The Orange County Register
03/12/16

Strategic Hotels Sold to Chinese Insurance Company for $6.5 Billion
By staff and wire reports

http://www.ocregister.com/articles/hotel-707955-hotels-strategic.html
LOS ANGELES – Blackstone Group has agreed to sell Strategic Hotels & Resorts Inc., owner of Ritz-Carlton Laguna Niguel and the Montage Laguna Beach, to a Chinese insurance company for $6.5 billion, The Associated Press reported, citing a person familiar with the deal.

The agreement with Beijing-based Anbang Insurance Group comes about three months after the private equity firm completed its acquisition of the hotel operator.

The source, who spoke on condition of anonymity Saturday because they were not authorized to speak publicly about the deal, could not immediately say how much of the $6.5 billion deal value includes debt.

Blackstone completed its acquisition of Strategic Hotels in December. That deal was valued at $3.93 billion, or about $6 billion including debt.

Strategic’s $360 million January 2015 purchase of the 250-room Montage Laguna Beach, from Ohana Real Estate Investors, was at the time the biggest hotel sale in California history.

A spokeswoman for Blackstone declined to comment Saturday. An email to a media representative at Anbang was not immediately returned.

Alan Reay, president of hotel consultant and broker Atlas Hospitality, said it had been rumored that the company was in play.

The purchase comes on the heels of Anbang’s acquisition of the Waldorf Astoria in New York, “so they’re obviously targeting irreplaceable trophy hotels assets in the United States,” Reay said. “We’re seeing a lot of Chinese investment money coming into the United States. It’s seen as a safe haven, and especially from major Chinese insurance companies that are looking for stable, safe investments.”

Reay called the number of purchases and sales Strategic has completed in the past year “unprecedented.”

With the sale to Anbang, he doubts hotel operations will change much, but said the recent purchases are reminiscent of unsustainable Japanese investments made in the late 1980s.

“The Japanese were buying at the peak of the market and had to walk away from many, many of those hotels,” Reay said. “I’m not sure if we can draw the same comparisons, a lot will have to do with what the debt structure looks like.”

Strategic Hotels’ portfolio is comprised of 16 properties with 7,532 rooms as well as meeting and banquet space.

Staff writer Samuel Mountjoy contributed to this report.