China Life-Led Group to Invest $2 Billion in Starwood Capital's US Hotel Portfolio
PHOTO: New York's Baccarat hotel, which Starwood Capital Group sold to China's Sunshine Insurance Group Co. Ltd. last year. (Photo courtesy of Baccarat Hotel & Residences)
A group of investors led by China Life Insurance Co. Ltd. has agreed to invest $2 billion into Starwood Capital Group's portfolio of U.S. hotels, the Greenwich, Connecticut-based investment firm confirmed Tuesday.
The investment is just the latest in a growing trend of Chinese investment in overseas hotels.
As a result of the investment, China Life, the country's largest life insurance company, will own a share of the 280 select-service hotels across 40 U.S. states along with a group of sovereign-wealth funds and others.
"With this select-service hotel portfolio, China Life has an efficient vehicle for investing in the United States economy," said Starwood Capital Group's chairman and CEO Barry Sternlicht in a statement. "We look forward to working with China Life on additional opportunities across a wide range of real estate asset classes in the years to come."
Managing approximately $51 billion in assets, Starwood Capital is one of the world's largest real estate managers. It's entire U.S. hotel portfolio is valued at more than $3 billion.
This week's investment comes less than two years after the Starwood Capital Group agreed to sell New York's Baccarat hotel to another Chinese insurance group for more than $2 million per room in February 2015. That same month, Hilton Worldwide completed the $1.95 billion sale of the Waldorf Astoria New York to China's Anbang Insurance Group.
Earlier this year Anbang led a Chinese consortium in a bidding war against Marriott International in hopes of acquiring Starwood Hotels & Resorts Worldwide. However Anbang ultimately withdrew its offer, resulting in a Marriott-Starwood merger that was completed last month.
Most recently, Anbang completed a majority of its $6.5 billion acquisition of Strategic Hotels & Resorts Inc. from the Blackstone Group. According to Bloomberg, the deal signals the second-largest U.S. acquisition by a Chinese buyer.
The recent surge in Chinese investment in overseas lodging can be attributed to newer regulations and insurance companies' aim to diversify their portfolios.
Citing China Insurance Regulatory Commission rules, Bloomberg reports Chinese insurers are permitted to invest up to 30 percent of their total assets in real estate and a maximum of 15 percent overseas.
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