Fertitta Buys Montage Laguna Beach for $650M

Tilman Fertitta is acquiring a landmark trophy property in Laguna Beach at a price that gets its own trophy: the billionaire casino owner is acquiring the Montage Laguna Beach hotel for $650M.

The jaw-dropping price tag for the 258-room cliffside luxury hotel translates to a record $2.5M per room, according to a report in the Orange County Register.

The Houston-based billionaire owns the Golden Nugget casinos as well as a 6.2% stake in Wynn Resorts, owner of hotels in casinos in Las Vegas and Macau. Fertitta also owns numerous high-profile restaurants and the NBA’s Houston Rockets franchise, which he purchased for $2.2B in 2017.

Rooms at the Montage Laguna, which sits atop a cliff overlooking the Pacific Ocean, range from $1,240 to $11K per night.

In September, GlobeSt. reported that China-based Dajai Insurance Group put three high-profile resort hotels in the US on the market, aiming for a combined sale price of $1.3B. Two of the assets are Four Seasons resorts—in Jackson Hole, Wyoming and in Scottsdale, AZ—and the other was the Montage. Bofa Securities and Eastdil Secured are marketing the hotels.

The three properties are part of Dajai’s Strategic Hotels & Resorts portfolio, which encompasses 15 luxury US resorts and hotels, including the JW Essex House overlooking Manhattan’s Central Park and InterContinental hotels in Chicago and Miami.

Dajai took control over the portfolio from China’s Anbang Insurance Group in 2019 in a transaction that was engineered by the Chinese government’s finance ministry.

In 2016, Anbang acquired the Strategic Hotels & Resorts portfolio in a $5.5B deal with Blackstone as part of a rapid expansion strategy by Anbang that preceded a crackdown by China on over-leveraged foreign investments.

In 2017, Anbang was seized by the Chinese government after its chairman was arrested and charged with corruption.  In June 2019, the finance ministry’s China Insurance Security Fund create Dajai Insurance, giving it an identical structure and the same shareholders as Anbang—including the Security Fund, which owns 98.2% of the entity.

Dajai agreed in 2019 to go through will transaction negotiated by Anbang to sell the entire Strategic hotel portfolio to South Korea’s Mirae Asset Financial Group, but the $5.8B deal unraveled after the outbreak of the pandemic crippled the hospitality sector.

The collapse of the deal resulted in a lawsuit that was settled in December 2020 when a Delaware judge ruled that the Chinese company had to refund Mirae’s $582M deposit.

According to a report in the Wall Street Journal, Dajai is aiming to reap $300M from each of the Four Seasons resorts and $700M from the Montage Laguna Beach.

Dajai is in the midst of a renovation/conversion of the Waldorf Astoria in Manhattan, an iconic property that was not part of the Strategic portfolio.

Anbang bought the Waldorf in 2015 for what then was a record-breaking price, $1.95B, and embarked on a redevelopment of the hotel that will create 375 condos in the landmark building.

In May, the NY Post reported that the US CEO of Dajai had resigned due to cost overruns at the Waldorf that have ballooned the cost of the renovation to more than the price of the building. Work on the shuttered Waldorf is now expected to continue into 2024.