We are an established hospitality brand with a strong presence across the United States. We’ve used Chinese capital in the past, particularly when Chinese FDI peaked in 2016. We’re considering seeking Chinese capital for a portion of our capital raise opening next year.
Chinese investors are continuing to be very active. Some institutions are being a little bit more cautious about development projects because they sense that we are later in the cycle, and so are preferring large opportunities with strong cash yield.
According to the new guidelines for money transfers out of China, it appears the government isn't keen on investments in resorts and trophy assets (if the govt can assert pressure on a group like Wanda and force it to change tactics, it certainly sends a strong signal to everybody else). Therefore, you would have to look for Chinese money already outside of China. However, there's also the risk of the Chinese government mirror US policy by encourage repatriation of foreign funds, which can be used as a tool to help in controlling the currency fluctuations caused by US companies' movement of funds. My advice when it comes to Chinese money: be patient and respectful to the government's actions, and always go with the flow. Donald Wen President, WenWin Solutions
In general, you would pursue a 内保外贷 (internal insurance lending), which allows a bank-to-bank arrangement whereby a Chinese bank arranges a letter of credit with Chinese collateral and then pledges this to the US bank as collateral for the loan in the US. East-West Bank has banking licenses in both countries and has done many of these. However, the Chinese government has restricted the use within the past year. I would be happy to discuss this further.
Although there is still the impact of the capital restriction applied by the Chinese government, the drive of the overseas real estate investment remains robust. I've seen my fund manager clients trying to raise money from those individuals/companies who placed their money abroad. With your track record with Chinese capital, you should be well positioned to raise funds from Chinese investors. High-end luxury hotels in the US attract big moneys like the insurers (such as China Life, Sunshine Insurance, etc.) in the previous peak, while most of the funds and individual investors are more familiar with budget hotels with higher returns in the domestic market. I would assume your brand has comparable yields that would attract a wide range of financial investors. I have also noticed that government-owned companies in China have also built and owned hotels in the US. SOEs used to only build properties but, when investing abroad, they take the role of the developer/owner and engage with hotel operators. You may want to talk to those companies, as well.
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