GIC forms JV with Host Hotels

Both partners will inject as much as $600m into the joint venture, which will target opportunities in Asia Pacific.

The Government of Singapore Investment Corporation has formed a joint venture with Host Hotels & Resorts, the largest US Real Estate Investment Trust, to invest in hospitality opportunities across Australia and Asia.

GIC is making the investment through its affiliate, RECO Hotels. Both institutions will contribute as much as $600 million (€385 million) to the venture, with Host owning 25 percent of the projects. With leverage, the companies expect to have an investment potential of $1.5 billion to $2 billion. An affiliate of Host Hotels will provide asset management services and will earn fees for these services.

Host Hotels already owns a minority interest in a European joint venture with Dutch pension fund Stichting Pensioenfonds and Jasmine Hotels, an affiliate of GIC. That JV owns ten hotels in five countries in Europe with approximately 3,200 rooms.
“Building on the success we are having with our European joint venture, we continue to believe that the joint venture structure is an effective and efficient way to enhance returns on our investments and diversify our portfolio holdings and revenue sources,” said Host CEO W. Edward Walter in a statement.

Host Hotels currently owns 119 properties with approximately 64,000 rooms. The company typically partners with brands such as Marriott, Ritz-Carlton, Westin, Sheraton, W and Hyatt in the operation of properties in more than 50 markets around the world.

GIC has formed a number of joint ventures recently. Earlier this month it teamed up with UK-based Orchard Street Investment Management to form a £300 million ($605 million, €394 million) special situations fund to invest in UK commercial real estate. In December GIC teamed with a group of investors including Citigroup’s investment arm CVC International in purchasing a 15 percent stake in a special purpose vehicle floated by Indian construction group Shapoorji Pallonji.