Congressman asks feds to review sale of downtown Long Beach hotel to Chinese firm

Rep. Alan Lowenthal, D-Long Beach, is again asking federal officials to investigate the potential sale of Long Beach hotel property to Chinese interests. Lowenthal’s office this week requested Treasury Secretary Steven Mnuchin review the possible sales of the Hyatt Regency Long Beach and Hyatt Centric The Pike Long Beach hotels to Shanghai Construction Group.

Lowenthal similarly requested the federal government probe the potential sale of another Long Beach hotel property in December. “I will continue to press for review of any real state or corporate transaction in my district that raises questions on national security, whether due to proximity to federal government offices, military bases or other federal infrastructure, harboring sensitive customer information, or hosting meetings with representatives of foreign governments,” Lowenthal said in a statement. Lowenthal is asking for the Committee on Foreign Investment in the United States to review the potential hotel sales.

The Treasury Secretary chairs the panel, which includes the attorney general and secretaries of state and homeland security, as well as other-cabinet level leaders. The committee’s mandate is to assess any national security implications that may arise if a foreign national assumes control of a U.S. enterprise. A Treasury spokesman said in an email that its illegal for the department to disclose any investigation filed with the committee.

Federal scrutiny requested

In December, Lowenthal asked the committee to review the possible sale of Westin Long Beach to Chinese or other foreign interests, citing the hotel’s proximity to U.S.

Customs and Border Protection offices and its history of accommodating visitors who work for the federal government and diplomat’s representing other countries. Lowenthal again pointed to Customs’ presence in downtown Long Beach as a reason for the feds to investigate the potential sale of the Hyatt hotels. He also pointed to a recommendation contained within the U.S.-China Economic and sk© Security SAVER SALE Review Commission that Congress prohibit state-owned Chinese firms from acquiring effective control of U.S. firms.

Nearly 32 percent of Shanghai Construction Group is owned by the similarly-named Shanghai Construction Group Corp., according to late March ratings report[1] from Moody’s Investors Service. The latter entity is a state-owned company answerable to Shanghai’s municipal government and has a controlling interest in Shanghai Construction Corp. The Hyatt hotels’ general manager in Long Beach, Mark Becker, declined to comment.

Shanghai Construction Group’s branch in the United States, SCG America also did not provide comment. Advertisement SCG America acquired Hyatt Regency Orange County[2] in Garden Grove for £137 million in October 2015.

The firm’s website shows that it also lists DoubleTree Pomona and Hotel Properties and La Quinta Inn & Suites Pomona-Cal Poly as being within its portfolio.

City Hall’s interest

Long Beach’s city government leases land where the Hyatt properties sit to the hotel company. John Keisler, the city’s director of economic and property development, said the City Manager’s office has a say in deciding whether Hyatt can transfer its lease interest at the Hyatt Regency site to another firm. City government has a duty to determine whether another company would have the ability to live up to the lease’s terms, and if a sale is attempted, City Hall would likely hire an outside expert to conduct its own review.

City government doesn’t have power over the Hyatt Centric site, according to Keisler. That lease is under control of DDR Corp., which is the company in charge of The Pike Outlets shopping center. DDR can only block a change in lessee for limited reasons, such as a hotel operator lacking the business experience or financial capability to run a business.

He also said that although Long Beach officials have heard Shanghai Construction Group’s name mentioned as a possible buyer, the firm has not contacted the city. Councilwoman Jeannine Pearce, who represents the downtown area, has also asked for the federal committee to represent the potential sale of the Hyatt properties. The potential sale of the Westin Long Beach is being reviewed by the federal committee, according to Lowenthal’s office.

Utah Retirement Systems owns that hotel, and agency spokesman Brian Holland said he couldn’t say whether or not the hotel is for sale.

“It’s not under contract and we still own it,” he said.

References

  1. ^ ratings report (www.moodys.com)
  2. ^ acquired Hyatt Regency Orange County (www.ocregister.com)

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