Gaw Capital Scoops Up Manhattan Hotel for $323M

Hong Kong’s Gaw Capital has bought a boutique hotel in Manhattan’s meatpacking district for $323 million, officially sealing a deal that was first reported back in August.

The private equity firm acquired the Standard Hotel through the limited liability company “GC SHL” on October 27, according to city records cited by industry news website Real Estate Weekly. The seller, AB Green Gansevoort, also operates under the name Standard New York.

The deal marks Gaw’s first high-profile acquisition in New York City, as the cross-border investment shop run by Hong Kong’s Gaw family builds on its $8 billion global property portfolio, which also includes hotels in California and Chicago.

Gaw Deal Puts Hotel Ownership Confusion to Bed

Completed in 2009, the boutique hotel at 848 Washington Street straddles the High Line, an elevated rail track that was converted into an urban park in lower Manhattan. The hip property by hotelier André Balazs initially drew some controversy over its exhibitionist-friendly, floor-to-ceiling windows, which allowed guests to subject park-goers to nightly nude displays.

Gaw was previously reported to be in advanced talks to buy the 338-room luxury hotel for $340 million. The eventual selling price represents a $77 million discount on the $400 million that the property was said to be selling for in early 2014, in a transaction that reached the contract stage but never closed.

At the time, hotel management firm Standard International was said to be purchasing the hotel from Balazs and his institutional partners Dune Capital Management and Greenfield Partners. The acquisition price equated to around $1.2 million per room, one of the highest in New York since the previous market peak in 2006. The deal fell through, despite widespread reports to the contrary, according to an account in The New York Post.

Balazs, who founded the Standard brand, still owned a 20 percent stake in the hotel before it was sold to Gaw.

Oversupply Takes $77M Bite out of Hotel’s Value

The steep drop in the hotel’s value since 2014 is related to its slumping performance, as measured by revenue per available room, occupancy rate, and food-and-beverage income, according to the newspaper. The hotel is under pressure from intensifying competition in the city’s hotel sector, with nearly 16,000 rooms projected to launch in New York, adding to an already record-high supply.

The city’s hospitality slump may have bottomed out, however, as occupancy in New York increased by 1.1 percent in the second quarter of 2017, and a 3.8 percent year-to-date growth in demand may have offset a 3.1 percent boost in supply, according to a report from PricewaterhouseCoopers. Nevertheless, the Standard Hotel is also said to be vulnerable to food-and-beverage competition, with trendy eating venues accounting for much of its income.

Hong Kong PE Firm Plants Its Flag in NYC

Gaw Capital is no stranger to the US, where its domestic affiliate, Gaw Capital Partners USA, has over $2.7 billion in gross assets under management. In July 2016, the business partnered with a local developer to purchase the Public Chicago Hotel in the midwestern city for $60 million, paying roughly $210,000 per room.

Further west, Gaw also picked up the Marriott City Center hotel in Oakland, California for $143 million this past May, according to sources who spoke with Mingtiandi, after Gaw-controlled Downtown Properties acquired a Mission Street office building in San Francisco for $42 million, among other deals.

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