Hong Kong-based Gaw Capital has made its latest purchase of a US property asset after the cross-border real estate private equity specialist last week acquired a 285-room Chicago boutique hotel, together with a partner for $60 million.
A US subsidiary of Gaw Capital Partners partnered with Chicago developer Shapack Partners to buy the Public Chicago Hotel, in the city’s Gold Coast from boutique hotel specialist Ian Schrager and Morgan Stanley, according to accounts in the Chicago media.
Family-run Gaw has successfully teamed with some of Asia’s largest institutional investors on acquisitions in the US and the UK, but also has extensive investments of its own in the hotel industry in the US and Asia.
Gaw Bets on a Restored Historic Hotel
Gaw and Shapack are paying approximately $210,000 per room for the Public Chicago, which Schrager opened in 2011 after acquiring and retrofitting the former Ambassador East hotel – and its famous Pump Room restaurant. US investment brokerage Eastdil Secured is reported to have advised Schrager and Morgan Stanley on the sale.
Unlike a number of cases where US investors have quickly flipped properties to Chinese investors for substantial profits after holding them relatively brief periods, Gaw’s price for the hotel at 1301 North State Parkway in Chicago is estimated to be roughly equal to the amount that its former owners spent acquiring and renovating the property near Chicago’s Millennium park.
The Hong Kong private equity shop is familiar with the Chicago market through the company’s chairman and managing principal, Goodwin Gaw, having previously invested in the Three First National Plaza office building in the city, and also being a part owner of the Soho House hotel in Chicago’s Fulton Market district.
Gaw founded Downtown Properties, which specialises in US hospitality projects two decades ago after buying and renovating Los Angeles’ landmark Hollywood Roosevelt Hotel. Gaw Capital has also been active in hotels in Asia, with the firm last year participating in the $940 million acquisition of the Intercontinental Hotel in Hong Kong, and acquiring the Big Hotel in Singapore for $151 million. The Gaw family also owns a 50 percent stake in the historic Strand Hotel in Rangoon.
Over the years the company has built a hospitality portfolio of 18 properties in Asia and the US, which includes properties under its own Hotel G brand in Bangkok, Pattaya, Hong Kong, San Francisco, Suzhou, Shenzhen and Beijing.
Chinese Investors Like Hotels
While Gaw has long had an affinity for hotels, other Chinese investors have rushed into this asset class in recent years.
In March this year China’s Anbang Insurance paid Blackstone $6.5 billion for the Strategic Hotels and Resorts group, and then in May Beijing-based Cindat Capital Management closed on a $571 million hotel joint venture that gave the investment firm a majority stake in seven Manhattan hotels.