Blackstone May Buy Back $9.5B in Assets Sold to Anbang – At the Right Price

Blackstone Group was a primary supplier to Anbang Insurance Group’s headlong effort to become one of China’s biggest buyers of overseas assets. Stephen Schwarzman’s alternative investment giant sold no less than $9.5 billion in real estate and shares to the Beijing-based firm from the time that Anbang purchased New York’s Waldorf Astoria from Blackstone’s Hilton Hotels in October 2014.

Now with Anbang reeling from a flurry of regulatory crackdowns and cashflow issues, the US private equity firm is poised to lend a hand again, with a report that Blackstone may try to buy back some of those properties from its troubled deal partner.

Chinese Govt Could Broker Anbang Asset Sale

Now with Anbang chairman Wu Xiaohui still keeping his head down after being detained last year, and competitors Dalian Wanda Group and HNA Group holding their own policy-induced fire sales, Blackstone has held initial talks about possible bids for Anbang assets. The properties said to be on the block include the Waldorf Astoria as well as the Strategic Hotels & Resorts portfolio, according to an account in Bloomberg citing people with knowledge of the matter. The sale would be overseen by the Chinese government.

The discussions are at an early stage and Blackstone may decide against bidding on any of the assets, the report adds. Anbang chairman Wu Xiaohui disappeared into detention last June, and the company is now understood to be supervised by a team including the China Insurance Regulatory Commission (CIRC). The Chinese government is also looking to broker the sale of a stake in the company, Bloomberg has previously reported.

Waldorf Astoria, and More, Could Be Up for Grabs

Anbang’s $1.95 billion acquisition of the home of the Waldorf salad just over three years ago kicked off an aggressive outbound deal spree that saw the company announce more than $16 billion in acquisitions of properties, insurance firms and other assets around the world in just 30 months. The formerly obscure insurer linked up with Blackstone again in 2015 to buy the office portion Manhattan’s 717 Fifth Avenue for $415 million to serve as Anbang’s US headquarters.

Anbang topped those deals by agreeing in March 2016 to buy Strategic Hotels & Resorts Inc, a portfolio of high-end hospitality assets across the US from Schwarzman’s New York-based firm. The Chinese company ultimately paid about $5.5 billion for 15 of the properties.

And last May, amid mounting challenges, Anbang managed to ink one last deal with its US partner by picking up the DoubleTree by Hilton Amsterdam Centraal Station from Blackstone for €350 million ($391.6 million).

Insurer’s Buying Spree Goes Off the Rails

Chinese regulators began to take an interest in Anbang as early as March 2016, when the company lodged a $14 billion bid to purchase US-based hospitality chain Starwood Hotels and Resorts. After abruptly walking away from that mega-deal, Anbang faced growing financial strains and intensifying scrutiny of its capital structure and fundraising practices.

The troubled firm has been quiet since its formerly high-flying chairman was detained last year. In August, Anbang denied reports that Chinese authorities were pressuring the company to sell off its $10 billion overseas asset portfolio and bring the proceeds back home.

Despite its crises, Anbang did pull off a noteworthy deal in December, with an investment fund led by the company’s Korean unit buying the Metro Tower in Seoul, according to reports. Tongyang Life Insurance, which is 75 percent owned by Anbang, bought the building for $225 million.

Chastened Chinese Deal-Makers Cut Back

Anbang’s struggles echo the trajectory of other mainland mega-investors that have stumbled after their global deal binges drew unwelcome attention from Chinese authorities. HNA Group, which is flailing financially after spending some $40 billion on overseas assets, announced yesterday that it is selling two of the four land parcels it purchased at Hong Kong’s former airport site in Kai Tak to Henderson Land for HK$16 billion ($2 billion), less than fifteen months after buying the residential plots for a record HK$14.2 billion.

Blackstone has sold over $7.5 billion in assets to HNA, including a $6.5 billion stake in Blackstone-controlled Hilton Hotels. A fund managed by the private equity firm reportedly agreed last month to acquire a downtown Sydney office tower from the beleaguered Chinese firm for about A$200 million ($161 million).

Fellow mainland investor Dalian Wanda Group has offloaded over $1 billion in projects in the UK and Australia within the last month as billionaire Wang Jianlin’s fledging empire collapses under its debt burdens.