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Anbang’s $5.8B hotel portfolio sale scrapped

Buyer Mirae Asset Global Investments accused the insurer of breach of contract

Clockwise from the top left: JW Marriott Essex House in New York, the Four Seasons in Jackson Hole and the Westin St. Francis in San Francisco with Daija CEO Andrew Miller (Credit: MusikAnimal via Wikipedia; Jackson Hole Real Estate; Booking)
Clockwise from the top left: JW Marriott Essex House in New York, the Four Seasons in Jackson Hole and the Westin St. Francis in San Francisco with Daija CEO Andrew Miller (Credit: MusikAnimal via Wikipedia; Jackson Hole Real Estate; Booking)

UPDATED, May 6, 2020, 5:14 p.m.: Anbang Insurance Group’s sale of its U.S. hotel portfolio has fallen apart.

The buyer, South Korea’s Mirae Asset Global Investments, announced the termination of its $5.8 billion purchase contract for Anbang’s 15 hotels, accusing the Chinese insurer of breaching contract, Reuters reported.

“Among other things, AnBang had failed to timely disclose and discharge various material encumbrances and liabilities impairing the hotels and failed to continue the operation of the hotels in accordance with contractual requirements,” Mirae said in a statement provided to Reuters. Anbang did not provide comment to the publication.

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The termination comes as U.S. hotel occupancy tanks amid the pandemic and the commercial mortgage-backed securities market seizes up. Billions in hotel loans have been sent to special servicing.

Anbang’s hotel portfolio includes the JW Marriott Essex House in New York, the Four Seasons in Jackson Hole, Wyoming and the Westin St. Francis in San Francisco. Mirae was one of up to 17 bidders interested in acquiring the properties when Anbang was looking for a buyer last year.

Despite initial interest from investors, there were signs of trouble in the deal. Last year, as Mirae and Anbang were hammering out a contract, the insurer discovered a scheme of fake deeds involving six of its 15 hotels. Then, Bloomberg reported last month that Mirae and its lenders were struggling to drum up investor interest in a $4 billion CMBS deal to finance the $5.8 billion deal.

Last week, an entity tied to Anbang filed litigation against Mirae in an attempt to bar the South Korean firm from scrapping the contract. That litigation is still proceeding in Delaware bankruptcy court, and according to a source close to Dajia, the company that took over Anbang’s assets, it is up to the court to determine whether Mirae can back out of the deal. [Reuters] — Erin Hudson

UPDATE: This story has been updated to note that the lawsuit filed by an Anbang entity against Mirae is still ongoing.

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