How a historic hotel rebirth is defining Gaw Capital’s success

The Regent Hong Kong holds a special nostalgic place in Christina Gaw’s heart. The managing principal and head of capital markets for Hong Kong-based Gaw Capital Partners said back in the 1980s and '90s, the hotel held an importance for the people of Hong Kong and she fondly remembers as a child if she did well on an exam she earned a trip to the hotel’s top-rated Sunday buffet.

Gaw Capital purchased the 503-key hotel in 2015 (it rebranded to InterContinental in 2001), closed it in April 2020 for a massive refurbishment, and finally rebranded the landmark back to the Regent Hong Kong and reopened earlier this year.

“There’s a lot of hard work, and we’ve put a lot of heart into the details of the hotel,” Gaw told the HICAP audience.

The Regent Hong Kong

But she also thinks the hotel has a special significance for Hong Kong’s resurgence.

“The Regent in its early days really witnessed the growth of Hong Kong to become a global financial center,” Gaw said. “We still have the very positive prospect that the Regent will continue to carry that through today and do its part… One of the most successful things for us is the rebirth of this hotel.”

Gaw pride and prudence

Gaw came from the investment banking world before joining the family's Gaw Capital in 2008. She works with her older brothers, who say she is the best fundraiser in Asia.

While Gaw brushes away that compliment (she says it wisely costs no money to say), she is more complimentary of Gaw Capital announcing in June it was closing its seventh Asia Pacific real estate fund, Gateway Real Estate Fund VII, for total equity raised of $3 billion.

She said completing that raise despite market uncertainties and rising interest rates was challenging. “2022 was a very difficult year. Fortunately, a big part of that fund raise was done in the early part of that year,” she added.

Managing that fund in an environment where interest rates keep rising required a lot of hand-holding with investors, Gaw said. She said several things were keys to success in the process.

“One different thing is the trust we have developed with investors. Right now, more than ever, I think communication and transparency is especially important,” Gaw said. “The way to differentiate is to show the kind of asset management work that we’re doing, how the team is very focused on the assets and what we are doing to mitigate the increases in the environment.“

She said that communication with investors can yield other benefits for the company.

“We tend to be quite flexible in terms of the structure that we will invest in the LPs,” Gaw said. “Another important thing is the ability to listen to what investors need, why they prefer certain sectors over another – even if sometimes that may differ from ourselves. And by doing that, we are able to gain intel from the investor, and we will structure certain products that cater to them.”

While Gaw Capital invests in all kinds of real estate, she said, “hotels have always been a bright spot” for the company.

It is a very good time to buy hotels, but I think because many people see it the same way, it also makes the hotel sector very competitive.

Christina Gaw

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When asked if she has a soft spot for hospitality, Gaw said her answer differs from what her brothers would say.

“The way that I see it is that a hospitality investment is based on the term and the valuation of the asset itself,” Gaw said. “So rather than whether a new hotel is glamorous, or there’s a soft spot per se, it’s about the valuation after purchase and whether the property is cheap enough.

“Because even though we have a lot going on in hospitality, which has grown a lot over the years, we are still a real estate player at heart,” Gaw continued. “The way that we look at it is we have to go in at the right time and also learn to exit at the right time. That’s very different from family investing.”

Gaw said those family holdings make the hospitality sector very different from the West and limit the number of transactions.

“It is a very good time to buy hotels, but I think because many people see it the same way, it also makes the hotel sector very competitive,” Gaw said. “It’s a competitive time in hotels, but transaction volume is down year-over-year. It’s because there is a pricing and expectation gap between the seller and buyer right now.”

Gaw said that the gap has created challenges in the market for hospitality. But she’s optimistic about where the market is heading in 2024.

“The sellers are seeing improvement in traveling and occupancy. Hotels are full because of all the events happening. So, the sellers feel that the expectation is going back up,” Gaw said. “But for the buyers, we’re all looking for a bargain because rates are high. So, there’s a gap. We believe that next year there should be more opportunities.”