Cindat Teams with London Investor for $703M UK Hotel Deal – Sets New 2017 High

Beijing-based private equity real estate firm Cindat Capital Management has reportedly teamed with London’s Aprirose in the property investment firm’s £525 million ($703 million) acquisition of UK hospitality chain Qhotels.

Aprirose announced the purchase of the chain of 26 five and four star regional hotels from Bain Capital Credit and Canyon Partners on Thursday. The purchase is the highest value hotel acquisition globally, so far in 2017, according to the UK firm.

Cindat, which has shown a taste for hotel acquisitions, as well as for UK assets, is reported to have taken a 50 percent stake in the platform deal, which includes properties in Leeds, Manchester, Glasgow and other UK cities. The purchase exceeds earlier estimates of the transaction price by some £50 million ($67 million).

“We are pleased to have completed on this exciting and unique portfolio,” said Aprirose CEO Manish Gudka in a statement. “The 26 hotels, spread throughout the UK, will add a new dimension to our asset diverse real estate portfolio and also offer us opportunities to further develop the portfolio to increase the number of beds available.” At present, the portfolio totals some 3,680 beds in a variety of property types, including spa hotels, golf resorts and luxury hotels.

Cindat Cross-Border Buying Streak Continues

For Cindat, which is led by former Merrill Lynch executive Greg Peng, this is the mainland firm’s second investment this year in UK real estate, after it teamed with state-run CITIC Capital in May to purchase a 70 percent stake in a residential project in London’s tony Mayfair area for a reported $155 million.

That London deal came just one year after Cindat, which is a private equity affiliate of one of China’s big four “bad asset banks,” closed on a $571 million joint venture with NYSE-listed REIT Hersha Hospitality Trust which gave it a 70 percent stake in a portfolio of mid-range hotels in New York City.

Cindat’s investment comes after mainland investors seemingly lost their appetite for overseas hotel deals this year. Buyers from the PRC accounted for only about $1.1 billion in cross-border hospitality investments during the first six months of 2017, after spending $10.3 billion on such acquisitions during the 2016 calendar year, according to a report by Cushman & Wakefield.

Aiming to Double Asset Values

For this latest UK deal, Cindat’s London-based partners appear confident in the potential to boost the value of their purchase.

“Our strategy is to double the value of assets under management, while at the same time exiting from maturing transactions,” Aprirose COO Gary Jones said. The investment firm has appointed hotel management group Redefine|BDL Hotels to manage the 26 properties.

Aprirose was advised on the acquisition by Colliers International, West Ridge, KPMG and Dentons.