Anbang Sets Cross-Border Record Buying $6.5B in Hotels from Blackstone

Anbang Insurance Group has set a new record for cross-border real estate acquisitions by Chinese investors in agreeing to buy 16 hotels worth $6.5 billion from Blackstone Group.

The Chinese state-owned insurer, which stunned the world with its $1.95 billion acquisition of the Waldorf Astoria early last year, is purchasing Strategic Hotels & Resort Inc from a real estate fund managed by Blackstone, according to an account in Bloomberg. The US private equity giant also controls the Hilton Hotel Group, which sold the Waldorf Astoria to Anbang in a deal that had been the been single largest acquisition of US real estate by a Chinese buyer until the two parties surpassed their own record with this latest transaction.

Anbang’s acquisition of the hospitality portfolio, which includes landmark resort properties and upscale urban hotels, is the latest in a sequence of hotel acquisitions by Chinese insurance companies, and reconfirms the outward flow of capital from mainland institutional investors. The transaction will also make Anbang the single biggest Chinese owner of global real estate assets, surpassing even the country’s sovereign wealth fund.

Anbang Boosts Global Real Estate Portfolio to Over $9.5B in Assets

While the pending transaction for Strategic Hotels & Resorts is valued at several times what Anbang paid for the Waldorf, the acquisition provides the mainland insurer with a portfolio of high end hospitality assets across the US.

Strategic Hotels & Resorts, which formerly was listed as a real estate investment trust until Blackstone bought out the REIT last September, includes Four Seasons resorts and hotels in Silicon Valley and Jackson Hole, Wyoming; the JW Marriott Essex House near New York’s Central Park; and the historic Hotel del Coronado luxury resort in San Diego.

Following the two record-breaking deals, Anbang ranks as the biggest Chinese buyer of overseas real estate assets with more than $9.5 billion in acquisitions, according to data compiled by Mingtiandi. By comparison, China Investment Corporation, the nation’s sovereign wealth fund and the second-ranking outbound real estate investor from the mainland, has amassed less than $8.5 billion in overseas properties.

In addition to the Strategic Hotels and Waldorf Astoria transactions, the Chinese insurer managed by Wu Xiaohui — the husband of former top leader Deng Xiaoping’s grand-daughter — just last month bought a commercial complex in Vancouver, Canada for $730 million. The company also acquired an office tower in Toronto last year for $84 million and the Merrill Lynch Financial Center in New York for $415 million.

Anbang has also been making deals outside of the real estate sector, including buying South Korean insurer Tongyang last month for $1.06 billion. That deal came after Anbang had already bought 10 percent of China Minsheng Banking for $4.88 billion, Delta Lloyd Bank Belgium for $273 million and Belgian insurer Fidea.

Blackstone Profits From REIT Privatisation

For Blackstone, the agreement with Anbang represents an opportunity for the private equity firm to realise a quick profit from its bet on privatising assets held by real estate investment trusts.

Over the last six months the alternative investment shop has bought up more than $10 billion in REITs and REIT assets, apparently in the belief that investors were undervaluing the listed vehicles.

In the case of the Anbang transaction, Blackstone was able to take home a more than $450 million profit on the hotel portfolio in just over six months, after acquiring the shares in the Chicago-based Strategic Hotels & Resorts Inc in a cash deal valued at $3.93 billion in September.

In addition to the Strategic Hotels & Resorts trust, Blackstone also last year purchased specialty REIT BioMed Realty Trust and its stable of office buildings in a $4.9 billion deal, and closed out 2015 by acquiring 49 shopping centers in the US from Canadian REIT RioCan for $1.9 billion.