Manhattan's historic Waldorf Astoria New York - the luxurious Park Avenue hotel that has hosted princes and Hollywood's elite for decades - will no longer be American-owned. In the largest U.S. deal with a Chinese investor, Beijing-based Anbang Insurance Group Ltd. has agreed to purchase the iconic hotel from Hilton Worldwide Holdings Inc. for $1.95 billion.
"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 J. Nassetta, president and chief executive officer of Hilton Worldwide.
While nearly $2 billion may sound a bit pricey - even for the enchanting Waldorf - it's much more than just a hotel purchase.
"The price is reflective of Anbang's upside opportunity," Nassetta said. "This relationship represents a unique opportunity for our organizations to work together to finally maximize the full value of this iconic asset on a full city block in midtown Manhattan."
Why are wealthy Chinese investors starting to buy up American real estate?
Buying American provides them with an opportunity not available at home - multiple real estate purchases by an individual. Beijing no longer permits individual buyers to own more than two properties - regardless of the reason of purchase.
According to a study by CBRE, Inc., the world's largest commercial real estate firm, Chinese insurers possess more than $14 billion to spend on real estate globally.
Dottie Herman, CEO of Douglas Elliman, one of the leading real estate brokers in New York City, told Forbes Magazine, "I've seen Chinese buyers for years, but the problematic real estate market in China has sent them to us. They're parking money in the property market as investments and also using it as a short-term home for their college-aged children."
Since opening in 1931, the Waldorf Astoria has continually set the bar for grand hotel experiences throughout the world, and was designated an official New York City landmark in 1993. What Anbang has purchased are some of the most breathtaking views of the Manhattan skyline, and a hotel with a guest list that includes U.S. presidents and foreign dignitaries. Even Marilyn Monroe called the Waldorf home in the 1950s.
Understanding its rich history and that the Waldorf Astoria is associated with a specific luxury brand, the purchase agreement included one unusual term. While the hotel is undergoing major renovation to restore the property to its majestic beginnings, Anbang will grant Hilton Worldwide a management contract to continue to operate the property - for the next 100 years.