Moody’s trims $137M on Westin St. Francis valuation
Anbang successor gets haircut as Goldman Sachs backs $881M refi on portfolio that includes four other high-profile establishments
After years of trying to sell off its entire U.S. hotel portfolio, the successor to the now-defunct China-based insurance provider Anbang has scored a lifeline on the Westin St. Francis Hotel in San Francisco’s Union Square and four other high-profile establishments.
Almost 20 percent of the new loan will go towards the Westin St. Francis, a 1,195-key hotel in Union Square built in 1931. Dajia has valued the property $436 million, or $364,850 per room, though Moody’s valuation came in at $298.8 million, or $250,000 per key.
Moody’s cited “significant uncertainty” around whether the hotel would rebound after the pandemic, given its past reliance on business and international travelers, as reasoning for its lower valuation.
Goldman Sachs is backing a $881 million CMBS loan, according to a Moody’s report.
Anbang assumed ownership of the hotels in 2016, when it purchased Chicago-based Strategic Hotels & Resorts from Blackstone. Two years later, Anbang’s chairman was in prison for fraud and the Chinese government seized control of the entire insurance company.
Since then, Chinese state-owned Dajia Insurance Group has held ownership of the U.S. hotel portfolio. Dajia is listed as the loan’s borrower, through 10 separate limited liability companies, according to the report.
Neither Dajia, nor Strategic Hotels & Resorts could be reached for comment.
The five properties were the last hotels in the former Anbang portfolio without a lifeline. First, Dajia tried to sell the entire portfolio in 2020 to South Korea’s Mirae Asset Management, but the deal fell through. In October, Goldman Sachs and Bank of America refinanced 10 other hotels formerly owned by Anbang with $2.1 billion in debt.
Dajia’s new floating-rate, interest-only loan will mature in 2024, though the firm has options to extend it for three more years. The debt will bear interest at the one-month secured overnight financing rate plus 3.53 percent — a higher rate than Blackstone’s recent refinancing of 106 Motel 6 and Studio 6 motels across the country.
With the new cash, Dajia appears to have accepted its fate and is getting in position to hang on to the properties. The state-owned company is planning to spend $140 million to renovate all five hotels.
About 20 percent of the loan will be allocated to the JW Marriott Essex House, a 528-key hotel at 160 Central Park South. Moody’s, again, provided a lower valuation of the property than its owners’ estimation of $436 million, valuing it instead at $145.2 million, or $275,000 per key.
In addition to also relying on business and international travelers, the hotel has also operated at a lower cash flow margin — meaning it produces less cash from its sales — than some of its competitors.
The other hotels in the portfolio are the 653-key Continental Miami, the 222-key Four Seasons in Washington, D.C., and a 792-room Continental hotel in Chicago.