Anbang completes $6.5B Strategic purchase—almost

Just as Marriott International completed its acquisition of Starwood Hotels & Resorts Worldwide, former Marriott rival Anbang Insurance Group completed most of its $6.5-billion acquisition of Strategic Hotels & Resorts, a deal that has been in the works since early spring.

The Beijing-based insurance company bought 15 of Strategic’s 16 properties, making the deal the second-largest U.S. acquisition by a Chinese buyer and the largest real estate purchase. Earlier this year, Anbang bought Strategic from Blackstone Group, which had taken the company private last December for about $6 billion. Strategic’s properties include the JW Marriott Essex House in New York and the Four Seasons in Washington. 

The 16th Hotel

The ownership of one Strategic hotel is still up in the air. Insiders told Bloomberg that the interagency Committee on Foreign Investment in the United States is still reviewing the purchase of the Hotel del Coronado near San Diego. The hotel is located close to a large naval base, and the committee reviews acquisitions of U.S. businesses by foreign investors that may pose national security risks. 

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This is not the first time that an Anbang acquisition posed a security risk. Last year, when Anbang finalized its purchase of the Waldorf-Astoria hotel in New York City, the U.S. State Department got involved over "fears of Chinese eavesdropping and cyberspying." The hotel had been the New York City home base for U.S. presidents going back to Franklin Delano Roosevelt (who had train tracks installed in the basement) as well as the U.S. ambassador to the United Nations and U.S. diplomats during the annual U.N. General Assembly. Once Anbang took over, the president opted instead to stay at the Lotte New York Palace. "There are a range of considerations that influence where the president will stay when he's not at the White House," White House Press Secretary Josh Earnest said last year. "Those considerations include everything from available space to cost and to security."

Anbang's Journey

The Chinese insurance giant has had a busy two years that included the successful purchase of the Waldorf Astoria hotel and its unsuccessful bid for Marriott in the spring. Beyond the hospitality industry, the company has also purchased office buildings and other businesses around the world. 

With more than $13.5 billion of overseas businesses acquired since 2014, the company is now preparing to "take a break" from actively pursuing more deals, although it will continue to keep an eye out for new opportunities. “We want to build up the existing synergies a bit first, and consider new deals when appropriate opportunities emerge,” Vice Chairman Yao Dafeng said earlier this month. The vice chairman said that Anbang is working to complete all pending acquisitions, and will continue looking for new ones in the meanwhile.

Last month, Anbang announced plans to take its life insurance business (as well as many of its overseas businesses) in Hong Kong public, and invited investment banks to pitch for advisory mandates. The initial public offering could take place by mid-2017.

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