Blackstone's Gray Confident Anbang Will Complete Hotel Deal

  • Insurer under contract for $6.5 billion Strategic purchase
  • Anbang-led group withdrew from bidding war for Starwood Hotels

Anbang Insurance Group Co., the Chinese insurer that backed out of a takeover bid for Starwood Hotels & Resorts Worldwide Inc., is on track to complete its $6.5 billion purchase of another U.S. hotel company from Blackstone Group LP, said Jon Gray, Blackstone’s global head of real estate.

Anbang is under contract to buy Strategic Hotels & Resorts Inc., “and I am highly confident they will close on the transaction,” Gray said Wednesday at a conference sponsored by New York University’s Schack Institute of Real Estate. His comments were Blackstone’s first public acknowledgment of the deal for Strategic, the owner of luxury properties including Manhattan’s JW Marriott Essex House.

Anbang burst onto the U.S. scene with its purchase last year of New York’s Waldorf Astoria for $1.95 billion, a record for an American hotel.  On March 31, a group led by the Beijing-based insurer abruptly withdrew a $14 billion offer for Starwood after igniting a three-week bidding war with Marriott International Inc. for the owner of the Sheraton, W and Westin brands. The group cited “various market considerations” as its reason, without elaborating.

Because Anbang wasn’t able to defeat Marriott in the contest for Starwood doesn’t mean that “Chinese bidders are not trustworthy counterparties,” Gray said at the conference. “I would not make that assumption.”

Public acquisitions are more challenging for foreign buyers, in part because of regulatory restrictions, and the nature of the merger process, he said. “But I think long-term, you have to recognize there’s a lot of capital that’s built up in China. Insurance companies there, just in the last three years, got the right to invest outside of their home country.”

Anbang’s purchase of Strategic would be the second-biggest acquisition of a U.S. company by a Chinese buyer, behind the $7 billion takeover of Smithfield Foods Inc. in 2013.

Blackstone completed its purchase of Strategic just four months ago, for about $6 billion. The private equity firm had been seeking buyers for individual properties in the portfolio when Anbang offered to purchase the entire company, people with knowledge of the matter said in March.

Blackstone shares jumped 5.2 percent Wednesday to $28.59 amid a rally in financial stocks. The company is scheduled to report first-quarter earnings April 21.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE