Hilton Worldwide Holdings Inc., the world's largest publicly traded hotel operator, has agreed to sell the landmark Waldorf Astoria hotel in Manhattan to China's Anbang Insurance Group Co. for $1.95 billion.
Hilton will continue to manage the 1,232-room luxury hotel, which will undergo a major renovation, the McLean, Va.-based company said in a statement Monday. It plans to use the proceeds from the sale to buy other U.S. properties.
The sale of the 83-year-old art deco building, which occupies a block on Park Avenue in midtown Manhattan, ends more than four decades of ownership by the company and expands a surge of Chinese investment in New York real estate. The transaction is the largest ever for a U.S. hotel, according to research firm Lodging Econometrics.
"There really are no other sales to compare it to," said Bruce Ford, senior vice president and director of global business development at Lodging Econometrics, based in Portsmouth, N.H. "It is the most unique asset with the most unique location in the world."
Hilton Chief Executive Officer Christopher Nassetta said in a February interview that the company may sell all or a part of the property as it considers other uses for the building. The company, majority owned by Blackstone Group LP, in December raised $2.35 billion in a record initial public offering for the hotel industry.
The Waldorf Astoria opened in 1931 as the tallest and largest hotel in the world, according to its website. Hilton founder Conrad Hilton gained the management rights in 1949, while Hilton Hotel Corp. purchased the property in 1972.
The hotel's redevelopment potential makes it an attractive investment, Ford said. The property is in need of an upgrade, said Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Va.
"This is a hotel that would have required a phenomenal amount of capital expenditure to restore it to its luxury roots," he said. "It's not clear that would have yielded good results in terms of rate growth at this hotel."
Hilton shares fell 11 cents to close Monday at $24.21. They had gained 22 percent since the IPO.
Other prominent real-estate deals by Chinese buyers include the purchase last year of a stake in midtown Manhattan's General Motors Building by Zhang Xin, the billionaire co-founder of Soho China Ltd, and Fosun International Ltd.'s purchase of 1 Chase Manhattan Plaza from JPMorgan Chase & Co. Greenland Holding Group Co., a Shanghai-based, state-owned developer, acquired a 70 percent share of the Atlantic Yards project in Brooklyn.
Information for this article was contributed by Noah Buhayar, David M. Levitt and Joshua Fellman of Bloomberg News.
Business on 10/07/2014