Chinese company Anbang Insurance Group is buying 16 U.S. luxury resorts and hotels in a $6.5 billion record deal with Blackstone Group.
The agreement between the two comes on the heels of Blackstone Group's purchase of Strategic Hotels for $4 billion about six months ago, which totaled to $6 billion including debt assumption. It's worth mentioning that the real-estate private-equity fund manager usually holds on to assets such as these for years.
According to prominent players in the industry, the deal is beneficial to both parties, where no one is drawing the short end of the stick.
"It's a great long-term play for Anbang and a good short-term move by Blackstone. A true win-win," Sonny Kalsi, a founding partner of GreenOak Real Estate, says.
Anbang is no stranger to this sort of purchases, as it has been acquiring property assets and insurance companies in the United States and Europe for years now. On that note, the company is also known for buying the Waldorf Astoria in New York for a $1.95 billion value back in 2014.
People familiar with the matter confirmed that Anbang agreed to pay $450 million more on top of Blackstone's approximate $6 billion purchase of Strategic Hotels, but because the deal is of private nature, the sources requested to remain unidentified.
Blackstone spokeswoman Christine Anderson and managing director of Anbang's North American branch Philip Yee refused to comment about the deal.
With the Chinese firm's newly acquired portfolio, it will definitely have a distinguished presence in luxury hotels in the United States, as the prime assets of Strategic Hotel include the Essex House and Hotel del Coronado, to name a few.
Chinese companies have been active in acquiring property assets and insurance companies overseas. They have reportedly made $84 billion worth of deals since the year started.
"This is being driven by global market volatility, the continued strength of the U.S. dollar and increased allocations for commercial real estate in an effort to diversify investment portfolios," Gilda Perez-Alvarado, managing director at Jones Lang LaSalle, says.
Regulators have been keeping an eye on Chinese companies' purchases of U.S. assets, and it even reached the point where President Barrack Obama chose not to stay at the Waldorf Astoria when it was sold to Anbang, which broke the eight-decade tradition of U.S. presidents.
