Hilton Worldwide Inc. will sell the Waldorf Astoria Hotel to Chinese firm Anbang Insurance Group Co. Ltd., a deal worth $1.95 billion, or more than $1.3 million per room.
The McLean-based hotelier will continue to manage the property for another 100 years under a long-term management contract, according to an SEC filing. Anbang plans a “major renovation to restore the property to its historic grandeur,” according to a statement from Hilton.
One of the “Big 8” Hilton-owned properties that make up a large portion of the company’s balance sheet, the Waldorf Astoria in Manhattan encompasses an entire city block on Park Avenue. (Others included in the “Big 8,” as they’re referred to internally, include the Hilton Hawaiian Village, Hilton Waikoloa Village, the Hilton New Orleans Riverside, the O’Hare Hilton, the Hilton Chicago, the New York Midtown Hilton and the Hilton San Francisco.)
The move answers one of the biggest questions observers have had since Hilton went public last fall: How the company planned to capitalize on this extremely valuable piece of real estate.
The Waldorf is the second big deal this year in which Hilton is making the most of its sizable real estate portfolio. The company also plans to sell an underused portion of its Hilton Hawaiian Village property for a 300-unit timeshare development. (Sales from Hilton’s ownership segment represented more than 42 percent of the company’s total revenue for 2013, according to its year-end earnings report.)
With regards to the Waldorf, Hilton CEO Chris Nassetta told investors in previous earnings calls that the company was not “emotionally attached” to the iconic Park Avenue Hotel, but would rather seek to get the best deal possible.
As far as future expansion, Hilton has touted a “capital light” strategy for its future expansion, through franchises and other partnerships. The company has also launched the Curio brand, a collection brand that will put the Hilton name on quirky or historic hotel properties, and plans to launch another, affordable boutique brand in the coming months.
Anbang Insurance Group is a Beijing-based insurance firm with more than 30,000 employees. The deal is expected to close before the end of March 2015.
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