Chinese Govt. Takes Control Over U.S. Hotel Investor Anbang Insurance

Fate of $7 Billion of Luxury U.S. Hotels Acquired from Blackstone Up in the Air

Waldorf-Astoria, New York

China's Insurance Regulatory Commission (CIRC) issued a statement saying it had taken control over Anbang Insurance Group Co. this morning possibly putting billions of dollars in luxury U.S. hotels up for grabs.

Anbang went on a U.S. hotel buying spree in 2015 and 2016 spending more than $7 billion in two transactions to acquire nearly 8,000 hotel rooms. The sellers in each case were affiliates of The Blackstone Group (NYSE:BX).

In June of last year, Chinese officials arrested Anbang's former chairman and general manager "on suspicion of economic crime," according to CIRC's statement this morning. The regulatory commission asserted the chairman's actions endangered the solvency of the insurance giant.

In order to maintain the normal operation of Anbang Group, the CIRC decided to take over the firm initially for one year.

"Since June 2017, the CIRC has sent a working group to Anbang Group to conduct in-depth inspections, strengthen on-site supervision and urge the company to improve its operation and management according to the regulatory arrangements," the CIRC said. "At present, the operations of Anbang Group are generally stable and their operations are basically stable."

That working group is headed by He Xiaofeng, director of the CIRC's reform and development department, other government officials, and at least one person from the People's Bank of China.

During the takeover, the team will actively secure new capital and complete an equity restructuring, the CIRC said. CIRC has yet to decide how to or whether to dispose of assets in Anbang's portfolio.

"Under the supervision of the regulatory authorities, the takeover management team will take effective measures to keep the company operating as usual," the CIRC said.

Anbang's most notable single U.S. hotel purchase was the $1.95 billion buy of the 1,413-room Waldorf-Astoria Hotel in New York City. Blackstone-controlled Hilton Hotels was the seller. Anbang began the first phase of a major renovation of the property this past December. The work includes restored public and event spaces, approximately 350 new guest rooms and suites, and approximately 350 residences.

In September 2016, Blackstone sold a portfolio of 15 hotels to Anbang for $5.5 billion. Blackstone originally acquired those hotels a year earlier in a buyout of Strategic Hotels & Resorts. The hotels sold to Anbang include:

  • Westin St. Francis -- San Francisco, CA -- 1,195 rooms
  • InterContinental Chicago -- Chicago, IL -- 792
  • Fairmont Chicago -- Chicago, IL -- 687
  • Fairmont Scottsdale Princess -- Scottsdale, AZ -- 649
  • InterContinental Miami -- Miami, FL -- 641
  • JW Marriott Essex House Hotel -- New York, NY -- 510
  • Ritz-Carlton Laguna Niguel -- Dana Point, CA -- 396
  • Loews Santa Monica Beach Hotel -- Santa Monica, CA -- 347
  • Ritz-Carlton Half Moon Bay -- Half Moon Bay, CA -- 261
  • Montage Laguna Beach -- Laguna Beach, CA -- 250
  • Four Seasons Washington, D.C. -- Washington, D.C. -- 222
  • Four Seasons Resort Scottsdale at Troon North -- Scottsdale, AZ -- 210
  • Four Seasons Silicon Valley -- East Palo Alto, CA -- 200
  • Four Seasons Jackson Hole -- Teton Village, WY - 124.