The Chinese owners of New York City’s famed Waldorf Astoria are putting the hotel up for sale, months after it reopened after a multibillion-dollar, much-delayed overhaul.
The renovation of the Waldorf Astoria was completed last year nearly five years behind schedule and $1 billion over budget.Real-estate investment bank Eastdeal Secured, a company controlled by the Chinese government, is expected to begin marketing the hotel, according to people with knowledge of the plans.
The historic hotel, which occupies an entire city block on Park Avenue in midtown Manhattan, reopened this past fall after an eight-year gut renovation that created a smaller hotel with 375 guest rooms and 372 condominium units for sale. The Waldorf’s adjacent restaurants, shops and other amenities will be included in the sale, but the condos will continue to be sold separately.
The Waldorf transformation was completed last year, nearly five years behind schedule and more than $1 billion over budget. Developers and real estate executives say it was the most complex and possibly the most expensive real estate conversion ever attempted in the United States.
While Hilton, which has a 100-year management contract for the hotel, does not disclose financial information for the property, the Waldorf is coming at a time when the luxury hotel market is hot.
New York City’s luxury lodging sector generated average daily rates of more than $580 last year and more than $450 per available room, according to data firm CoStar. These two figures were all-time highs.
A Chinese reinsurance company bought the 1,400-room Waldorf Astoria for $1.95 billion in 2014, one of the most expensive hotel sales ever. Additionally, the owners spent more than $2 billion in construction costs for a total of more than $4 billion.
The seller does not expect to recoup all of its costs from a sale, people familiar with the matter said. But with the expected billion-dollar-plus price tag, only a small cadre of potential buyers will be able to afford the flagship property for Hilton’s Waldorf luxury brand.
Sovereign funds in the Middle East and Asia and other foreign governments could be potential buyers, according to people familiar with the matter. Qatari government funds already own the famous St. Regis Hotel and Plaza Hotel in Manhattan.
But the sale of the Waldorf will be part of a recent wave of Chinese property owners pulling out of the U.S. market. The sell-off continues as political tensions with the United States intensify.
Wu Xiaohui, chief executive of Anbang Insurance Group, bought the Waldorf Astoria hotel in 2014, as Chinese investors took advantage of new regulations in China to more easily buy real estate and make other investments abroad. These buyers didn’t mind paying top dollar, U.S. property analysts said, because they wanted trophy buildings that would be treasured for years.
Wu was arrested by Chinese authorities and later tried on charges of fraudulent fundraising and abuse of power. He is now believed to be serving an extended prison term.
The Chinese government took over Wu’s company and set up the state-run Dajia Insurance Group to manage its assets, including Waldorf. This meant that government officials in Beijing were now in charge of reforms.
According to people familiar with the project, the Chinese government continues to pour in money and move forward, even as it talks about a possible sale or takeover of a partner. It now owns the property through a limited liability company.
In addition to the Waldorf Astoria, the Chinese government agency has hired Eastdeal to market a dozen luxury hotels in the United States known as the Strategic Hotels and Resorts portfolio. The collection includes the JW Marriott Essex House near Central Park in Manhattan and the Four Seasons in Washington, DC.
Write to Craig Karmin at Craig.Karmin@wsj.com
