Rizal S Poems
Inside the Super-Fast, 100-Year Deal for the Waldorf
By William D. Cohan October 08, 2014
The $1.95 billion sale of New York’s Waldorf Astoria hotel, announced on Oct. 6, is mostly framed as the 2014 analogue to Japan’s Mitsubishi Estate Co. buying Rockefeller Center—the moment that removes any doubt that China, and Chinese investors, are for real.
Only a month ago, real estate investment bankers at Eastdil Secured were putting together a selling memorandum about the Waldorf for Hilton and Blackstone’s head of real estate, Jonathan Gray. Anbang Insurance Group, a 10-year-old Chinese insurance company, meanwhile, had been looking for a major real estate investment in New York, and caught wind that the Waldorf might go on the market.
The chance to buy the Waldorf coincided with the Chinese government’s recent decision to allow Chinese insurance companies to invest 15 percent of their capital outside China.
Incredibly, even though $1.95 billion represents 32 times the Waldorf’s adjusted Ebitda of $61 million, Anbang may not be overpaying—at least not by the metrics used to gauge other recent sales of luxury hotels in Manhattan. The price equals almost $1.4 million for each of the Waldorf’s 1,415 rooms and suites, in line with the recent prices paid for the Standard Hotel ($1.2 million per room), the Langham/Setai (also $1.4 million per room), and the Park Lane Hotel ($1.1 million per room). Anbang, which has made a $100 million deposit on the sale, has also committed to a major renovation of the Waldorf—which was badly in need of updating—as well as of the suites and apartments, which for years have been home to visiting world dignitaries.
At closing, which is expected by the end of December, Hilton will pay off the hotel’s existing $525 million mortgage and use the remaining proceeds from the sale to buy other hotel properties in order to take advantage of a provision of the tax code that allows taxes on the sale to be deferred. (This tax benefit is not unlike
By William D. Cohan October 08, 2014
The $1.95 billion sale of New York’s Waldorf Astoria hotel, announced on Oct. 6, is mostly framed as the 2014 analogue to Japan’s Mitsubishi Estate Co. buying Rockefeller Center—the moment that removes any doubt that China, and Chinese investors, are for real.
Only a month ago, real estate investment bankers at Eastdil Secured were putting together a selling memorandum about the Waldorf for Hilton and Blackstone’s head of real estate, Jonathan Gray. Anbang Insurance Group, a 10-year-old Chinese insurance company, meanwhile, had been looking for a major real estate investment in New York, and caught wind that the Waldorf might go on the market.
The chance to buy the Waldorf coincided with the Chinese government’s recent decision to allow Chinese insurance companies to invest 15 percent of their capital outside China.
Incredibly, even though $1.95 billion represents 32 times the Waldorf’s adjusted Ebitda of $61 million, Anbang may not be overpaying—at least not by the metrics used to gauge other recent sales of luxury hotels in Manhattan. The price equals almost $1.4 million for each of the Waldorf’s 1,415 rooms and suites, in line with the recent prices paid for the Standard Hotel ($1.2 million per room), the Langham/Setai (also $1.4 million per room), and the Park Lane Hotel ($1.1 million per room). Anbang, which has made a $100 million deposit on the sale, has also committed to a major renovation of the Waldorf—which was badly in need of updating—as well as of the suites and apartments, which for years have been home to visiting world dignitaries.
At closing, which is expected by the end of December, Hilton will pay off the hotel’s existing $525 million mortgage and use the remaining proceeds from the sale to buy other hotel properties in order to take advantage of a provision of the tax code that allows taxes on the sale to be deferred. (This tax benefit is not unlike