After just becoming the largest owner of real estate in the world, the Blackstone Group has agreed to sell its 16 luxury properties, including the iconic Hotel de Coronado to Chinese-based Anbang Insurance Group.
The 128-year old Hotel del Coronado was the largest resort hotel in the world when it opened in 1888. It has been featured in numerous movies and continues to host royalty, presidents, and celebrities. It is currently part of a collection named Strategic Hotels & Resorts, Inc.
Since the Manhattan-based private equity Blackstone Group went public in 2007, the organization has expanded its real estate portfolio from $17.7 billion to over $100 billion worth of property, and produced an 18 percent after-fees compound return.
The sale came as a shock to most Wall Street analysts, since CEO Steve Schwarzman recently told the Business Insider about the company’s real estate investments: “We’ve had almost no losses of any type.”
Given that Blackstone Group just bought Strategic Hotels & Resorts in December for $3.93 billion, the private equity firm appears positioned to keep its winning record by booking a $2.57 billion short-term windfall profit on the deal.
The 16 properties include 7 in California, including the Loews Santa Monica Beach, the Montage Laguna Beach, the Ritz-Carlton Laguna Niguel, the Ritz-Carlton Half Moon Bay, the Four Seasons Hotel in East Palo Alto, and the Westin St. Francis in San Francisco.
The usually quiet real estate market for hotels was shaken up in October 2014 when Anbang Insurance Group announced that they were buying Hilton’s flagship Waldorf Astoria in New York City for $1.95 billion.
Anbang, with 30,000 employees and more than $114 billion in assets, is not the largest insurer in China. But after it acquired Belgian insurer Fidea NV and Delta Lloyd Bank Belgium, Anbang has the largest registered capital, at $9.5 billion.
The company is no stranger to investing in U.S. commercial properties. Recent transactions include paying $1.4 billion last year for a 40% stake in Manhattan’s landmark General Motors Building, and paying $725 million to buy 1 Chase Manhattan Plaza. Buying Strategic Hotels and combining it with the Waldorf Astoria would give Anbang thousands more rooms, as well as meeting and banquet space.
In a late breaking story, Starwood Hotels stock jumped by 8 percent on March 14 following news that Anbang Insurance Group had made a “hostile takeover bid” of $76 per share in an effort to scuttle a $12.8 billion friendly bid for Starwood by Marriott International.
Starwood is one of the world’s largest hotel companies, operating prestigious brands that include Westin, Sheraton, The Luxury Collection, W Hotels, St. Regis, Le Meridien and others.