BALTIMORE, MD—This is a story of an old-time hotel beingrepositioned with care taken to conserve its historic roots—via oneof the newest sources of financing available to developers.

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Baltimore developer Shaffin Jetha is renovatingand repositioning his recently-acquired Mount VernonHotel at 24 West Franklin into a 170-room HotelIndigo hotel, a brand franchised byInterContinental Hotels Group.

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For the local community, the key aspect of the deal is that theboutique hotel is being redesigned with the local culture andhistory of the surrounding Mount Vernon neighborhood in mind.

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For the development community, and commercial real estateborrowers in general, the $6 million in EB-5funding is what is intriguing about the $20 millionrenovation.

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Briefly, EB-5 is a government program under which developerscan procure project funding from foreign investors in exchange fora green card. There are two types of EB-5 structures: direct (orindividual) investment, and regional centers. The latter is vastlymore popular, with 90 to 95% of filed EB-5 proposals coming in withthis structure.

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In both scenarios, investors must provide $1 million—or $500,000with a "targeted employment area"—and create 10 full-time US-basedjobs as a result of that investment.

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For the Hotel Indigo project in Baltimore, EB5-investment firmOriental Dolphins provided the funding, byrecruiting 12 Chinese investors for the hotel project, each of whominvested $500,000.

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According to Kate Weaver, a CPA and manager ofODI, this is one of the first EB-5 investment funded projects inBaltimore City, but she adds, the company "has plans for severalapartments, offices and assisted living projects in Baltimore andthe District of Columbia."

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The building is a national historic landmark constructed in 1905as Baltimore's first YMCA. It later became the original home of theUniversity of Maryland's School of Commerce, before it wasconverted into a 197-key hotel in the mid-eighties. Currently, itis divided between dormitory housing and separately-owned hotelrooms.

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Marc Tropp and Barry Dollmanof Eastern Union Funding's Bethesda, MD officehelped arrange the financing for the transaction, which alsoincluded a loan from Virginia Heritage Bank.

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