With the temporary takeover of Anbang Insurance Group Co. by China’s government, real estate buyers are eyeing marquee properties from New York to California acquired in a global shopping spree.

The insurer, like its fellow Chinese investor HNA Group Co., went on a multibillion-dollar buying binge over the past few years, grabbing properties including Manhattan’s Waldorf Astoria hotel, which it acquired three years ago for a record $1.95 billion, and Strategic Hotels & Resorts, a luxury-lodgings owner with locations in San Francisco, Chicago and New York. Other purchases included 717 Fifth Ave. in New York, a 26-story office building that’s home to Anbang’s U.S. headquarters.

“As you think about the Strategic assets, there would be plenty of very interested and well-capitalized buyers -- some looking at individual assets or markets, some potentially interested in the entire portfolio,” said Michael Bellisario, senior research analyst at Robert W. Baird & Co. “When you pair a motivated seller and well-capitalized buyers searching to put money to work, that’s a good combo to see assets clear.”

The Chinese government said Friday that it took temporary control of Anbang and will prosecute founder Wu Xiaohui for alleged fraud, cementing the downfall of a dealmaker whose aggressive global expansion came to symbolize the overreach of the country’s debt-laden conglomerates. The government said it would consider “all or partial” sales of Anbang’s assets, without providing more details.

One company that benefited from Anbang’s fast expansion was Blackstone Group LP -- the world’s biggest private equity investor in real estate and a major seller of property to Anbang, including the Strategic properties and 717 Fifth -- and it could benefit again should the insurer unwind its holdings. Blackstone has held initial discussions about bidding for Anbang assets, including Strategic and the Waldorf, people with knowledge of the matter said earlier this month.

A Blackstone representative on Friday had no immediate comment.

Here’s a rundown of Anbang’s assets in North America -- properties that may soon be on the market and ready to be scooped up by Blackstone or other buyers:

The Waldorf Astoria

In early 2015, Anbang completed the purchase of the 1,232-room Park Avenue tower, an Art Deco landmark and one of Manhattan’s signature properties, for $1.95 billion, the highest price ever paid for a single hotel in the U.S. and the most paid by a Chinese buyer for a building in the country. The seller was Hilton Worldwide Holdings Inc., taken public by Blackstone in late 2013.

Anbang has told Hilton, which manages the property on behalf of the insurer, that it’s moving forward with plans to convert hotel rooms into high-end condos. The interior of the Midtown property is under “heavy demolition,” Hilton Chief Executive Officer Christopher Nassetta said on the company’s earnings call last week. While Anbang is believed to be selling assets around the world, “at the moment, the Waldorf is not one of those,” he said.

Should the Waldorf be put on the market, the property “is a different animal” from the Strategic hotels because of “its size and ongoing redevelopment,” Bellisario said. “This limits the buyer pool.”

Anbang’s U.S. Headquarters

For its second major real estate deal in Manhattan, the insurer bought the office portion of 717 Fifth Ave., a 26-story tower at the corner of 56th Street that would serve as its U.S. headquarters, for $414 million. The purchase, from Blackstone, closed in late February 2015, just weeks after the Waldorf transaction was completed.

Meanwhile, in Canada

Later in 2015, Anbang pushed deeper into Canada, buying 70 York St., a 17-story office tower in Toronto’s financial district, for about C$110 million ($75 million). Brookfield Asset Management Inc. was the seller of the property, known as the HSBC Building.

In 2016, the buyer of InnVest Real Estate Investment Trust was linked to Anbang. InnVest, one of Canada’s largest hotel owners, was acquired for about C$2.1 billion by Bluesky Hotels & Resorts Inc., whose president and chief executive officer had been employed by Anbang and acted on behalf of the insurer in prior deals in Canada, people with knowledge of the matter said at the time.

Around the same time that year, Anbang took full ownership of Bentall Centre, Vancouver’s largest office complex, purchasing the 33 percent share of the property that it didn’t already own. The two separate transactions valued the four-tower complex at more than C$1 billion.

Luxury Hotels

In March 2016, Anbang agreed to buy Strategic Hotels & Resorts Inc. for about $6.5 billion just three months after Blackstone acquired the luxury-lodging company. Blackstone had planned to sell off Strategic’s 16 properties individually before getting a pre-emptive offer from Anbang for the entire portfolio, including San Francisco’s Westin St. Francis; Four Seasons resorts in Scottsdale, Arizona, and Jackson Hole, Wyoming; Ritz-Carltons in Half Moon Bay and Laguna Niguel, California; and Manhattan’s JW Marriott Essex House.

In the end, Anbang ended up with only 15 hotels. The Hotel del Coronado near San Diego was removed from the deal after a U.S. national-security review raised concerns about the property’s proximity to Naval Base Coronado, one of the main training grounds for the special-operations Navy SEALs.

The Strategic portfolio is a “very rare collection that probably can be sold at a pretty peak value,” said Bruce Ford, senior vice president at industry consultant Lodging Econometrics. “There’s definitely money out there. The question is: Who’s the buyer, and will it be more than what they were bought for?”

Source:
courtesy of BLOOMBERG

by Patrick Clark and David M Levitt

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