Gaw Capital Defaults on $100M Loan Tied to California Hotel

A vehicle managed by Hong Kong’s Gaw Capital Partners has defaulted on a $100 million loan linked to a 500-room California hotel, according to a local media account citing official records.

Fund manager Gaw purchased the Oakland Marriott City Center in the Golden State’s Bay Area for $143 million in 2017. Invesco CMI Investments bought the hotel’s loan last May and now could look to seize the 1983-vintage property next to Oakland’s convention centre, the East Bay Times reported.

The delinquent loan marks the latest setback for Gaw on the US West Coast, where the privately held firm sold the nearby Courtyard Oakland Downtown hotel last year at a 76 percent haircut and saw an Oregon commercial building fall into receivership in 2023.

“You are going to see more hotels fall into default,” Alan Reay, president of market tracker Atlas Hospitality Group, told the East Bay Times. “There is a disconnect between what sellers and buyers of hotels expect the price should be. There is going to be an adjustment in pricing.”

Golden State Worriers

When Gaw acquired the Oakland Marriott City Center almost eight years ago, from a joint venture of New York-based Apollo Global Management and Bay Area investor DiNapoli Capital Partners, the firm anticipated future market growth in the high-tech centre’s urban core.

Gaw bought the hotel through its $315 million US Fund II and viewed the acquisition as an opportunity to benefit from the ongoing urbanisation and tech-driven economic growth in the communities surrounding San Francisco, with one source telling Mingtiandi at the time that Oakland was becoming “the Brooklyn of the Bay Area”.

But today the business-oriented markets of San Francisco, Oakland and Silicon Valley are struggling badly with their hotels, Reay told the East Bay Times, with lenders likely starting to lose patience with delinquent owners.

Gaw sold the Courtyard Oakland Downtown in October to an affiliate of Atlanta-based Core Property Capital for $10.6 million, or a quarter of the $43.8 million it paid for the 162-key hotel in 2016. The property had been valued at $44.6 million as of January 2024, according to Alameda County estimates.

The disposal came after the firm headed by Goodwin Gaw had taken advantage of San Francisco’s beaten-down office market in late 2023 when it bought back the North Park office campus along the city’s Embarcadero from Blackstone for $82 million, after the fund manager had sold the same complex to the New York-based giant for $245 million in 2018.

Other Bay Area investments in Gaw’s portfolio include the 153-key Hotel G San Francisco, as well as the 555 Montgomery Street and Hamms Building office blocks in San Francisco and the Bayfair Center shopping complex in San Leandro.

Pivot to Japan

With property values slumping in the US, Gaw Capital has focused on developed Asia Pacific markets like Japan.

The firm announced last week that it had teamed up with Singapore-based Patience Capital Group to acquire the 11-storey Tokyu Plaza Ginza mall in Tokyo’s prime Ginza district, with market sources who spoke to Mingtiandi confirming a deal value of $1 billion.

In May of last year, Gaw acquired a third property for its western Tokyo data centre campus, with the deal set to add 38 megawatts of IT capacity to the firm’s existing development in Fuchu City.

The fund manager has also bet on Japan’s multi-family market, having joined up with Alyssa Partners last April to acquire a portfolio of 29 Tokyo apartment buildings on behalf of separate accounts for the Qatar Investment Authority and other investors.