Chinese insurer pays R21.8bn for Hilton's Waldorf Astoria hotel
Chinese insurance giant, Anbang Insurance Group has bought Hilton's New York luxury flagship hotel, the Waldorf Astoria for R21.8 billion ($1.95 billion)
Chinese insurance giant, Anbang Insurance Group has bought Hilton's New York luxury flagship hotel, the Waldorf Astoria for R21.8 billion ($1.95 billion), the US hotel giant confimed on Monday.
The Waldorf Astoria hotel is set to become the biggest prize yet for buyers from China who have been pouring money into US real estate as they seek stable investments outside their country.
Anbang Insurance Group has agreed "to restore the property to its historic grandeur" and will allow Hilton to manage the property for the next 100 years, Hilton Worldwide Holdings said.
The Waldorf Astoria New York is an Art Deco hotel occupying a full city block in midtown Manhattan that has been in business for more than a century. Conrad Hilton, Hilton Worldwide's founder, called it "the greatest of them all."
"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," said Christopher Nassetta, president and chief executive of Hilton Worldwide, in a statement.
Anbang is based in Beijing and has more than 30,000 employees. The hotel is the foundation of Hilton's luxury brand Waldorf Astoria Hotels & Resorts, which spans 27 destinations, including Beijing, Shanghai, Amsterdam and Dubai.
Nine additional Waldorf Astoria hotels are planned, with destinations such as Bali, Bangkok and Beverly Hills, the company said.
Hilton Worldwide said it would use the sale proceeds to buy additional hotel assets in the United States. The company did not provide details of its acquisition strategy.
Hilton has a portfolio of 11 global brands, with operations in 93 countries.
Hilton shares were up 0.4 percent at $24.42 in early trade in New York.
Hotel History
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, according to the Waldorf’s website.
Chinese Buyers
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.
The China Insurance Regulatory Commission in 2012 issued rules allowing the nation’s insurers to invest more in commercial real estate in the main cities of developed nations. In February of this year, it capped “real estate category assets” at 30 percent of investments.
Anbang in 2013 passed on buying Hong Kong’s Wing Hang Bank Ltd., which was eventually purchased by Singapore’s Oversea-Chinese Banking Corp., and instead has accumulated a 9 percent stake in China Merchants Bank Co.’s Shanghai-listed shares, according to data compiled by Bloomberg.
Hotel Sales
The Waldorf Astoria sale adds to at least 12 other luxury hotel transactions in Manhattan since 2006, according to STR Inc., a Hendersonville, Tennessee-based research firm. They include Hyatt Hotels Corp.’s $390 million purchase of the 210-room Park Hyatt New York in August and the sale last year of the Helmsley Park Lane Hotel on Central Park South to investors led by the Witkoff Group for about $660 million.
U.S. insurers also have been looking to buy hotels. Allstate Corp. Chief Executive Officer Tom Wilson said in 2012 that his company was searching for investments in the industry as a way to diversify from bonds and protect his company as interest rates rise.
MetLife Inc. joined with Thayer Lodging Group to purchase the Ritz-Carlton San Francisco for about $161 million last year. The largest U.S. life insurer also has teamed with Loews Corp. to invest in its namesake brand of hotels.
