Who owns six of California’s fanciest resorts?
According to numerous media reports, a $5.8 billion deal to sell 15 U.S. hotels has fizzled into litigation. That means ownership is in question for Montage Laguna Beach, Ritz-Carlton Laguna Niguel in Dana Point, Loews Santa Monica, Ritz-Carlton Half Moon Bay, Four Seasons Hotel in East Palo Alto and Westin St. Francis in San Francisco.
The Chinese government has been trying to rid itself of hotels after it seized the financially ailing Anbang insurance empire two years ago. A deal to sell the 15 Anbang lodging assets to South Korea’s Mirae Asset Global Investments has collapsed.
Mirae said Monday it terminated the deal, announced in September after Anbang breached its contractual obligations.
In return, Anbang is suing Mirae in the United States, saying the termination was improper. Mirae “categorically denies Anbang’s claims,” the company replied.
Anbang acquired the California luxury resorts in 2016 with its purchase of 15 hotels owned by Strategic Hotels & Resorts of Chicago. Anbang first gained the international tourism spotlight by buying New York’s famed Waldorf Astoria hotel in 2014.
Ownership switches for hotels typically don’t mean great changes for the properties as third-party management companies usually handle day-to-day operations. And luxury resorts seem to change hands often.
For example, the Montage was flipped three times in a two-year period. Strategic Hotels bought Montage in 2015. Then Strategic soon sold itself to New York investors Blackstone. Then Blackstone sold Montage and other Strategic hotels to Anbang.
Assuming that Anbang’s 15 hotels are back on the market, the timing could not be worse. With global travel at a near standstill due to coronavirus business limitations, most hotels are shut or nearly empty.
It’s a sharp contrast to what had been a hot market for California hotels. Last year, hotel buyers spent $6 billion, according to the Atlas Hospitality Group consultancy. That was up 7% in a year, the fourth-highest volume. That cash changed hands in 297 deals, up 6% but below the five‐year average of 331 deals.
“There are very few players that have the funds to take on a deal of this magnitude,” says Alan Reay, Atlas president, of Anbang’s 15-hotel collection. “Maybe a sovereign fund from the Middle East? But they have now been crippled by the collapsing oil market. There are a number of distressed funds but the pricing would have to be substantially lower for them to jump in, probably at least 30% lower than where Mirae was at.”
The New York Times contributed to this report.
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Author: Jonathan Lansner