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Anbang’s $5.8 Billion Hotels Sale to Mirae in Peril

The company’s sale of its U.S. luxury hotel portfolio might collapse due to lack of demand for its CMBS financing.

(Bloomberg)—Anbang Insurance Group Co.’s sale of a $5.8 billion portfolio of U.S. luxury hotels to South Korea’s Mirae Asset Global Investments Co. is at risk of collapsing, according to people with knowledge of the matter.

After a lender group led by Goldman Sachs Group Inc. failed to garner sufficient investor demand for roughly $4 billion in commercial mortgage-backed securities to finance the transaction, talks shifted to the provision of a similar amount in bridge financing in an attempt to keep the deal alive, the people said, asking not to be identified because the talks are private.

But some participants in the bank syndicate are balking as the impact of the coronavirus on global travel becomes more evident and prolonged, some of the people said.

The $4 billion bridge-financing package is far from being finalized and if Mirae is unable to secure sufficient commitments for the facility or other alternative financing, the deal may be abandoned, they said.

A representative from Mirae said the deal is going smoothly and financing negotiations are progressing. Many lenders are willing to provide financing for the transaction now due to low interest rates, the spokesman said.

Representatives for Anbang didn’t immediately respond to a request for comment. A representative for Goldman Sachs declined to comment.

Revenue at hotels across the globe is expected to plunge as tourists and corporate travelers cancel plans and hundreds of conferences get either scrapped or delayed. This has made some lenders unwilling to commit to certain new loans, in part because anticipated muted appetite from investors could leave them saddled with unwanted positions, one of the people said.

Anbang, the poster child for a slew of Chinese companies that went on global acquisition sprees and accumulated sizable debt loads in the process, agreed to the sale in September. Mirae posted a deposit representing around 10% of the total, a person familiar with the matter said at the time.

The portfolio of 15 hotels, which Anbang acquired through its acquisition of Strategic Hotels & Resorts Inc., includes the Westin St. Francis in San Francisco, Loews Santa Monica Beach Hotel, JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.

In a statement confirming the transaction, Mirae said the deal established it as a global player and touted the scarcity value and high barriers to entry of the hotels it had bought. It also said it had beat out competitors including Blackstone Group Inc., Brookfield Asset Management Inc., GIC Pte and Host Hotels & Resorts Inc.

China’s two-year state custody of Anbang ended last month, when the China Banking and Insurance Regulatory Commission said it had secured private investors.

Authorities took control of the 2 trillion yuan ($287 billion) conglomerate in February 2018 after former Chairman Wu Xiaohui was arrested -- and later jailed -- for fundraising fraud and embezzlement.

--With assistance from Jack Sidders, Kyungji Cho and Zhang Dingmin.

To contact the reporter on this story: Gillian Tan in New York at [email protected].

To contact the editors responsible for this story: Alan Goldstein at [email protected]

Katrina Nicholas, Candice Zachariahs

© 2020 Bloomberg L.P.

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