Mirae Seeks Time to Close Luxury Hotel Deal With Financing Stuck

(Bloomberg) -- South Korea’s Mirae Asset Global Investments Co. has asked Anbang Insurance Group Co. for more time to close on its $5.8 billion purchase of a U.S. luxury hotel portfolio as the Covid-19 pandemic roils financial markets, according to people with knowledge of the matter.

The two parties had been working toward finalizing a deal by the end of this week, but Mirae is seeking an extension until the second half of this year because the required debt financing isn’t immediately available, one of the people said, asking not to be identified as the matter is private.

Bank loans and other forms of funding for hospitality transactions have all but dried up over uncertainty regarding how or when the global travel industry can recover. With most of the world’s population under strict lock down, airlines and hotel operators are cratering.

A representative for Mirae declined to comment. Representatives for Anbang didn’t respond to requests for comment.

Anbang agreed to the hotels sale in September and Mirae paid a deposit representing around 10% of the total, a person familiar with the matter said at the time.

Lenders led by Goldman Sachs Group Inc. failed to garner sufficient investor demand for roughly $4 billion of commercial mortgage-backed securities to finance the deal last month, forcing talks to shift toward a similar amount in bridge financing.

The portfolio of 15 luxury hotels, which Anbang acquired via its acquisition of Strategic Hotels & Resorts Inc., includes the Westin St. Francis in San Francisco, Loews Santa Monica Beach Hotel, JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.

Occupancy rates at U.S. luxury hotels were just 5.5% in the week ended April 4, far worse than the overall industry figure of 22%, lodging data from STR show. With so few guests, more properties are likely to close, SunTrust Robinson Humphrey said in a research note earlier this month.

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