Fairmont Heritage Place - The Cedars

Hendersonville, North Carolina
EB5 Explained

Luxury-brand condo hotel with denial-refund and completion guarantees

Fairmont Heritage Place The Cedars will be a full-service condo hotel in the heart of historic Hendersonville, Western North Carolina. The project will renovate and restore the historic Cedars Hotel and feature signature Fairmont amenities. A condo hotel is a hybrid real estate model that offers condominium ownership with the option to rent out units like a hotel. Each Fairmont owner can use their property as a vacation home and, when not using the unit, generate income by renting it out through the hotel, with Fairmount Hotel services. The project comprises two six-story towers featuring 130 Fairmont-branded luxury residences plus 40 sub-units with separate locks, totaling 170 locked and rentable units. The units range from studios of approximately 500 square feet to penthouses of up to 3,635 square feet.

Investment Highlights

Project Area

Urban

I-526E Processing

Standard

Investment Amount

$1,050,000

Total EB-5 Raise

$21,000,000

Total Project Cost

$118,522,092

Investment Term

3 years + 1-year extension option

Preferred Returns*

5% annual return

Required Jobs

200

Estimated Jobs

686.2

Job Cushion**

243%

Luxury hotel brand

The Project partners with Fairmont Hotels & Resorts, a globally renowned brand recognized for exceptional service.

5% preferred return*

Preferred Return of up to 5% of Capital Contribution per annum, subject to deductions for administrative, legal, or tax expenses.

Capital stack & project value can give repayment confidence

The NCE holds Second Recorded Security Interest. The Senior Loan’s limit is $32 million. The appraisal of $164,500,000 upon completion inspires confidence of EB-5 repayment in the event of a sale.



I-526E denial-refund guaranty***

This protects EB-5 investors in the event of petition denial. Such an event requires the Manager, NCE or JCE to return the EB-5 investor's Capital Contribution.

Project-completion guaranty

The Completion Guaranty serves as a safeguard to ensure substantial completion, as evidenced by the issuance of a permanent or temporary certificate of occupancy.

Attractive investment in the broader market

To date, the Developer has already secured 32 deposits from non-EB5 investors. The swift sales indicate the project's diversified appeal.

Why Invest

Overall, this project will resonate with a higher-end market of investors who prefer globally recognized luxury brands. Strong sales performance with non-EB-5 investors gives further evidence of its market strength. We believe the 5% preferred return is higher than the industry norm and may attract investors. The capital stack structure and appraised project value provide optimism for repayment in the event of a sale. An I-526E Denial Refund Guaranty and Project Completion Guaranty provide can provide a sense of security for cautious investors.

Condo Hotel Rental Program

2 in 1: vacation home and rental property

Owners of the residences have the option to participate in a Fairmont-managed hotel rental program (the "Rental Program"), enabling them to rent out their units as traditional hotel rooms through the Fairmont website and other standard hotel booking platforms. Alternatively, they can choose to independently rent out their units using various short-term and long-term rental websites in the market. This flexibility empowers owners to tailor the usage of their units to their individual investment and lifestyle needs.

Amenities

World-class Fairmount hotel services

The Project includes the renovation of the historic Cedars Hotel. The restored hotel structure will house essential amenities such as the front desk, lobby bar, library, lounge, and a signature fine-dining restaurant. The new structures will host additional amenities like a fitness center, spa, meeting space, pool, and ballrooms. The development also offers an artisan coffee shop, a resort pool deck with hot tubs and fire pits, a staffed residence lounge with Wi-Fi, a dedicated "Bark park" for dogs, a gift shop, a spacious west lawn with a wedding gazebo, and private meeting rooms for business functions. The historic Cedars Hotel was a coveted wedding venue, and the Project will continue this tradition.

Market Demand

Rising demand for luxury living and limited competition

This North Carolina Project taps into a significant market opportunity and boasts a strategic location just 15 minutes from Asheville Airport, which offers direct flights to major cities such as New York, Boston, Fort Lauderdale, Dallas, and Las Vegas. With a cost of living 6% below the national average and a growing population, the region's demand for luxury communities and vacation homes is surging. The Project can assist in meeting this demand as one of the largest approved developments in an area with limited land availability. Featuring world-class amenities under the prestigious Fairmont brand, the Project's ability to generate rental income enhances its exclusive appeal. Cost of living source: https://www.payscale.com/cost-of-living-calculator/North-Carolina-Hendersonville

Project Location

Stunning views and proximity to hiker paradise

The Project's location offers its residents prime views and easy access to the Blue Ridge Mountain, a year-long paradise for outdoor adventurers. Thousands of miles of trails are ideal for hiking, mountain biking, horseback riding, and rock climbing. Hendersonville is a historic city that is a mere 15-minute drive to the Asheville Regional Airport, making it one of the most accessible cities in North Carolina. The region's economy is experiencing growth and attracts interest from Fortune 500 companies and international corporations.

Job Creation

686 jobs projected, only 200 required

The anticipated 20 EB-5 investors will require 200 jobs. Based on the Project's budget of $118,522,092, the Project is projected to create a total of 686.2 jobs, resulting in a job cushion of 243%.

Capital Stack

Appraised value significantly exceeds total debt

EB-5 investors hold a second recorded security interest. In case of default or foreclosure, proceeds from the property sale would first satisfy the senior loan, which is capped at $32 million, before addressing the EB-5 loan obligations. Importantly, the project’s appraised value upon completion is $164.5 million, substantially exceeding the total debt, which can provide a sense of security for EB-5 investors. Additionally, the project can proceed without EB-5 funds, as the senior loan and condominium deposits alone are sufficient to complete construction. Disclosure: Fundamental data and forecast supplied by management of the Company. Such projections may not be realized.

Financial Projections

Condo unit sales aim to repay all debt including EB-5

​​The Developer Group hired a real estate market research firm, HVS Consulting and Valuation, to conduct a market study on February 27, 2020, which has been utilized as a basis for the financial projections. Income is expected to be generated from both the sale of units as well as from rental/hotel operations. Projected unit sales alone are enough to repay all sources of capital, including EB-5 investors; projected unit sales are $120.3 million. All unsold units (if any) will operate as traditional hotel rooms managed by Fairmont, creating additional projected revenue for the Project. Residential Unit Sales (source: Business Plan dated March 2023)

Milestones & Progress

Demolition, site preparation, and construction started

The project began with demolition and site preparation in Q4 of 2022. Construction of the first phase, Pisgah Tower, started on March 8, 2024, with completion targeted for 2025. The second phase, Dupont Tower, along with additional commercial space, is scheduled to be completed by Q1 of 2026. Operations are set to commence following the completion of Phase I in 2025. (Source: https://www.blueridgenow.com/story/sponsor-story/fairmont-heritage-place-the-cedars/2024/03/28/groundbreaking-on-new-luxury-living-in-hendersonville/73103976007/).

Disclosure

*Preferred returns are part of the deal structure and indicate the sequence of how distributions (from operations or a capital event) are disbursed. They are not guaranteed and should not be considered a financial projection. Actual cash flow and/or distributions from the Company may differ from the preferred return. If the Company's net cash flow falls short of covering the preferred returns owed, any outstanding balance will accrue until there are adequate funds or proceeds from a capital event to fulfill the annual return obligations. The Company's Manager reserves the right to withhold all net operating cash flow earmarked for investors, opting instead to accumulate these funds until the repayment of Capital Contributions. Investors should review the PPM and the respective offering documents from the Company for full details. **Job cushion is based on a projected job creation estimate only and does not guarantee the success of the investment nor the success of obtaining permanent residency. ***The refund guaranty is subject to terms and conditions.

Disclaimer

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