The worlds’ biggest hotel operator Hilton Worldwide has sold the iconic Waldorf Astoria in New York to a Chinese insurance company for nearly $2 billion, a record for a US hotel. The deal marks the continued Chinese real estate shopping spree in America.
Hilton Worldwide Holdings sold the historic landmark to Beijing-based Anbang Insurance Group for a record breaking $1.95 billion, which is the largest acquisition of US realty by a Chinese buyer.
Opened in 1931 and offering some of the best views of the Manhattan skyline, the hotel is famed for its elite guest list from US presidents, royalty like Princess Grace to celebrities like Marilyn Monroe and Elizabeth Taylor.
President Barack Obama books the Presidential Suite when he travels to New York City, following the tradition of every US president since Herbert Hoover. Next time the President stays at the hotel, it will be under Chinese ownership.
The fact it also happens to be the residence of choice for US envoys to the UN – its sale to a Chinese firm is raising security concerns in Washington. Now the purchase is under review.
The US is specifically concerned about security and spying, since the hotel has played host to US envoys to the United Nations for more than 50 years.
“We are currently in the process of viewing the details of the sale and the company’s long term plans for the facility,” Kurtis Cooper, spokesman for the US Mission to the United Nations, revealed on Tuesday.
It will be the first purchase in the United States for Anbang Insurance Group. The company – which is controlled in part by members of China’s ruling class and relatives of some Communist revolutionary leaders – was started in 2004 with seed money from nationalized industries like Sinopec oil. The company is headed by Wu Xiaohui, who is married to the granddaughter of Deng Xiaoping, the former leader of China, The New York Times reported.
“Any future decisions about the nature of that relationship (with the Waldorf Astoria) would need to factor in costs, the company’s plans for the facility, the needs of the United States government and the US Mission to the UN, and any possible security concerns,” Cooper said.
US Ambassador to the UN Samantha Powers also has a residence at the hotel, and it hosts many heads of state and government.
Hilton Worldwide Holdings announced that it would continue to manage the hotel for Anbang for the next 100 years and that the property would “undergo a major renovation to restore the property to its historic grandeur.”
The deal is scheduled to close on December 31, but if the closing time is delayed, the sale must be finalized no later than March 31.
MADE IN USA, OWNED BY CHINA
The sale “will ensure that the Waldorf Astoria New York represents the brand’s world-class standards for generations to come,” President and CEO of Hilton Worldwide Christopher Nassetta said in a statement.
China already owns 121 Park Avenue, the latest acquisition in the East’s shopping spree in the West. China’s growing economy, stronger currency, and greater access to credit has enticed buyers to invest in the US.
“What we are witnessing is the greatest transfer of wealth in human history. America’s wealth, America’s productive capacity, the capital that has been accumulated over a couple of centuries of industrial growth, is being transferred to East. Asia and China in particular at a volume and speed that has never been seen before,” Curtis Ellis, Executive Director of the American Jobs Alliance.
Chinese insurers have more than $14 billion available to spend on real estate abroad according to a study by global commercial property and real estate adviser CBRE.
In Manhattan alone in recent years, Chinese investors have bought some of the city’s most famous buildings. Zhang Xin, the co-founder of China Ltd bought a stake in Manhattan’s GM building last year, and another Chinese company, Fosun International Ltd, picked up shares in the Chase Manhattan Plaza.
In 1989, Japanese Mitsubishi Estate Company bought a controlling stake in New York’s Rockefeller Center, also a staple in the city’s architecture. The Japanese buying spree which peaked around 1994 when the yen weakened was mostly focused on personal and commercial beachfront property in Hawaii. Although they did purchase nearly a dozen skyscrapers around the country, these buildings were generally included as part of corporate takeovers or company purchases outright. The obvious wealth of the Japanese has long since evaporated, only to be replaced by the Chinese, who are eager to “over-pay” in order to get whatever they desire.
CHINA URGES BUYERS TO INVEST IN THE US
The Chinese realty spree in the US is primarily due to the fact Beijing no longer permits individuals to own more than two properties in China, and after the recent crackdown on corruption (that led to the highest office of the Party), those with abundant cash and no secure place to park it are taking the official “nudge” to invest in the US before the government relieves them of their financial “burden” of excessive wealth.
China is the leading foreign buyer of US properties. According to the National Realtors Association, between March 2013 and March 2014, the Chinese spent $22 billion on US homes, with more than 75 percent of the purchases paid in cash.
The Chinese are also putting money into America’s most expensive homes that have an average price to half a million dollars. An average American house costs $200,000.
Personally, I favor legislation prohibiting foreign ownership of real property above a 30% stake, just as is present in 96% of other countries. The obvious reasons for this intelligent position need not be explained …
WALDORF-ASTORIA NEW YORK CITY
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