Waldorf Astoria Sold to Anbang for $1.95 billion

Date: October 2014; Update February 2017

Location: New York, USA – Park Avenue

Name: The Waldorf Astoria, five star

No. of keys: 1413

Seller: Hilton Worldwide Holdings. Conrad Hilton bought this iconic hotel in 1949…It first opened in 1893 on the site of millionaire William Waldorf Astor’s Fifth Avenue mansion.

Waldorf’s cousin and fellow millionaire John Jacob Astor IV reconstructed the hotel a few years later at a nearby location. The hotel fell into disrepair during prohibition and was torn down in 1929, making way for another landmark: the Empire State Building.

The Waldorf is a cultural icon and has hosted foreign heads of state for years. It was featured in a 1945 film staring Ginger Rogers called “Week-end at the Waldorf.”

Legend has it that the Waldorf salad was invented by the maître d’hôtel of the Waldorf Astoria in 1896.

The hotel is home to restaurants where New York’s elite dine such as Peacock Alley, Bull and Bear Prime Steakhouse and Oscar’s.

The Waldorf Astoria has been at its current location on Park Avenue since 1931.

Hilton will continue to operate the Waldorf for the next 100 years under a “strategic partnership” with Anbang, the Beijing-based company.

At the current time (November 2017) Hilton have 26 Waldorf Astoria hotels in 12 counties, globally.

Buyer: Anbang Insurance Group, which is a global insurance company with total assets of nearly 1971 billion RMB. With over 30,000 employees and a customer base of 35 million worldwide, Anbang stands out as one of the most profitable insurance companies in China. Its business covers life insurance, P&C insurance, health insurance, pension insurance, banking and asset management. In 2017 Anbang entered the Fortune Hlobal 500 list at the ranking of 139.

The Waldorf Astoria will undergo a “major renovation” to restore the hotel to its “historic grandeur,” according to a joint statement from Hilton and Anbang.

In March 2016 Blackstone Group LP agreed to sell Strategic Hotels & Resorts Inc. to Anbang for about $6.5 billion, just three months after Blackstone themselves purchased the U.S. luxury-resort company.

The price is about $450 million more than Blackstone paid for Strategic in December. The New York-based private equity firm had been planning to sell individual properties in the portfolio before Anbang made a pre-emptive offer for the entire company.

The transaction marks a deeper push into U.S. hotels for Beijing-based Anbang, and it ranked as the largest U.S. real estate purchase by a buyer from mainland China, according to data compiled by Bloomberg.

Strategic owns 16 properties across the U.S., including the Four Seasons resorts in Scottsdale, Arizona, and Jackson Hole, Wyoming; Ritz-Carltons in Half Moon Bay and Laguna Niguel, California; San Diego’s Hotel del Coronado; and Manhattan’s JW Marriott Essex House.

In June 2016 Anbang reported that instead, they were planning to convert 75% of the hotel into condominiums and reduce the hotel to 300 to 500 rooms.

However by July 2017, Anbang was ordered to sell its foreign assets, by the Chinese government, including the Waldorf Astoria...albeit they may see it that way! – “Anbang at present has no plans to sell its overseas assets,” the company said in a WeChat message. “Currently, Anbang’s various businesses and operations are all normal, and the company has ample cash and sufficient solvency capabilities.” A representative for China’s insurance regulator had no immediate comment when reached by phone, according to Bloomberg.

By February 2018 the Chinese government steamed in and has taken over the hotel!

Rather than following traditional regulatory methods of nationalising Anbang or forcing its sale to another financial firm, Eurasia Group Asia Director Michael Hirson pointed out that Beijing chose to have a committee of regulators run Anbang for at least a year.

“Given actions over the last year, Xi’s top-down, highly political approach so far favours punishing executives for wrong-doing, but not the broader public for poor investment decisions.”

“Anbang was probably taken out in a really public manner to set an example for others to step back a little bit,” said Adams Lee, an international trade lawyer at Harris Bricken. He’s watching to see if this is an isolated case, or if another Chinese company gets hit in another two to three months.

Hirson thinks HNA may be next.

Price per Key: $1,380,042

THPT Comment: I guess one would expect nearly $1.4m a key for perhaps the most famous hotel in the USA/globally on such amazing real estate…until the Qataris paid even more for Claridges, The Connaught and The Berkeley in London, just six months later in 2015.

First Seen: CNN Money and CNBC