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Anbang Wants To Unload $5.5B Hotel Portfolio

Anbang Insurance Group Co., which until recently was a major investor in U.S. CRE, is planning to sell a portfolio of as many as 15 luxury hotels that it acquired about two years ago from Blackstone Group for $5.5B. How much Anbang could get for the properties now is an open question.

Essex House, Manhattan

Anbang, which was seized by the Chinese government after its chairman was arrested and charged with corruption (and convicted this year), had previously been entertaining offers for some individual properties in the portfolio. 

The portfolio includes such notable hotels as the Essex House in Manhattan and the InterContinental Hotels in Chicago and Miami. The Waldorf Astoria in New York, which Anbang also owns, reportedly isn't in the portfolio.

Now the company is looking to sell the entire portfolio, the Wall Street Journal reports. If Anbang is able to do so, such a deal would represent its first major divestment in the United States, though it has been selling assets in China lately.

Earlier this year, Blackstone considered buying back some of its former hospitality assets, but so far that has not happened.

It isn't clear whether now is a good time to be the seller of such a luxury hotel portfolio. On the whole, according to JLL data, the U.S. lodging industry is strong, but rising labor costs and supply growth are putting downward pressure on hotel profits.

Luxury hotels are expected to do well in the coming years. The segment is expected to grow significantly worldwide between 2018 and 2025, with a compound annual growth rate of 4.3%, according to Grand View Research. That is because of the increasing purchasing power of consumers, as well as the rising number of international and domestic travelers.

Anbang, though its seizure makes it a special case among Chinese owners of U.S. commercial real estate, isn't the only investor from that country in the process of unloading assets. 

Chinese investment firm HNA Group is also selling significant chunks of its holdings. In the hotel space, HNA recently inked a deal to sell its stake in Hilton Worldwide Holdings

HNA is under pressure to sell assets to both pay down part of its $100B in debt and to decrease its overseas holdings at the direction of the Chinese government.