Anbang Finds Buyer for High-Profile Hotel Portfolio
Chinese Insurer Selling Luxury Properties to South Korean Buyer for $5.8 Billion
By Lou Hirsh
China’s Anbang Insurance Group reportedly agreed to sell a portfolio of 15 U.S. luxury hotels for more than $5.8 billion to an affiliate of a South Korean financial services company, three years after it purchased the same properties from private equity giant Blackstone Group as part of a high-profile international expansion.
Mirae Asset Global Investments, headquartered in Seoul, plans to acquire the high-profile properties that include Loews Santa Monica Beach Hotel near Los Angeles, the Westin St. Francis in San Francisco, Essex House near New York’s Central Park and InterContinental locations in Miami and Chicago, according to unnamed sources in the Wall Street Journal.
The deal does not include what is perhaps Anbang’s most high-profile U.S. hotel, the landmark Waldorf Astoria in New York City. The firm bought it for $1.95 billion in 2015 and has closed it for a renovation.
Anbang put the hotels on the market after the insurance firm came under heightened scrutiny from the Chinese government over its purchase of trophy assets including luxury hotels. In February last year, China’s Insurance Regulatory Commission issued a statement saying it had taken control of Anbang Insurance Group with the goal of firming up the company’s financing after spending that the commission argued endangered the solvency of the insurance giant.
Anbang was one of a number of Chinese firms including Dalian Wanda Group and HNA Group that spent record amounts on international real estate in the middle of this decade. The billions of dollars the firms spent concerned the Chinese government, which called the firms “gray rhinoceroses” that threatened its national economy. Last year, officials at China’s macroeconomic management agency, the National Development and Reform Commission, issued a series of rules that limited outbound investment on real estate and other categories that virtually halted Chinese investment in the United States.
Headlines that Chinese investment here was suddenly down as much as 75% after record amounts of spending in previous years followed. Most of the firms began selling off their international real estate as well.
The Anbang hotel portfolio was known to have drawn interest from multiple large suitors including Brookfield Asset Management, Bloomberg News reported.
Alan Reay, president of hotel brokerage and consulting firm Atlas Hospitality Group, told CoStar News that luxury hotels are generally still performing well nationwide thanks to healthy recreational and business travel trends, though industry growth in room prices and revenue has recently been slowing after nearly a decade of post-recession strength.
“It’s a pretty aggressive price, but these are pretty irreplaceable properties,” Reay said of the purchase by Mirae. “They’re just not building any more hotels in some of these prime locations like the beach property in Santa Monica.”
In September 2016, Blackstone sold the portfolio of 15 hotels to Anbang for $5.5 billion, according to CoStar data. Blackstone originally acquired those hotels a year earlier in a buyout of Strategic Hotels & Resorts.
Mirae’s acquisition comes as the Wall Street Journal also reported that the portfolio transaction overcame a potential stumbling block. An individual in California reportedly created fake deeds to transfer ownership of up to a half-dozen of the properties.