Shanghai-based Firm Selling LA’s Indigo Hotel

Greenland USA, a subsidiary of Shanghai-based development firm Greenland Group, is selling the 350-room Indigo Hotel less than a year after it opened in Downtown Los Angeles.

The company’s asking price for the property is $280 million—a target price that would translate into $800,000 per room, a new per-room record for a DTLA hotel. Construction costs for the hotel were estimated at about $600K per room.

The sale of the Indigo Hotel, which is managed by InterContinental Hotels Group, may be the first phase of an effort by Greenland Group to eventually decouple itself from the massive $1B Metropolis project in LA.

Greenland is planning to use proceeds from the sale of the Indigo to fund the completion of the Metropolis project, which along with the new hotel is building three high-rise towers that will include a total of 1,000 residential units.

The residential units were planned as condominiums, but now may be converted into rental units and sold off to a multifamily operator, according to reports.

CBRE forecasted last month that the overall LA hotel market will achieve an annual RevPar rate of about $133 by the end of the year, which represents a 35% increase from the revenue per available room rate at the end of 2021, but still lags behind the pre-pandemic RevPar of $145, which is not expected to be exceeded before 2023.

As economic decoupling from China amid rising geopolitical tensions with the US accelerates—and China cracks down on over-leveraged real estate investments by Chinese developers—the massive, debt-filled investments several PRC-based companies have made in US hotels in recent years make them ripe targets for divestiture. 

 US hotels have been one of the largest destinations for foreign direct investment by China, with the more than $10B invested in the US hospitality industry by Chinese companies accounting for nearly a quarter of total outbound FDI from China to the US, according to JLL.

Last summer, China implemented new laws to restrict extensive overseas investments by Chinese companies. Dalian Wanda Group this week put two of its US developments up for sale: Vista Tower in Chicago and the Beverly Hills hotel and residential project on sale for $2.1B.

According to CoStar, the record per room price for a Downtown LA hotel currently is the $556K per room that Chesapeake Lodging Trust paid when it acquired the Ace Hotel for $103M in 2015, a deal that has since been exceeded in other LA submarkets: last year, the Jeremy West Hollywood sold for $990K per room ($283M) and the W Hollywood Hotel sold for $718K per room ($219M).