August 8, 2014 (Jay, VT)- Jay Peak Resort today announced that it will payout an additional $350,000 this year to the partners in its first EB-5 project, Tram Haus Lodge. The payment comes just eight months after Jay Peak Management Inc paid the investors in this project more than $750,000 as part of the project’s guarantee to return 100% of investors’ funds. While there are well over 500 EB-5 operators in the country, less than one percent have commenced with a payout strategy, making Jay Peak’s guarantee of a repayment exceptional.
“I am proud of the fact that our first group of investors will have their investments returned to them in full,” said Jay Peak president Bill Stenger. “These 35 investors have received their permanent green cards and will now have their entire investment returned to them. This is a successful outcome for all involved.”
The accelerated payment comes as resort officials acknowledge there was poor communication between the investors in its Tram Haus Lodge on the timing of when they were transitioned from an “at-risk” class to being fully guaranteed the 100% return of their money.
“We handled the communication and presentation of the exit strategy for the Tram Haus Lodge investors poorly and some of the limited partners let us know it,” continued Stenger. “Although the partnership agreement states it is solely up to the General Partner (Jay Peak Management Inc) to decide if and when it’s appropriate to redeem the partnership and begin returning (investor) funds, we realize the manner in which the redemption was communicated did not measure up to the standards by which we conduct every other aspect of our business.”
Stenger is referring recent discussions between Jay Peak and the investors in its Tram Haus Lodge property. Jay Peak’s EB-5 projects are structured as limited partnerships comprised of a general partner and the group of foreign nationals investing (limited partners) While EB-5 investments are required to be at risk and cannot be guaranteed, as part of the project, the investing group is presented with potential exit strategies—methods by which the investors could be made whole with the return of their $500,000 if the business goes as planned and market and other conditions permit. The general partner is solely responsible for determining when those conditions present themselves.
In August of 2013 the General Partner (GP) concluded that the Tram Haus Lodge Partnership could begin an exit strategy by which all of the 35 investors would have all of their funds returned. While the GP worked with Jay Peak Inc. (the guarantor of the return of the invested funds), on terms of a payment schedule, the GP failed to notify the limited partners of the redemption in a timely manner. Because of the communication breakdown, many investors continued to believe they would be receiving their annual dividend check. Jay Peak’s announcement of an accelerated $10,000 payout this year to each investor represents what the limited partners would have expected to receive over the course of the 2013-14 winter operations.
Stenger says that in addition to disappointing investors, the communication breakdown resulted in a missed opportunity.
“At the end of the day, we missed the chance to showcase the fact that we are one of only a handful of EB-5 centers to have an active payment strategy in place to return 100% of investor funds. That’s out of more than 500 in this country. It’s a great story for Jay Peak; a great story for Vermont, and great story for the EB-5 initiative.”