After withdrawing its $14 billion bid for Starwood Hotels & Resorts on April Fools’ Day, China’s Anbang Insurance Group has apparently moved on to acquire a hotel group in Canada, as what appears to be an affiliate of the mainland insurer has reached an agreement to acquire InnVest, one of that nation’s largest hotel owners for C$2.1 billion (US$1.6 billion).
Bluesky Hotels & Resorts Inc. is the proposed purchaser of record, but that company – which was only incorporated in Canada in April and has no prior corporate track record – allegedly has substantial ties to Anbang, according to the Wall Street Journal and Bloomberg News. An Anbang spokesman has denied participation in any proposed InnVest agreement.
Anbang’s reluctance to take credit for the agreement may stem from an ongoing investigation into its overseas real estate deals by Chinese insurance regulators. That scrutiny, which seeks to uncover whether the insurer has invested assets beyond government limitations, allegedly derailed Anbang negotiations for Starwood Hotels & Resorts Worldwide Inc. earlier this year.
Is Anbang Still Hungry for Hotel Assets?
InnVest is a real estate investment trust (REIT) holding one of Canada’s largest hotel portfolios, including a 50 percent interest in Choice Hotels Canada Inc, one of the largest franchisors of hotels in Canada.
The InnVest portfolio consists of 109 hotel properties covering 14,500 rooms, operated under brands including Best Western, Comfort Inn, Fairmont Hilton, and Holiday Inn in all ten Canadian provinces.
The proposed acquisition of InnVest by Bluesky Hotels & Resorts Inc. faces a June 28 vote by InnVest shareholders at their annual meeting. Investors, who hold 29 percent of outstanding stock, have already agreed to the purchase. Bluesky has proposed to pay C$7.25 a share for InnVest, roughly a 33 percent premium to its mid-May closing price when the agreement was announced.
A Confidential Representative Asks that Anbang Not Be Named
The negotiations for InnVest were led by Bluesky President and CEO Li Chen (also known as Lydia Chen). Sources told Bloomberg News that she admitted she was representing Anbang at the beginning of acquisition talks, but that she allegedly said that Anbang did not want to be named as the buyer. Chen has previously acted on behalf of Anbang in prior Canadian deals, and has been employed by the company, according to Bloomberg.
The secrecy surrounding the deal comes in the wake of reports that China’s insurance regulator is looking into Anbang’s overseas real estate buying spree, which includes last year’s purchase of Manhattan’s Waldorf Astoria, and prior deals for a Toronto office tower and a controlling stake in Bentall Centre, a large office and underground shopping area in Vancouver, British Columbia.
There is a state-imposed 15 percent limit on any Chinese insurance company’s assets invested in overseas holdings. Anbang previously cited that ruling when it withdrew earlier this year from a massive negotiation for Starwood Hotels & Resorts Worldwide Inc., the owner of hotel brands Westin, Sheraton and the upscale W chain.
Bluesky and InnVest did not respond to requests for comment.