Portman Holdings made a name for itself in China developing soaring structures and gleaming towers, and now the seeds of investment sown there are taking root back home.
A group of Chinese institutional investors has formed a joint venture to invest in 230 Peachtree, a redevelopment to be anchored by a 206-room Hotel Indigo in downtown Atlanta, an expressive canvas throughout the decades for architect John Portman, who designed and developed the Peachtree Center, AmericasMart, Westin Peachtree Plaza and more.
China Orient Summit Capital, or COS Capital, was formed by China Orient Asset Management Corp. and China Summit Capital. The former was set up in 1999 by China’s Ministry of Finance to dispose of non-performing assets. It now reportedly controls $39 billion in assets, specializing in real estate and fund management. COS-Capital has an office in San Francisco, according to its website.
Executives were drawn to the mixed-use project by the growth of downtown and Portman’s vision for turning an outdated space into something new.
“Downtown Atlanta is a market with improving real estate fundamentals, and given their long history in the city, there is no market that Portman knows better. Creating value through physical repositioning of a property is also one of our preferred investment strategies,” Chen Lijian, CEO of COS-Capital, said in a Portman release.
The firm sees this deal as a portal to future U.S. projects with Portman Holdings.
“We recognize that working with quality local partners is critical, particularly for overseas investors. We have been looking for the right opportunity to cooperate with Portman in an investment, and I fully expect that this is the first of multiple deals we execute together,” Xu Yongli, chairman of COS-Capital, added in the release.
Ambrish Baisiwala, CEO of Portman Holdings, wouldn’t comment on any prospective deals in the works, but he did say this project was a step forward in a relationship that started back in China. COS-Capital has invested in some Chinese projects designed by the Portman architectural firm, but this is the first on the development side.
“We are really bascially seeing the same relationships that we have turn around to us now and say, ‘What can we do with you in the U.S.?’” Mr. Baisiwala said.
LIke many investors globally, savvy Chinese firms are looking for stable, “core” product with established cash flows, Mr. Baisiwala said.
“Essentially we had invested in 230 Peachtree on the basis that we would own this for a long period of time, and our Chinese partners like the opportunity, they like Atlanta, they like the proximity to Americasmart downtown, and they saw what’s happening in Atlanta and so they really came in behind our existing investment thesis,” he said.
Terms of the deal were not disclosed.
The 230 Peachtree development sits atop the Peachtree Center Marta station and boasts direct access to the AmericasMart.
Chinese outbound investment in financial assets and real estate by both state-owned and private entities increased substantially as China’s services industry matured and globalized in 2014, driving a three-fold increase in mergers and acquisitions over the last three years in the U.S., according to a report by New York-based consultancy Rhodium Group, which tracks Chinese investment globally.
Chinese investors spent $3.1 billion on real estate and hospitality projects in the U.S. throughout the year and more than $12 billion in all categories, the report said. Read more here.