Hong Kong's Gaw Capital buys Public Chicago

It’s been a good year for Hong Kong-based private real estate investment firm Gaw Capital Partners.

A year ago, an investor consortium advised and managed by Gaw purchased the InterContinental Hotel Hong Kong for $938 million. By the end of October, Gaw Capital had acquired Singapore's Big Hotel for $144 million. 

But like many Asian businesses, Gaw has been looking firmly westward, and has just made a major new buy in the U.S. 

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Partnered with Chicago developer Shapack Partners, a U.S. subsidiary of Gaw Capital Partners has acquired the Public Chicago Hotel from boutique hotel specialist Ian Schrager and Morgan Stanley. The purchase price was an estimated $60 million, significantly less than what the hoteliers were seeking back in early 2015, when the hotel first went on the market. At the time, reports indicated that Schrager and Morgan Stanley were seeking as much as $300,000 per room, or about $86 million. Schrager and Morgan Stanley joint venture spent about $60 million acquiring and renovating the 16-story former Ambassador East hotel prior to its 2011 opening.

RELATED: Chicago's transactions market continues to make noise. Learn more about hospitality investment opportunities in the city and nearby markets at NATHIC Midwest, November 16-17, at the InterContinental Chicago Magnificent Mile.

The Hong Kong private equity shop is reportedly familiar with the Chicago market. The company’s chairman and managing principal, Goodwin Gaw, has previously invested in the Three First National Plaza office building in the city, and is also part-owner of the Soho House hotel in Chicago’s Fulton Market district.

Twenty years ago, Gaw founded Downtown Properties, which specializes in U.S. hospitality projects, after buying and renovating Los Angeles’ Hollywood Roosevelt Hotel. The company now has a hospitality portfolio of 18 properties in Asia and the U.S.

 

A photo posted by PUBLIC Hotels (@publichotels) on

Chinese Investors, U.S. Hotels

The sale follows a recent trend of Chinese businesses looking to acquire American hotels and hotel companies. Most notably, Anbang Insurance offered $13 billion to buy Starwood Hotels & Resorts this past spring, forcing Marriott to up its ante to $13.6 billion to keep their own planned merger on track. (That deal is scheduled to be finalized soon—as soon as China approves, of course.) 

But Anbang already has a respected presence in the U.S., having acquired New York City’s Waldorf-Astoria in late 2014 for a reported $1.95 billion and purchased Strategic Hotels and Resorts for $6.5 billion

In February, Hersha Hospitality Trust announced that it would be selling seven limited-service hotels in Manhattan to a joint venture between itself and Chinese firm Cindat Capital Management for $571.4 million. The properties total 1,087 rooms, valuing the transaction at about $526,000 per key. 

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