The days of Chinese conglomerates making enormous, high-profile tourism investments and acquisitions are clearly over, or at least on hiatus. It’s not just HNA that’s being forced to unload billions of investments and purchases. Anbang Insurance Group is following suit and has opted to put $5.5 billion worth of U.S. luxury hotels up for sale, sources familiar with the matter told The Wall Street Journal. These properties were purchased from Blackstone Group LP in 2016, and include properties like the InterContinental Hotels locations in Miami and Chicago; Essex House Hotel, which overlooks Central Park in Manhattan; and the Four Seasons in Jackson Hole, Wyoming.
The portfolio includes properties bearing the InternContinental and Four Seasons’ brands, along with the famed Essex Hotel in Manhattan
An Anbang spokesman dismissed the rumors as “pure market speculation.”
This sale does not include the Waldorf Astoria, which Anbang purchased back in 2015 for just under $2 billion. According to unnamed sources cited by The Wall Street Journal, there are currently no plans to sell the Waldorf Astoria.
The move to sell properties wasn’t unexpected, and rumors of this particular sell-off have been circulating since February. Anbang is currently in crisis, although the company’s troubles are not solely centered around the conglomerate’s financial health. The company’s former chairman, Wu Xiaohui, was removed from his position this year and was convicted of fraud and embezzlement.
The Chinese government argued that Wu had masterminded a $10.2 billion fraud scheme by selling illegal “investment-type” insurance products that promised high yields in the short term to increase the company’s liquidity and help bankroll prominent investments and expansions in China and abroad.
Wu was sentenced to 18 years in prison in May.
Former Anbang Chairman Wu Xiaohui’s use of illegal investment products to fund expansion has left the company on a bad financial footing
Anbang is currently under the control of Chinese authorities, who have been tasked with getting the company in better financial shape. However, it does not seem that Anbang is under the same kind of debt pressure as HNA, which has struggled to pay fuel bills and leases for its aircraft.
Anbang nonetheless received a funding injection of $9.7 billion from the Chinese government back in April to maintain the company’s solvency. Chinese authorities have maintained that Wu’s actions presented a risk to national financial security and that to maintain the stability of Chinese financial markets it was necessary to keep the company operational. How dire Anbang’s financial woes are is hard to pin down, but it’s safe to say that the group needs to raise billions in capital. Major sales, like the possible sale of its various U.S. luxury hotel properties, could help Anbang stave off disaster for the time being.