable candidates for the EB-5 program. Investors must work with an experienced EB-5 Immigration Attorney to ensure that their source and path of funds is well-documented and legal.
Investor Information
Investor Management Participation
As a limited partner in this EB-5 project, investors will not have any management responsibilities. The experienced management team will handle all operational and administrative tasks, ensuring the smooth execution and oversight of the investment. This structure allows investors to focus on the benefits of their EB-5 journey, such as obtaining U.S. permanent residency, without the burden of day-to-day involvement in the project's management. This arrangement ensures that investors can have confidence in knowing that their investment is being professionally managed by a dedicated team.
Investor Distributions
The General Partner has the discretion to make cash, property, or asset distributions to Partners at any time, but is not obligated to do so. While periodic distributions of Interest Payment Proceeds to Limited Partners are expected, the General Partner plans to withhold Investment Proceeds until Limited Partners become EB-5 residents. Each Limited Partner can receive a total amount of Interest Payment Proceeds and Investment Proceeds equal to their original investment ($800,000) plus a 0.50% return on that amount. Once a Limited Partner has received back all their original investment and their share of the Interest Payment Proceeds, they will be automatically withdrawn from the Partnership at the end of the current fiscal quarter. After this, they will no longer receive any further distributions. This applies as long as the conditions in the Partnership Agreement are met, including receiving their share of any proceeds from the investments made by the Partnership.
Investor Communications
Investors will have access to inspect and receive information concerning the Fund including the information required to be delivered as per the Fund agreement and the information provided by the Manager for compliance with applicable USCIS rules and regulations.
In Event of I-526 Denial
If an investor's I-526E petition is denied, the Subscription Amount and Administrative Fee are generally nonrefundable unless the denial is due to issues with the Partnership’s I-956F application. The General Partner will try to find a substitute investor for the denied investor, but if no replacement is found, the funds will remain with the Partnership. If a replacement is identified, the denied investor may receive a refund of their Subscription Amount and Administrative Fee, minus $5,000 for administrative costs. Failure to file the I-526E Petition by the deadline results in a nonrefundable Administrative Fee. In cases where denial is due to the Partnership’s I-956F application, the investor may receive a refund of their Subscription Amount, less any capital already returned.
Withdrawal
Investors may not voluntarily withdraw from the Fund without the approval of the Fund Manager. If approved, they may receive a return at the Manager's discretion. There is no guarantee that they will be allowed to withdraw and will likely have to wait until distributions are made.
Tax Implications
Investors should consult with a personal tax advisor regarding the potential state and local tax consequences of an investment in the Company.
There are restrictions on transferring, assigning, or disposing of the Units. Generally, a U.S. Investor will recognize capital gain or loss when they sell, redeem, exchange, or otherwise dispose of their interest in the Company, except for amounts related to interest (which will be recognized as ordinary interest income) if the U.S. Investor has not previously included the accrued interest income. The ability to deduct capital losses may be limited, and these limitations will vary depending on each taxpayer's situation. Therefore, each Investing Member should consult their own tax advisors regarding these limitations.
Subscription Procedures
To subscribe, prospective investors must complete and submit the required Subscription Documents to Civitas Hawaii Fund, LP, along with their Subscription Amount, paid in full in U.S. dollars by wire transfer before the specified deadline. The Administrative Fee is required at the time of subscription to cover immigration compliance costs. Once the regional center is authorized, investors must submit or authorize Civitas to obtain their complete I-526E Petition and related materials for review by the General Partner’s immigration counsel within 10 business days of filing with USCIS. Investors are also required to cooperate with the General Partner on any immigration-related matters.
Voting Rights
Investors will have limited voting rights on matters of the Partnership.
DISCLAIMER
December 2024
EB-5 Choice has undertaken an independent due diligence evaluation of the Hale Malana project, designed for foreign investors who intend to participate in the EB-5 Immigrant Investor Program.
The objective of this report is to accomplish the following:
1. Ensure compliance with the EB-5 Reform and Integrity Act of 2022.
2. Conduct an impartial and autonomous review of the offering documents.
3. Provide a concise summary of the significant provisions.
4. Employ appropriate procedures to verify the accuracy and reasonableness of the information provided by the offering party.
It should be noted that the review's scope may be limited to the documents supplied by the offering party if third-party information is unavailable. This report is not intended as a recommendation to invest or abstain from investing in the specific offering. Rather, its purpose is to consolidate the investment proposal, facilitate comprehension of the offering, and aid the reader in identifying its strengths and weaknesses through the procedures we have executed.
Any decision to invest should be made subsequent to a thorough review of all documents and consultations with appropriate professionals to determine suitability and risk tolerance. Furthermore, please be aware that the due diligence report reflects our viewpoint and does not incorporate potential developments or changes occurring after the report's listed date.
The “EB-5 immigrant visa” preference category is intended to encourage the flow of capital into the United States economy and to promote employment of workers in the United States. To accomplish these goals and so that foreign investors may obtain immigration benefits for having made an investment, the EB-5 Program mandates that:
(i) foreign investors must make a minimum capital contribution of $1,050,000; In certain rural areas or
areas of high unemployment (“Targeted Employment Area” or “TEA”), the
investment may be as low as $800,000.
(ii) that such minimum capital be deployed exclusively in job creating activities; and (iii) 10 full-time jobs
be created on account of each investor.
LEGAL NOTICE
Please refrain from sharing this document with any unauthorized individuals or posting it online. Unauthorized dissemination of this information could lead to legal consequences. Your cooperation in maintaining the confidentiality of this document is greatly appreciated.
Please be advised that this due diligence report is provided solely for informational purposes and should not be construed as an offer to sell or a solicitation to purchase any securities mentioned herein. Any offers can only be made in compliance with relevant laws and regulations, and qualified investors must receive official offering and subscription documentation.
The report contains summaries of specific terms found in relevant documents and agreements. If any of the terms, conditions, or provisions in the actual documents and agreements conflict with or contradict the descriptions or terms provided in this report, the terms of the actual documents and agreements shall take precedence. In the event that a translated version of this report is created for convenience or any other purpose, the provisions of the original English version shall take precedence. If there are any discrepancies between a translated version and the English version, the original English version shall take precedence.
In the event of any discrepancies between the information presented in this report and the Company's Memorandum, the provisions of the Memorandum shall govern. None of the information or analyses presented herein are intended to serve as the sole basis for making any investment decision, and no specific recommendations are being made. Certain information included in this report may have been obtained or derived from sources prepared by third parties, and while we believe such information to be reliable for the purposes of this report, we assume no responsibility for its accuracy.
EB-5 Choice expressly disclaims all liability for any direct or consequential loss or damage of any kind arising directly or indirectly from: 1) reliance on any information found in this report, 2) any errors, omissions, or inaccuracies in such information, or 3) any actions taken as a result thereof.
Before making any major investment decisions, know your rights as an investor.
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