A deal by China’s Anbang Insurance Group Co (安邦保險集團) to purchase a landmark Southern California hotel near a major US naval base from Blackstone Group LP was called off following opposition from US national security officials, according to people with knowledge of the decision.
Blackstone ended the sale of the Hotel del Coronado near San Diego, California, estimated to be worth about US$1 billion, after concerns were raised by the Committee on Foreign Investment in the US, according to the people, who asked not to be identified because the sale process is private.
The interagency body, led by the US Department of the Treasury, reviews acquisitions of US businesses by non-US entities for national-security risks.
Photo: Reuters
The hotel, where the 1959 Billy Wilder comedy Some Like It Hot was filmed, is one of the most valuable of the 16 luxury properties that were part of Strategic Hotels & Resorts, a real-estate investment trust that Blackstone acquired in December last year for about US$6 billion. The firm agreed in March to sell Strategic to Anbang for US$6.5 billion and the Beijing-based company completed the purchase of 15 hotels last month, according to people with knowledge of the transaction.
The remaining hotel is located on a peninsula that is also home to the Naval Base Coronado. The base comprises eight installations that lie on either side of the hotel, including an air station, amphibious base, landing fields, radio receiving facility and warfare training center. It is one of the main training grounds for the special-operations Navy SEALs.
The sale’s termination delays Blackstone’s ability to cash out of its Strategic purchase at a profit. The Hotel del Coronado has an assessed value of US$588 million, though its market price is far higher. The property is likely worth about US$1 billion, according to Green Street Advisors LLC, a Newport Beach, California-based real-estate research firm.
US Department of the Treasury spokeswoman Whitney Smith also declined to comment.
Foreign investment committee reviews are confidential.
China’s growth into the world’s second-largest economy has spurred massive overseas investment and sparked tensions and concerns over cyberespionage.
Royal Philips NV in January canceled the US$2.8 billion sale of its lighting-components unit to a group led by GO Scale Capital of China because of opposition from the foreign investment committee.
Anbang set a record for a single US hotel acquisition with its purchase of New York’s Waldorf Astoria for US$1.95 billion in February last year, a deal that the foreign investment committee cleared.
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