The Waldorf Astoria hotel, a landmark in New York that reopened last year after an extensive remodel, is coming to market. Analysts said China's recent move to sell, even at a loss, by the hotel's state-owned owner Dajia Insurance was influenced by the current instability in U.S.-China relations.
On the 11th, the Wall Street Journal (WSJ) reported that China's state-owned Dajia Insurance is expected to begin the sale process for the Waldorf Astoria as early as next month through real estate investment bank Eastdil Secured. The sale would cover the hotel's restaurants, shops and other amenities, while the condominium units in the building are expected to be sold separately.
The sudden push by the Chinese government to sell is being attributed to rising tensions between the two countries since the launch of the Donald Trump administration. The WSJ said, "The Waldorf sale will be part of a broader move by Chinese property owners who have been steadily pulling back from the U.S. real estate market," adding, "These sell-offs are continuing amid escalating political tensions with the United States."
The hotel closed for eight years starting in 2017 for an extensive renovation and reopened last year. According to data firm CoStar, the average daily rate for luxury accommodations in New York City last year topped $580 (about 840,000 won), and revenue per available room topped $450 (about 650,000 won). Given the improving market, putting it up for sale just months after reopening is unusual.
The Waldorf was thrust into the spotlight when China's Anbang Insurance Group acquired it from the Hilton chain in 2014 for $1.95 billion (about 2.8 trillion won). It was the highest price ever paid for a single hotel at the time. But in 2017, Anbang's then-chair Wu Xiaohui was arrested by authorities on corruption charges, and Anbang's asset, including the Waldorf, was transferred to Dajia Insurance.
When ownership was transferred, the remodeling contract was already underway. The Chinese government continued the project as planned, but the construction period, initially slated to run through 2020, was extended to 2025, and the expense ballooned to about twice the originally projected $1 billion (about 1.4 trillion won). The more than 1,400 rooms were reconfigured into 375 hotel rooms and 372 condominiums after the remodel.
Located in Midtown Manhattan, the Waldorf is a historic luxury hotel that symbolizes New York. Built 47 stories tall in 1931 during the Great Depression, it held the title of the world's tallest hotel for about 20 years. Former Presidents Park Chung-hee, Kim Dae-jung, Roh Moo-hyun and Park Geun-hye stayed at the hotel during visits to New York, cementing its status as a symbolic venue for global dignitaries.
Beyond the Waldorf Astoria, the Chinese government is also seeking to sell the portfolio of Strategic Hotels & Resorts, a U.S. hotel group that Anbang acquired in 2016. The assets include the J.W. Marriott Essex House near Central Park in Manhattan and the Four Seasons Hotel in Washington, D.C.
Given the Waldorf's symbolic status and high asset value, potential buyers are likely to be limited. Sovereign wealth funds from the Middle East and Asia and some foreign governments are being discussed as possible bidders. Qatar's sovereign fund already owns the St. Regis and the Plaza in Manhattan and is known to be active in U.S. real estate investment.