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WSJ: China's Anbang Puts $5.5 Billion Luxury Hotel Portfolio on Block

WSJ: China's Anbang Puts $5.5 Billion Luxury Hotel Portfolio on Block
(Piotr Trojanowski/Dreamstime)

Monday, 20 August 2018 07:56 AM

China’s Anbang Insurance Group Co. reportedly is trying to sell a luxury hotel collection that it acquired for $5.5 billion two years ago as the company is forced to raise cash after being taken over by the government.

Anbang had been listening to offers to buy individual properties within its hotel portfolio, which includes high-end properties like the Essex House Hotel overlooking Manhattan’s Central Park; the Four Seasons Hotel in Jackson Hole, Wyo.; and the InterContinental Hotels in Chicago and Miami, The Wall Street Journal reported.

But now as Anbang looks to raise cash more rapidly, the insurer has decided to sell the entire portfolio of about 15 hotels, sources told the Journal.

Authorities seized control of Anbang and announced the prosecution of now-jailed founder and former chairman Xiaohui Wu on Feb. 23. The takeover is scheduled to last one year, during which Anbang will be managed by officials from financial regulators and government bodies. The Chinese government has injected $9.7 billion into the financially troubled company.

Anbang paid $5.5 billion to Blackstone Group LP for the collection of luxury hotels in 2016. It isn’t clear how much Anbang could command for the hotel portfolio today, WSJ.com explained.

In 2015, Anbang paid $1.95 billion for New York’s landmark Waldorf Astoria hotel—the highest price ever for a U.S. hotel. The property, which isn’t part of the portfolio Anbang bought from Blackstone, is closed as it undergoes a massive renovation. Anbang isn’t expected to include the Waldorf among the hotels it is selling, say people close to the matter.

U.S. luxury hotel sales volume and the price per room for these sales have declined in recent years. In 2015, U.S. luxury-hotel sales totaled $22 billion with a price per room valuation of $678,000, according to real-estate firm JLL’s Hotels & Hospitality Group. Last year, luxury hotel sales dwindled to $5.2 billion and $568,000 per room, though sales and prices picked up in the first half of this year as the economy gained strength.

In recent days, a Chinese court has rejected an appeal by Wu against a conviction for fundraising fraud and embezzlement that led to an 18-year jail sentence and confiscation of 10.5 billion yuan ($1.52 billion), Reuters reported.

“The evidence was solid and sufficient. The conviction was accurate. The sentencing was appropriate,” the Shanghai High People’s Court said in a statement posted online on Thursday.

Wu led the insurer as it became one of China’s most aggressive dealmakers with a series of major overseas acquisitions. He was put on trial in late March, charged with illegally raising 65.2 billion yuan and embezzling 10 billion yuan.

Wu initially contested the charges but said in his closing statement that he understood and regretted them and requested leniency. He was found guilty and sentenced in May, and immediately lodged an appeal - a rarity in high-profile cases.

Meanwhile, President Donald Trump has been zeroing in on Chinese investment in the U.S. amid his escalating trade war with the world’s second-largest economy, Bloomberg reported.

The increased attention has seen some high-profile deals scuppered, such as Chinese billionaire Jack Ma’s attempt to buy Dallas-based payment provider MoneyGram International. Broadcom Ltd.’s $117 billion attempt to buy California’s Qualcomm Inc. -- which would have been the largest tech deal in history -- was shot down on concerns the merger would benefit China’s emerging telecommunications giant Huawei Technologies Co. And, this week, China’s Shenzhen Energy Group Co. ended a plan to buy U.S. solar power assets from a Canadian Solar Inc. unit after failing to get CFIUS approval within an agreed-upon time.

Material from Bloomberg and Reuters were used in this report.

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China’s Anbang Insurance Group Co. reportedly is trying to sell a luxury hotel collection that it acquired for $5.5 billion two years ago as the company is forced to raise cash after being taken over by the government.
china, anbang, luxury, hotel
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2018-56-20
Monday, 20 August 2018 07:56 AM
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