Los Angeles Business Journal
09/14/18

Will Loews Santa Monica Top $500M?
Recent deals in luxury segment of region’s hotel industry suggest as much
By Ciaran McEvoy

http://labusinessjournal.com/news/2018/sep/14/will-loews-santa-monica-top-500m/

Loews Santa Monica Beach Hotel could fetch more than $500 million now that China-based Anbang Insurance Group Co. has put it on the market after counting it as part of its portfolio for just two years.

The price estimate comes from Alan Reay, president of Irvine-based Atlas Hospitality Group, who based the figure on recent sales comparisons, including last year’s deal for the 358-room Ritz-Carlton Bacara in Santa Barbara. New York-based Carey Watermark Investors bought the Santa Barbara establishment for $375 million, just a bit more than $1 million a room.

Reay said the 347-room Loews Santa Monica’s beachfront location in the L.A. market would likely take the mark up to $1.5 million per room or so.

Anbang purchased the Loews hotel for $485.4 million in 2016, but the company has been mired in scandal since then. China’s central government seized control of the company earlier this year after its chairman, Wu Xiaohui, was sentenced to 18 years in prison for fraud and embezzlement. The crackdown came after an international buying spree that extended from a $1.95 billion deal for the Waldorf-Astoria in New York for $5.5 billion for the 15-hotel portfolio that included Loews Santa Monica and other luxury hotels around the U.S.

China’s government pumped $9.7 billion into Anbang to address a reported liquidity crunch at the insurer in June, when a sale of assets began.

Anbang is expected to seek a buyer for the whole portfolio rather than separate deals. Blackstone Group, which sold the portfolio that included Loews to Anbang, could repurchase the properties, Reay said.

Las Vegas-based Lockwood Development Partners also has reportedly expressed interest in buying the hotels, which include the Montage Laguna Beach and Ritz-Carlton Laguna Niguel in Orange County.

Sovereign funds, overseas funds and ultra-high-net-worth individuals might also look at the properties, Reay said.

“If (Anbang is) looking to sell all 15 (hotels), that really does limit the buyer pool,” he said.