Report says HK's Gaw Cap eyeing NY hotel

By William Hennelly | China Daily | Updated: 2017-08-11 07:51
The Standard Hotel, a symbol of chic in Manhattan's Meatpacking District, could be going to a Chinese buyer.

Hong Kong-based Gaw Capital Partners is reportedly close to buying the 338-room hotel, with floor-to-ceiling windows, at a discount.

The New York Post cited sources saying that a fund-controlled by Goodwin Gaw, 48, and his brother and sister-will pay $340 million for the property that overlooks the High Line, a popular city park and tourist attraction.

The rumored price for the Standard is $60 million less than what it was reportedly going for in 2014. That year the hotel's parent, Standard International, contracted to buy the hotel from Dune Capital Management and Greenfield Partners, but the deal was not consummated.

Andre Balazs, the noted hotelier who founded the Standard brand, still owns 20 percent of Standard International.

"Generally speaking, the reported price is about what I would have expected for the property-based on other hotel sales over the past few years, replacement costs and the significance of the property in the Meatpacking District sub-market," Thomas McConnell, head of real estate services firm Cushman and Wakefield's Global Hospitality Group, told China Daily via email.

"One observation is that a significant component of the value of the hotel is the food and beverage operation," he said.

McConnell said the Standard's food and beverage outlets do very well and are a central component of the property's success as a lifestyle property.

"Many similar hotels in NYC have difficulty squeezing much profit out of their food and beverage operations, but the Standard seems to have found the formula."

Gaw's interest comes as a marketing survey by hotel data firm STR shows that nearly 16,000 new hotel rooms will join the total inventory in New York, which already is at an all-time high of more than 115,000 rooms. Hotels in New York face greater competition from that new supply and the omnipresence of Airbnb, the online accommodations-sharing marketplace.

Gaw Capital Partners USA has more than $2.7 billion in assets under management-including Los Angeles' Hollywood Roosevelt Hotel, and one of Gaw's investment funds recently bought the Marriott City Center in Oakland, California.

Gaw once had stakes in New York at 123 William Street, 218 18th Street and 285 Madison Avenue, which it has since sold, according to The Real Deal website.

In March, UK-based Foreign Direct Investment Awards picked Gaw for FDI Deal of the Year, noting that "their commitment to transforming 123 & 151 Buckingham Palace Road is an outstanding example of adding strategic value."

While Gaw continues his US property acquisitions, Chinese investment in US real estate overall is retreating, dropping 17 percent year-on-year to $4.7 billion in the first half of 2017, according to Real Capital Analytics.

Anbang Insurance Group, which bought the famed Waldorf Astoria New York hotel in 2014 for $1.95 billion, has closed the landmark building for renovations that will turn it into a condominium/hotel.

But Anbang has since scaled back its FDI forays, as have giants Dalian Wanda Group, Fosun International and HNA Group Co Ltd, as they face scrutiny in China.

Chinese regulators want to determine how much debt the mainland companies have used to fund their buying sprees and whether they are overleveraged and pose a systemic financial risk.

Still, Chinese investors are expected to maintain an interest in the US real estate market.

"Overall, we believe that the long-term trend of Chinese mainland companies investing in overseas real estate will revive once the authorities relax restrictions," said Andrew Haskins, Colliers International executive director of Asian research, in a report.

Haskins said that his firm expected the pace of Chinese investment in the US to moderate, but do not anticipate a sharp fall.

"Carefully considered investment in US property can offer Chinese enterprises both reasonable returns and diversification of risk," he added.

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