Chinese Insurance giant Anbang are suing South Korea’s Mirae Asset Management for failing to complete the $5.8 billion acquisition of a US hotel portfolio.
The lawsuit was initiated in the US on Monday, following Mirae’s failure to secure finance to complete the acquisition.
The hotels that were to be acquired included JW Marriott Essex House in Manhattan, New York.
Anbang bought the luxury hotel portfolio through a $5.5 billion deal in 2016.
The sale to Mirae stalled missing a payment in mid-April, and then trying to renegotiate the price and terms of the acquisition.
Financial commentators are saying the original price of course seems high amidst the current Covid-19 pandemic. Doubtless Mirae Asset Management are looking to understand the future returns in a diminished market. Like the rest of the hotel world.
The Covid-19 pandemic has seen US hotels empty in recent weeks. At the same time financiers are looking at saving assets, not acquiring new ones. So, finance for deals like this one are drying up.
Anbang has been looking for a buyer of the portfolio for more than two years.
A hotel deal in 2014 brought the Chinese insurer into the hotel market, the acquisition of the New York Waldorf Astoria. They have spent $1 billion so far on transforming the Waldorf Astoria into luxury apartments.
The diversification strategies of Anbang are meeting with many difficulties, as the sales offices for the luxury apartments are also closed.
Lawsuits are expensive and can take significant time to complete, Mirae Asset Management will be mindful of this, a re-negotiated deal could look considerately different to the original.