Business

Oakwood Worldwide in $4-billion deal

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New joint venture that will spend $4 billion to buy and build furnished apartment buildings globally
'It's a great marriage for us,' said Bill Foltz, Oakwood Worldwide's chief financial officer
Mapletree owns and manages about $20 billion in real-estate holdings of many kinds in Asia

Oakwood Worldwide hopes to triple its pioneering extended-stay housing brand through a new joint venture that will spend $4 billion to buy and build furnished apartment buildings globally.

The partnership that the Los Angeles company has struck with real estate developer Mapletree Group in Singapore expects to open about 100 buildings — with maid, concierge and gym services — over the next three to five years, the companies said Wednesday.

Mapletree will provide the funding, half of which will be devoted to expanding in the U.S.

"It's a great marriage for us," said Bill Foltz, Oakwood Worldwide's chief financial officer.

Oakwood, a private company, does not release financial results publicly, but Foltz said the deal eventually is expected to increase revenue from "the higher nine-figure range" to more than $1 billion a year.

Century City lawyer Jim Butler, a specialist in lodging deals, said many deals these days involve wealthy Asian investors funding capital-starved but well-known U.S. firms.

“They love American brands,” Butler said, “and Oakwood is the best-known in the extended-stay apartment business.”

In 1969, apartment developer Howard Ruby launched Oakwood Apartments, inventing the business of extended stay apartments for business travelers and relocated employees who want hotel-style amenities — without having to stay in hotels.

The typical traveler spends 75 days in an Oakwood unit, company officials said.

Multinational corporations and their mushrooming global workforce have created massive demand for such shelter in the U.S. and abroad, with Oakwood competitors such as Bridgestreet Worldwide and National Corporate Housing jostling to provide temporary housing for globe-trotting workers.

Against that backdrop, the partnership will create "a new chapter" for Oakwood, Ruby said.

"As the corporate housing industry's pioneer, we are able to leverage our rich history and experience in development and acquisition to expand," he said.

Mapletree owns and manages about $20 billion in real-estate holdings of many kinds in Asia, including office, industrial, residential and retail properties.

The companies said that presence complements the global contacts developed by Oakwood, which manages 25,000 apartment units around the world, many of them leased and operated without the Oakwood brand.

The $2 billion spent in the United States will go a lot further than that amount in pricey markets in Asia, where apartments can go for $1 million. It's possible that 75 of the 100 new Oakwood-branded buildings could be in the United States, Foltz said.

As its entry into the joint venture, Mapletree is paying an undisclosed sum for a 49% stake in Oakwood Asia Pacific, a subsidiary of the L.A. firm that handles Oakwood's apartment business in China, Hong Kong, India, Indonesia, Japan, Korea, the Philippines and Thailand.

The investment is part of a major expansion at Mapletree, which plans to double its assets under management over the next five years. The companies said the Singapore firm has an option to invest more in the joint venture with Oakwood if that expansion succeeds.

"I believe that the strengths of the two groups will see the Oakwood brand continuing to be the top-rated corporate and serviced apartment operator worldwide," Mapletree Group's chief executive, Hiew Yoon Khong, said in the statement.

scott.reckard@latimes.com

Twitter: @ScottReckard

Copyright © 2014, Los Angeles Times
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