Assets in the Ascendas Hospitality REIT include the IBIS Sanyuan hotel in Beijing
Hong Kong-based real estate private equity shop Gaw Capital may be about to take on Blackstone for the keys to Ascendas Hospitality Trust, a S$838 million ($584 million) hotel REIT, according to recent media reports.
Gaw, which has often worked in concert with mainland Chinese and Korean institutional investors in recent years, has been playing a growing role in acquisitions in the region, and recently bought a boutique hotel in the city-state.
Blackstone, which is the world’s largest manager of alternatives assets, has been on a REIT privatisation binge in the past year, after buying up multiple real estate investment trusts in the US, and could be looking to extend that streak into Asia.
Jon Gray & Co on a REIT Binge
Blackstone’s Jon Gray seems enthusiastic about buying up more REITs
According to an account in Reuters, the managers of the Ascendas Hospitality REIT began reviewing options regarding the trust and its assets last month after receiving an unsolicited expression of interest in buying out all of its securities.
The hospitality REIT was only formed in 2012, and is one of three REITs managed by Singapore government-linked Ascendas. In total the REIT owns 11 hotels totalling 4100 rooms, including the Ibis Beijing Sanyuan in China, with the majority of the assets being in Australia.
Speaking at a conference in October, Jon Gray, global head of real estate for Blackstone said that stock investors are underpricing the value of US real estate, and predicted more takeovers of REITs and other publicly traded landlords, as well as sales of assets.
The trended of undervaluing publicly traded real estate assets also appears to hold true in Asia, with Ascendas hospitality trust being one of only six Singapore-listed real estate trusts trading above the book value of its assets as of last week, according to Thomson Reuters data.
At least in the US, Blackstone has been putting Gray’s words into practice, with the private equity investment firm scooping up more than $10 billion in real estate trusts and REIT assets there over the last four months.
In September, Gray’s crew bought out the shares in Chicago-based Strategic Hotels & Resorts Inc in a cash deal valued at $3.93 billion, and followed up in September by purchasing specialty REIT BioMed Realty Trust and its stable of office buildings in a $4.9 billion deal.
Blackstone then closed out 2015 by acquiring 49 shopping centers in the US from Canadian REIT RioCan for $1.9 billion.
The Gaw Family Has a Taste for Hotels
Gaw led the $938M acquisition of Hong Kong’s Intercontinental Hotel
While Gaw has not previously shown a taste for REIT assets, it clearly has a hankering for hotels, after leading the $938 million acquisition of the Hong Kong Intercontinental Hotel last July, and purchasing the Big Hotel in Singapore for a reported S$203 million ($141.5 million) in October.
Including the Big Hotel, Gaw Capital Partners now has 19 properties in its hospitality portfolio including the iconic Strand Hotel in Yangon, Myanmar and the Hollywood Roosevelt Hotel in Los Angeles. The firm also controls hotels in Bangkok, Pattaya, Hong Kong, San Francisco, Suzhou, Shenzhen and Beijing, as well as managing the soon to be opened Roosevelt Macau.
In addition to its hotel deals, Gaw has lead high profile acquisitions in the US, such as the $725 million purchase of a Seattle office tower last June, and has advised China’s Ping An Insurance on two acquisitions in London. For its Seattle deal, and the Intercontinental acquisition, Gaw is said to have teamed with Korean institutional investors.