China Life leads US$2 billion acquisition of Starwood hotel stake in record year for real estate investment

China Life Insurance Co has led the acquisition of a US$2 billion stake in American hotels owned by Starwood Capital Group as mainland Chinese capital pours into overseas real estate at an accelerating pace.

Under the deal China Life, the country’s biggest life insurance company, and a group of sovereign wealth funds, will acquire a portfolio of 280 limited-service hotels in 40 US states, according to a Starwood statement on Tuesday.

“With this select-service hotel portfolio, China Life has an efficient vehicle for investing in the United States economy,” Barry Sternlicht, chairman and chief executive officer of Starwood Capital, said in the statement. “We look forward to working with China Life on additional opportunities across a wide range of real estate asset classes in the years to come.”

Starwood Capital created Starwood Hotels and Resorts in the 1990s, but sold its investment in the group in 2000. Anbang Insurance had made a US$14 billion bid to acquire Starwood Hotels, but the deal ended up being clinched by hotel chain Marriott International.

China Life’s acquisition is part of the record-high movement of Chinese funds into real estate assets in places such as the US and UK, a trend that will continue in the near future according to partners at international law firm Paul Hastings. The first five months of 2016 saw US$17 billion in Chinese outbound real estate investment, the law firm said.

Paul Hastings worked with China Life in May for its US$1.65 billion acquisition of 1285 Avenue of the Americas in New York, the highest value office building transaction in New York City this year. Hastings was also “involved” with the Starwood Capital deal, the law firm said.