Real estate experts say Waldorf may find a buyer

If the Waldorf Astoria hotel goes back on the market following the takeover of its owner by the Chinese government, real estate experts say the iconic New York City property might attract buyers.

"A development firm or hotel with residential partner would likely be able to come up with the most competitive bid," said Mark Van Stekelenburg, a managing director with commercial real estate giant CBRE Group Inc. "There are still almost 30,000 hotel rooms in the NYC pipeline, so a pure hotel play may have its challenges and would likely not drive the same economic picture as a mixed-use play."

The Art Deco Waldorf was acquired three years ago for a record $1.95 billion by Anbang Insurance Group Co and is undergoing renovation to convert some of its rooms to high-end permanent residences.

On Feb 23, China's Insurance Regulatory Commission (CIRC), the country's top insurance regulator, said on its website that it was taking over Anbang for one year because the insurer's business operations had violated regulations and laws that could "seriously endanger" its solvency.

The CIRC said that Anbang Chairman Wu Xiaohui has been removed from his post and is being prosecuted for "economic crimes." The No. 1 Branch of the Shanghai Municipal People's Procuratorate said in a statement on its website that Wu has been charged with fundraising fraud and embezzlement.

The CIRC said it will keep the company private, that Anbang's debts and obligations will not be affected. It did not provide more details.

It acquired the 1,200-room Waldorf on New York's Park Avenue for the highest price ever paid for a US hotel from Hilton Worldwide Holdings Inc, which was taken public by the private equity group Blackstone in 2013.

Blackstone is already said to be looking at buying back some of the properties it sold to Anbang over the years, including the Waldorf, according to Bloomberg.

Hilton manages the Waldorf property on behalf of Anbang. The hotel has been closed for nearly two years for the renovation.

Van Stekelenburg said the plan to convert some of the hotel rooms into condos or permanent residences is attractive to potential buyers.

"While the luxury residential market has slowed considerably in Manhattan, there are still opportunities for development, especially at iconic properties and good locations. The potential pricing of residential use per square foot is far higher than the pricing of a hotel per square foot, so this likely is still a viable option," he wrote in an email.

Van Stekelenburg said developers, a real estate firm and lodging companies would all probably be interested in the Waldorf.

Despite undergoing renovation, Barry Hersh, a professor at New York University's Schack Institute of Real Estate, believes the Waldorf has maintained its value. "I don't think the property is worth much more than what it sold for ($1.95 billion) and maybe a little less," he said in an interview.

The Waldorf is still a "very valuable location" and will benefit from changes in New York City zoning laws that allow for greater flexibility when remodeling a building, Hersh said.

Even though the luxury market in New York has cooled, Hersh said residences at the Waldorf would still draw attention because "there are still a lot of rich people who want to live in New York City".

Anbang had been one of China's most aggressive buyers of overseas assets, spending more than $20 billion on deals since 2014, according to data from research firm Dealogic. In addition to the Waldorf, it paid Blackstone $6.5 billion two years ago for Strategic Hotels & Resorts.