Cindat Capital Management has acquired a 70 percent stake in seven Manhattan hotels for $571.4 million as part of a joint venture with New York-listed hospitality specialists Hersha Hospitality Trust.
The Beijing-headquartered investment manager acquired the stake in the portfolio from Hersha which retains a 30 percent equity interest, as well as a $37million preferred equity interest in the venture at a 9 percent fixed coupon.
“Demand from Chinese investors for high-quality US real estate assets is growing rapidly. Limited service hotels in Manhattan, in our opinion, offer steady cash flow with relatively low volatility, and hence, good risk-adjusted investment returns,” commented Greg Peng, Cindat's co-founder and chief executive.
Natixis Real Estate Capital led a syndicate of international and domestic financial institutions and provided $285 million of senior acquisition financing to the joint venture, while an affiliate of Oaktree Real Estate Finance provided $50 million of mezzanine financing.
Hunton & Williams worked as legal counsel to Hersha on the transaction, while Sidley Austin provided legal counsel to Cindat. Both law firms collectively advised the newly formed joint venture. Solid Rock Advisors advised Cindat on the transaction.
Cindat Capital Management was established to advise Chinese institutional investors, such as insurers, and other state owned or private enterprises on their overseas real estate investments.
The firm is understood to be planning to raise a blind pool fund later this year.