Mirae Asset says on track to close $5.8 bn US hotels deal

Mirae Asset Global Investments Co. Ltd. remains on track to close a $5.8 billion acquisition of 15 US luxury hotels from China’s Anbang Insurance Group, the company source said, denying market reports that the portfolio deal was at risk of collapsing because of difficulty in securing funding.

Mirae Asset plans to finance the acquisition with about $4 billion in loans and $2 billion in principal investment by its three affiliates, including brokerage arm Mirae Asset Daewoo Co. Ltd.

But it has been struggling to finance the transaction, agreed in September last year, as lenders became hesitant to participate in the financing package after the coronavirus pandemic had pummeled financial markets and businesses, in particular the travel industry.

“We will close the deal with short-term borrowings from local lenders and then seek refinancing after monitoring the situation,” a Mirae Asset Investments source told the Korean Investors on March 13.

“We are in separate negotiations with Goldman Sachs for different conditions and in discussions with other large US financial services companies as well,” he said.

The South Korean asset manager is aiming to close the deal in coming weeks, and Anbang Insurance stays firm on completing the sale to Mirae Asset, according to the source.

Bloomberg reported on March 12 that a lender group led by Goldman Sachs failed to garner sufficient investor demand for roughly $4 billion in loans and talks shifted to the provision of a similar amount in bridge financing to keep the deal afloat, citing people with knowledge of the matter.

The report added that the $4 billion bridge financing package was far from being finalized and if Mirae is unable to secure sufficient commitments for the facility or other alternative financing, the deal may be abandoned.

Pension funds and institutional investors have put on hold new property investments because travel restrictions made it difficult to conduct due diligence study amid fears over the possible impact of the coronavirus.

A spike in the dollar/won exchange rate may add difficulties to sell down the US luxury hotel portfolio to domestic investors.

The hotel portfolio includes the Westin St. Francis in San Francisco, the Loews Santa Monica Beach Hotel, the JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.

Mirae Asset Daewoo, which is supposed to put up 1.8 trillion won ($1.5 billion) for the hotel portfolio deal, has reportedly halved its sell-down target to 500 billion won.

It is planning to raise up to $600 million in a global bond sale as early as April to fund investments.

By Hyun-il Lee

hiuneal@hankyung.com