Photo byShutterstock.

|

Mirae Asset Global Investments failed to close on its $5.8billion purchase of a luxury US hotel portfolio, according tosources cited in a Wall Street Journal article.

|

Now the South Korean financial-services company is being sued bythe seller, Anbang Insurance Group, to force the sale.

|

The 15 high-end asset portfolio includes such properties asEssex House Hotel in Manhattan, the Four Seasons Hotel in JacksonHole, and San Francisco's Westin St. Francis.

|

The sources told the WSJ that Mirae's reason for notclosing the deal by the deadline was in part due to the hotelsoperating outside the ordinary course of business amid thecoronavirus pandemic.

Hospitality's Grim Outlook

There is no doubt that hotels are under siege in the currentcoronavirus-driven economy. As of April 8, nearly 8 out of 10 hotelrooms were empty across the country per STR. Hotels are currentlyon pace to lose more than $500 million in room revenue per daybased on current and future reported occupancy rates, according tothe American Hotels and Lodging Association. This pace translatesinto a loss of $3.5 billion every week with most hoteliersreporting projected revenue losses of greater than 50% for thefirst half of the year.

Another Luxury Hotelier Taps PPP

Luxury hotels are not immune to this downward trajectory, asMirae Asset Global Investments and one luxury hotel owner show.

|

Ashford Inc., the external advisor to both Ashford HospitalityTrust and Braemar Hotels & Resorts, recently explained why itwas tapping the small business Payment Protection Program forfunds.

|

It was responding to the backlash that has formed against largercompanies that are taking out these loans, with many feelingpressured to return the loans.

|

Ashford said that the Covid-19 pandemic has been devastating toits company and employees, with 32 of its 130 hotels closed. "Ourhotels that remain open are operating with cash flow shortfallseven before debt service and also require funding," it said.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.