The Waldorf Astoria Hotel in New York City was sold to Anbang Insurance Group Co, a leading Chinese insurance firm, for a record $1.95 billion, making it the most expensive property deal for Chinese buyers in America and also the priciest single hotel sale in the country.
The Waldorf Astoria, located at Park Avenue, is owned by Hilton Worldwide Holdings Inc., and the group has been operating the hotel for more than fifty years after it purchased it in 1949. The Art deco tower was called "The Greatest of Them All" by Hilton founder Conrad Hilton.
Hilton announced that Anbang agreed to pay an initial $100 million deposit and will also pay off the hotel's $525 million mortgage. Breaking down the transaction - Anbang is shelling out $1.4 million for each room in the hotel, according to CNBC.
"We are very excited to be entering into this long-term relationship with Anbang, which will ensure that the Waldorf Astoria New York represents the brand's world-class standards for generations to come. This relationship represents a unique opportunity for our organizations to work together to finally maximize the full value of this iconic asset on a full city block in midtown Manhattan," Christopher J. Nassetta, president and chief executive officer, Hilton Worldwide said in a statement.
Though Anbang will take ownership of the Waldorf Astoria, Hilton will continue to run the 47-story luxury hotel for the next 100 years. The property is also slated to undergo a major renovation after the deal closes, which the companies expect to seal by the end of this year or by March 2015.
The deal not only marks a significant milestone for the hotel industry in America but is also a paradigm of Chinese investment in American real estate.
"The Chinese have money to spend and the inclination to do so," Sean Hennessey, chief executive of Lodging Advisors, a consulting company, told the New York Times.
"The property will continue to be an iconic hotel even if it's owned by a foreign entity," Hennessey added.
But what stands out in this deal is the fact that it was a Chinese insurance company and not a major property firm as such that netted a crown piece of real estate in the heart of New York City.
"We're seeing a diversification strategy being employed by insurance companies and others, and it's also true when it comes to private Chinese investors. We've seen a lot of wealth generated there over the last decade, and we see private investors diversifying their portfolio around the globe," Kevin Mallory, global head of the hotels unit at CBRE Group Inc explained the diversification trend to Bloomberg in a telephone interview.
