MCLEAN, Va.—Hilton Worldwide Holdings today announced it closed its previously-announced sale of the Waldorf Astoria New York to Anbang Insurance Group Co. for $1.95 billion. In addition, Hilton Worldwide has signed agreements to redeploy the proceeds of the sale to add five landmark properties in strategic resort and urban locations to its owned portfolio: Hilton Orlando Bonnet Creek in Orlando, Fla. (1,001 rooms); Waldorf Astoria Orlando in Orlando, Fla. (498 rooms); The Reach, A Waldorf Astoria Resort in Key West, Fla. (150 rooms); Casa Marina, A Waldorf Astoria Resort in Key West, Fla. (311 rooms); and Parc 55 in San Francisco, Calif. (1,024 rooms).
The Parc 55, which represents over one third of the purchased portfolio by number of rooms, will be a new addition to the Hilton Hotels & Resorts brand that will be managed by Hilton Worldwide. The other acquired hotels are currently managed by Hilton Worldwide.
As part of its long-term relationship with Anbang, Hilton Worldwide will continue to operate the Waldorf Astoria New York under a 100-year management agreement. Anbang also plans to complete a major renovation to restore the property to its historic grandeur.
“These transactions will enable us to unlock the embedded value of the Waldorf Astoria New York and acquire great institutional quality assets that we expect will drive significant incremental value for the company,” said Christopher J. Nassetta, president and CEO, Hilton Worldwide. “Our relationship with Anbang will ensure the Waldorf Astoria New York will continue to be a marquee hotel for the Waldorf brand long into the future, and will enable Hilton Worldwide and Anbang to build on the hotel’s rich legacy and traditions.”
The five U.S. hotels to be acquired with the proceeds from the sale of the Waldorf Astoria New York are expected to be part of a like-kind exchange under Internal Revenue Code Section 1031. The total purchase price of these five hotels of $1.76 billion represents approximately 13x the midpoint of the five properties’ combined full-year forecasted 2015 Adjusted EBITDA of between $132 million to $138 million. Hilton Worldwide expects that these hotels will not require meaningful incremental capital expense in the near term, and will expand the footprint of Hilton Worldwide’s portfolio of iconic owned hotels in Florida resort markets and San Francisco, a key growth market. Hilton Worldwide expects to close on the purchase of these five hotels in February of 2015, and use the balance of the proceeds of the sale of the Waldorf Astoria New York net of prorations, adjustments and transaction expenses, estimated to be approximately $100 million, to purchase additional assets within the next six months.
Eastdil Secured advised Hilton Worldwide on the sale of the Waldorf Astoria New York and the hotel acquisitions.