Oakwood Worldwide plans to aggressively expand the serviced apartment model in the United States through its newly formed joint venture with Singapore-based real estate developer Mapletree, according to Oakwood CFO Bill Foltz.
Through the deal, of which Foltz was the architect, Mapletree is buying and developing about $4 billion worth of serviced apartment inventory over the next five years for Oakwood as it acquires a 49 percent stake in Oakwood Asia Pacific, the company's business division in the region. That $4 billion in development will be split about 50-50 between serviced apartments in the United States and the rest of the world, particularly Asia and Europe, Foltz said.
While long-term corporate housing certainly is a mature industry in the United States, the concept of serviced apartment buildings—apartments that usually include full concierge services, a front desk and restaurant facilities—is not as common, according to Foltz.
"It's well accepted in Asia and Europe, but in the United States, typically corporate travelers use a more conventional apartment that we refurnish and repurpose," he said. "We do anticipate development in the States will be more in the pure serviced apartment model, and it's certainly going to expand the brand very rapidly."
Oakwood and Mapletree estimate the deal will add more than 100 properties around the world, more than tripling Oakwood's number of branded buildings. Foltz said that number is "appropriately conservative" and would depend upon where exactly the buildings are added. Asian buildings tend to cost much more per unit compared with U.S. buildings, he explained.
Mapletree, meanwhile, had been quite eager to expand into the United States, and Oakwood was "a natural partner, because no one is bigger than us in the corporate housing world," Foltz said. "Not having a presence in the United States, they needed a partner intimate with the space."