RREEF, H&Q team up for hotel joint venture in China

Private equity firms RREEF and H&Q Asia Pacific have teamed up with Hilton Hotels to build more than 20 hotels in China.

RREEF, the real estate and infrastructure arm of Deutsche Bank, and private equity firm H&Q Asia Pacific have formed a joint venture with Hilton Hotels to bring 20 limited-service hotels to China.

Details of the partnership were not disclosed, but last month Chinese news sources reported that H&Q was investing $500 million (€379 million) in Hilton’s burgeoning Chinese hotel business.

The joint venture will comprise approximately 5,000 new rooms under the Hilton Garden Inns banner. According to a statement, the properties will most likely be in Shanghai, Beijing and Tianjian, as well as cities in the Yangtze River Delta and Bohai Bay area. The no-frills hotels will target business and leisure travelers.

Earlier this month, Kurt Roeloffs, head of RREEF Asia Pacific, told Private Equity Real Estate that the firm liked what they saw in China, although it had taken them many years to get comfortable with the country, particularly finding the right local operating partners. The firm recently announced its first investment in China, a mid-market residential project in Zhuhai. RREEF is working with three local developers on the $225 million project.

In the statement announcing the Hilton deal, Brian Chinappi, head of acquisitions in East Asia for RREEF, said that the firm liked the long-term real estate fundamentals and was focused on the business and leisure travel sector.

The venture also represents a further expansion for Hilton into China. The hotelier already owns five hotels in the country.

H&Q has been active in China as well. The firm recently made headlines when it exited its investment in Chinese Starbucks outlets. It sold the properties back to the US-based Starbucks chain.