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Cindat looks to sell stake in Manhattan hotel portfolio at discount

Chinese private equity firm paid $571M for stake in 7 hotels in 2016

From left: Holiday Inn Express at Wall Street, Cindat CEO Greg Peng and Holiday Inn Express at Times Square (Credit: IHG/Booking and Cindat)
From left: Holiday Inn Express at Wall Street, Cindat CEO Greg Peng and Holiday Inn Express at Times Square (Credit: IHG/Booking and Cindat)

A Chinese private equity firm is looking to sell a stake in its large Manhattan hospitality portfolio at a discount, in one of the largest hotel offerings to hit the market since the start of the pandemic.

Cindat USA is looking to sell a preferred equity stake in a portfolio of seven select-service Manhattan hotels it bought in 2016 as part of a joint-venture with Hersha Hospitality Trust. The company, which is backed by China’s Cinda Asset Management and Taikang Life Insurance, is eyeing pricing that would value that 1,087-room portfolio in the low-$400 million range, according to the brokers handling the listing.

That’s a significant discount to the $571 million the partners paid for the portfolio four years ago, reflecting the dramatic shift the market’s taken during that time.

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“Now is a time to invest in New York at a historically attractive long-term basis,” said JLL’s Kevin Davis, who is leading the team marketing the portfolio. “We are in the market with a number of transactions in New York City right now and are seeing tremendous interest from both domestic and foreign investors.”

It’s been a tough market for investment sales, and particularly tough for hotels.

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Just six hotel deals closed in the first half of the year, according to a recent report from the Real Estate Board of New York. That was down 70 percent from the same time last year, with pricing falling 37 percent.

That was a slower pace of sales than the investment market overall, which saw transaction volume fall 32 percent.

The pandemic brought the city’s tourism industry to a near halt earlier this year, but in recent weeks hotel occupancy rates have climbed back up — though they remain far below where they were at a year ago. Even before the pandemic, though, hotel values had been hurt by an influx of new supply and increasing costs, particularly for properties represented by the city’s hotel union.

Cindat and Hersha’s portfolio is non-union. And the partners own the properties outright without ground leases — traits that Davis said should help drum up demand from potential investors.

Cindat bought a 70 percent stake in the portfolio in 2016 from Hersha, which retained its 30 percent. The company is looking to sell a piece of its stake and will stay in the deal. The properties are the Holiday Inn Express, Candlewood Suites and Hampton Inn in Times Square; a pair of Hampton Inn hotels in Chelsea and Herald Square; a Holiday Inn on Wall Street and a Holiday Inn Express on Water Street.

Cindat’s parent company, Cinda, has partnered with Aby Rosen’s RFR Realty, along with Hines and China Vanke, on a condo project at 100 East 53rd Street.

Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229

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Hersha Hospitality TrustHotel MarketInvestment Sales