The retreat of overzealous outbound Chinese hotel investment continues with the Wall Street Journal reporting Anbang Insurance Group is now trying to package a portfolio of 15 hotel assets with an asking price of US$5.5 billion.
The expensive package, reportedly being marketed directly as there are just a handful of potential buyers, does not include its Waldorf Astoria in New York City. Blackstone sold the Waldorf to Anbang in 2015 in a landmark US$1.95 billion deal and was later seized by the Chinese government. It is currently closed for renovation.
The portfolio for sale includes many assets Anbang acquired, again from Blackstone, in its 2016 US$6.5 billion deal for Strategic Hotels & Resorts. Hotels on the market include the Essex House in New York City, Four Seasons hotels in Washington, D.C., and Jackson Hole, Wyoming, as well as InterContinental hotels in Chicago and Miami.
The Journal story said the only response it received from an Anbang spokesperson about the portfolio sale was that it was “pure market speculation.”
“There is clearly pressure to clean this up for Anbang, presumably government generated,” Laurence Geller, former CEO of Strategic Hotels & Resorts and current owner of a portfolio of hotel assets under his Geller Capital Partners, told HOTELS.
Geller added that the last couple of years of Strategic’s ownership seemed to “ignore the significance of the hidden but incredibly lucrative opportunities waiting to be exploited within the fundamental value of the portfolio.”
He added that Blackstone did not pursue these opportunities, “if they indeed knew them. Certainly, Anbang wallowed and languished.”
Geller questions whether a new owner will be bold enough or interested enough in exploiting the obvious and the not so obvious real estate maximization opportunities. “There is no better single portfolio in North America and one less appropriately managed. Therein lies the tale, and the very significant upside opportunity that five years on muddling along management has left and can be offered… It is a major opportunity for someone prepared to unearth the barely hidden treasures, reposition to a degree in line with tomorrow’s high-end needs, build upon a great platform and develop it further internally, organically and by acquisition. Financial engineering without a bold plan would be like putting a bandage on a wide open wound.”
Anbang’s operation was seized by the Chinese government in February, and in May, former Anbang Chairman Wu Xiaohui was sentenced to 18 years in prison after being convicted of fraud and embezzlement. The Chinese government has reportedly infused US$9.7 billion in capital into Anbang to help stabilize its operations while it sells off assets.
News of the sale come as the Chinese government reigns in debt-laden firms such as HNA Group and Dalian Wanda Group, all of which have been selling foreign real estate to pay down debt. At its peak Anbang had signed more than US$30 billion of foreign investment deal.