Cindat Capital Management is hungry for a bigger piece of the global hospitality market, as the Chinese private equity firm is reportedly in talks for a £500 million ($660 million) joint acquisition of Britain’s QHotels Group.
Cindat is teaming up with British investment firm Aprirose for the pursuit of the UK hotel management firm, according to a Bloomberg report citing people familiar with the matter. The Beijing-based investor would take a 50 percent stake in QHotels, which has a portfolio of 3,650 rooms across the UK, while Aprirose would hold the remainder. Aprirose was previously pursuing the deal for the British hospitality company on its own.
According to the report, Cindat and Aprirose aim to reach an agreement within the next few weeks to purchase QHotels from Bain Capital Credit and Canyon Partners. The two US private equity firms acquired the hotel management firm in 2014 by purchasing a portfolio of loans from the liquidators of the Irish Bank Resolution Corporation.
Founded in 2003, QHotels runs 26 four-star hotels and two countryside lodges across England and Scotland, including properties in Manchester, Glasgow, Sheffield, and Leeds.
Cindat Looks To Deepen British Commitment
Cindat, the private equity affiliate of “bad bank” Cindat Asset Management, focusses on investing in mature, low-risk international real estate assets in the US, Britain, and Australia. The company forged its first British deal in May 2016, partnering with China’s CITIC Capital to buy a 70 percent stake in a luxury apartment project in London. The 32-apartment project at 60 Curzon Street is projected to be valued at £660 million ($866 million) upon completion.
Cindat has also flexed its muscles in the hospitality sector, closing on a $571 million joint venture with Taikang Life Insurance for a majority stake in seven Manhattan hotels in May 2016. The company made its first overseas investment in 2014 by teaming up with local builder Zeller Realty Group to buy 311 South Wacker Drive skyscraper in Chicago for $304 million.
Cindat has also acquired a taste for health care real estate, partnering with fellow Chinese institution Union Life Insurance to buy a portfolio of senior housing and long-term/post-acute care facilities from Ohio-based Welltower for $930 million last November.
Outbound Curbs Rein in Hotel Investment
Mainland Chinese investors poured some $10.3 billion into overseas hotels in 2016, according to property consultancy Cushman & Wakefield, but their interest in the sector has subsided this year, with only about $1.1 billion of hotel investments in the first half of 2017. Among the major transactions, troubled insurance giant Anbang Group picked up an Amsterdam hotel from Blackstone Group for €350 million ($391.6 million) in March.
Tightening cross-border capital controls helps explain the lack of any blockbuster hospitality deals this year. As part of China’s campaign to tamp down offshore investments in non-strategic sectors, the State Council last month issued new guidelines restricting deals in a variety of industries including real estate, hotels, entertainment and sports.
The curbs do not appear to be a showstopper for Cindat, an investment vehicle affiliated with Hong Kong-listed China Cinda Asset Management, one of China’s four main buyers of non-performing loans. Cindat was set up in 2013 “to guide and safeguard Chinese capital in their overseas investments,” according to the firm’s corporate website.