Security concerns raised by the U.S. watchdog on foreign investment have reportedly ended the proposed the sale of San Diego's Hotel del Coronado to China's Anbang, a replay reminiscent of when Anbang ultimately was successful acquiring New York's Waldorf Astoria amid security doubts.
Seller Blackstone Group has called off the deal on San Diego's Hotel del Coronado, leaving its fate in the lurch and leaving Anbang without a key asset. According to the South China Morning Post, Blackstone ended the sale after the Committee on Foreign Investment in the United States (CFIUS), which reviews acquisitions of American businesses by non-U.S. entities for national-security risks, raised some concerns over the deal. The hotel is located close to a large naval base of eight installations that sit on either side of the property, including an amphibious base, landing fields, and warfare training center.
With Chinese acquisitions of U.S. hotels and hotel companies on the rise, the government is paying close attention to who owns what and how close foreign-owned hotels are to sensitive locations.
According to Bloomberg, the termination delays Blackstone’s ability to cash out of its Strategic purchase at a profit. The Hotel del Coronado has an assessed value of $588 million, though its market price is far higher. The property is likely worth about $1 billion, according to Green Street Advisors LLC, a Newport Beach, California-based real estate research firm.But some analysts are reportedly calling the whole issue "overblown," and blaming the furor on the ongoing U.S. presidential election, and its anti-Chinese rhetoric.
Anbang did not confirm the Bloomberg report on Monday, but said the company “is pleased to have completed its acquisition of a portfolio of hotels as part of the Strategic Hotels transaction from the Blackstone Group.” Blackstone did not comment.