Investors Bid up to US$5.8B for 15 U.S. Anbang Hotels

Main Photo: The Essex House, New York

Date: May 2019

Location: Across the USA

Name: Several including the Fairmont Scottsdale, several Ritz-Carlton properties (including those in Half Moon Bay near California’s Silicon Valley), several Four Seasons hotels, the JW Marriott Essex House on Central Park South in New York City, the InterContinental in Chicago and the Westin in San Francisco.

No. of Keys: Around 7,000

Seller: Anbang Insurance from China, at the bequest of the Chinese government

Buyer: Nine months after Chinese holding company Anbang Insurance put a collection of luxury hotels up for sale, the firm is receiving offers from some big names in the industry—including private equity firm Blackstone Group, the company from which Anbang acquired a swath of assets during its buying spree.

Blackstone sold New York City’s Waldorf Astoria hotel to Anbang back in 2014 for close to $2 billion, ushering in the era of major Chinese investment in U.S. real estate assets. Less than four years later, after the Chinese government seized control of Anbang following an investigation from China’s Insurance Regulatory Commission, Blackstone reportedly was in talks to reacquire a number of other assets it had sold to Anbang—including the 16 Strategic Hotels & Resorts properties it sold for $6.5 billion in 2016.

Last August, the price tag on the assets was $5.5 billion. According to the Financial Times, Chinese authorities unwinding the insurance giant have now received offers of up to $5.8 billion from 17 potential buyers, including Canadian asset management firm Brookfield, South Korea’s Mirae Asset Management, SoftBank-owned Fortress Investment Group, Singapore’s sovereign wealth fund GIC and Blackstone for the portfolio. Notably, no Middle Eastern sovereign wealth funds participated in the bidding.

The London Financial Times noted a difference of more than $1 billion between the highest bid for the hotels and the lowest, which could indicate different opinions on the properties’ value and how complex the deal might be. The paper blames uncertainty over the U.S. economy for “depressing” the bids, along with the assets’ need for heavy capital expenditure.

Since last year, after Anbang was taken over by what is now the Chinese Banking and Insurance Regulatory Commission, management of Strategic has been in disarray.

In March of last year, David Hogin, the chief operating officer of Strategic, wrote to Anbang requesting approval for the 2018 budget, according to a letter seen by the Financial Times. “Given all the recent turmoil within our parent company, it is critically important that we communicate with [employees] that their salaries and benefits are proceeding in accordance with prior practice,” he wrote.

Direct investments from China to the United States dropped 84 percent between 2017 and 2018 ($29 billion to $4.8 billion), a seven-year low.

Likely Price: US$5.8bn

Price per Key: Around US$828,571

THPT Comment: Big ticket deal….One buys 16 hotels for $6.5bn and sells 15 for $5.8bn hmmmm not a great deal. Mind you there’s still a wide variance between the bids.

First Seen: Hotel Management

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