State-owned Chinese insurer eyes sale of Montage Laguna Beach

Dajia Insurance Group pondering package of posh resort, two others for more than $1B

Los Angeles /
Jun.June 07, 2022 09:30 AM
Montage Laguna Beach (Montage Hotels, iStock)
Montage Laguna Beach (Montage Hotels, iStock)

The China-based owner of the Montage Laguna Beach looks to be preparing to sell the posh beachfront resort.

Dajia Insurance Group is exploring a sale of a trio of luxury hotels that includes the coastal OC resort, Bloomberg reported, citing unidentified sources. Other hotels under consideration for sale include Four Seasons resorts in Jackson Hole, Wyoming, and Scottsdale, Arizona. The group could sell for more than $1 billion, according to the report.

The state-owned Dajia, which took over most of the operations of the now-defunct Anbang Insurance Group, is tapping advisers for a potential transaction, according to Bloomberg. It may seek to cash in on surging travel demand even as rising interest rates make financing real estate transactions more expensive.

The hotels in the Dajia portfolio are well-known in the lodging industry for their high-end locations and the troubled saga surrounding their ownership. The properties were transferred to Dajia when the Chinese government restructured Anbang following that company’s collapse.

The 258-room Craftsman-style Montage Laguna Beach spans 30 acres atop a seaside bluff within the artist colony along the coast. Amenities include three signature restaurants, two pools and a 20,000-square-foot spa. Rooms cost between $1,670 to $12,500 a night, according to its website.

In 2019, Anbang agreed to sell a group of 15 hotels to South Korea’s Mirae Asset Management Co. for $5.8 billion. That transaction, which included the three properties that Dajia may now sell, fell through in 2020 as the coronavirus pandemic crippled global the hotel industry.

Now Dajia, based in Beijing, is exploring a smaller transaction at a moment when lodging demand is surging in the US, especially at lavish resorts like the Laguna Beach, Jackson Hole and Scottsdale properties.

Across all US hotels, revenue per available room increased 33 percent last week from the same period in 2021, and 26 percent from 2019 before the pandemic, according to data fromRaymond James & Associates.

At the same time, rising interest rates and uncertainty in capital markets could make it harder for a buyer to line up financing for a Dajia deal. In May, Dajia halted efforts to refinance a separate hotel portfolio, citing market volatility.

Dajia refinanced the Laguna Beach, Jackson Hole and Scottsdale hotels last fall. In October, it lined up $340 million in CMBS debt for the property along Orange County’s coast.

Earlier in the month, it refinanced a portfolio of nine hotels with $1.8 billion in debt from Goldman Sachs and Bank of America. The Ritz-Carlton Laguna Niguel, a few miles from the Montage in Laguna Beach, was among those nine hotels.

The Chinese government’s China Insurance Security Fund owns 98.9 percent of Dajia. The rest is owned by China Petrochemical and SAIC Motor. Last year, China tried to sell the firm for as much as $5.2 billion.

Anbang got the Montage Laguna Beach Hotel when it purchased the Strategic Hotels & Resorts portfolio from Blackstone for $6.5 billion in 2016.

That was just a year before Chinese regulators went after the company, arresting former chairman Wu Xiaohui and charging him with fundraising fraud and embezzlement. He was sentenced to 18 years in prison in 2018 for perpetrating a $12 billion fraud scheme.

The government took over the company and has sold off assets or otherwise rolled them into Dajia.

[Bloomberg] – Dana Bartholomew





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