South Korea’s financial conglomerate Mirae Asset Group will close a seven trillion won acquisition of 15 U.S. luxury hotels from China’s Anbang Insurance Group next month.
According to industry banking (IB) sources on March 11, Mirae Asset Global Investments, an affiliate of Mirae Asset Group, is expected to finally complete the acquisition of 15 luxury hotels in major cities in the U.S. from China’s Anbang Insurance Group in April. The Seoul-based firm will become the new owner of the hotel portfolio including the Westin St. Francis in San Francisco, Intercontinental Hotel Chicago, and the JW Marriott Essex House in New York. Anbang will sell the properties for 5.8 billion dollars (around 6.9 trillion won).
The acquisition costs for the 15 hotels have been funded by several affiliates of the group. Mirae Asset Daewoo provided 1.8 trillion won, while other key affiliates including Mirae Asset Life Insurance (500 billion won) and Mirae Asset Global Investments (190 billion won) also took part. The remaining amount will reportedly be financed through a secured loan from local lenders.
Of the total, Mirae Asset Daewoo has reportedly halved its sell-down target to around 500 billion won in order for the hotel portfolio not to be categorized as a consolidated subsidiary of the brokerage firm.
In the meanwhile, pension funds and institutional investors have recently put on hold new investments because travel restrictions made it difficult to conduct due diligence study amid fears over the possible impact of the coronavirus.
The hotels that Mirae Asset is about to take over are scattered across the U.S. It will take a lot of time conducting due diligence on 15 difference properties. Given an investment review process normally takes around one month after a due diligence process, the South Korean firm will be able to enter into a sell down process in the second half of this year. With the novel coronavirus spreading exponentially in the U.S, it is still unclear how situations will unfold from now on.
With Mirae Asset Daewoo having difficulties to sell down the hotel portfolio in a timely manner, the firm is expected to be put under more pressure. Mirae Asset Daewoo, on its book, is still carrying some equity interests in overseas properties – including Majunga Tower in France, while it needs additional 489.9 billion won for the acquisition of Asiana Airlines. (By reporter Jo Se-hun)