New York’s Waldorf Astoria hotel finds a rocky road to condo conversion
New York’s famed Waldorf Astoria hotel is struggling to complete its plan to convert hundreds of rooms into luxury residences, a process that is shaping up to be one of the biggest condo conversion and hotel reconstruction projects ever. important, most complex and costly undertaken.
China’s Anbang Insurance Group Co. bought the Park Avenue hotel for a record sale price of $1.95 billion in 2015, promising to deliver some of the city’s most luxurious and exclusive residences. In 2017, Anbang closed the 1,400-plus-room property to begin a four-year transformation of the historic building into a small hotel and condominiums.
Today, five years later, the project is still not finished and could well continue until 2024, according to people familiar with the matter. Conversion costs have also skyrocketed and are expected to reach $2 billion, up to a quarter more than initial internal estimates, these people said. This would bring the combined acquisition and conversion costs to over $4 billion.
The pandemic, global supply chain issues, and rising material and other costs have slowed major construction projects across New York City. But the Waldorf had unique issues that also contributed to delays and increased costs. This includes the complexities of demolishing the rooms and rebuilding the nearly century-old hotel, which as a designated historic building must follow certain preservation rules throughout the process.
The Chinese government also took control of Anbang in 2018 after its chairman, Wu Xiaohui, was convicted of various financial crimes related to fraud and abuse of power and sentenced to 18 years in prison. A rotating cast of other Anbang leaders attempted to rethink the project or change strategy while Mr Wu was detained, and progress stalled, according to people familiar with the matter.
The latest victim of cost overruns is the managing director of the American subsidiary of Dajia Insurance Group Co., which took control of the Waldorf property and other assets of Anbang.
US CEO Andrew Miller left the company last week and no successor has been named, people familiar with the matter said. Executives at the Chinese parent company and the US CEO were at odds over the cause and extent of the cost overruns, according to people familiar with the matter.
The Waldorf’s historical significance and rich past have sparked much curiosity about the property’s future. The art deco building was one of the largest luxury hotels in the world when it opened in 1931. By the time it was sold to Anbang in 2015, every president since Herbert Hoover had stayed there.
The Waldorf has also hosted celebrities in New York ranging from General Douglas MacArthur to Frank Sinatra and Marilyn Monroe. The Duke of Windsor stayed there after abdicating his throne to marry American socialite Wallis Simpson. Hotelier Conrad Hilton, who acquired control of the property in 1949, once scribbled on a photo of the hotel that it was “The greatest of them all”.
More recently, the hotel has struggled to live up to its storied history, and some guests and hoteliers say an upgrade is long overdue. When it reopens, the establishment will have 375 rooms and 375 residences. Prices start at $1.8 million for a studio and go up to tens of millions of dollars for a penthouse. Residents will have separate entrances and amenities from hotel guests, including a 25-meter Starlight Pool overlooking Park Avenue.
Luxury realtor Donna Olshan, whose company Olshan Realty Inc. publishes a weekly report on luxury residential transactions in Manhattan, said the Waldorf hasn’t reported any sales to her. Sales could be challenged by the lack of foreign buyers, who have yet to return in large numbers to the city since the pandemic, she said.
“Now we don’t just have Covid, which people have gotten used to, we have war. Inflation. Rise in interest rates. And China is upside down,” Ms. Olshan said. “When you put this cocktail together, it can be intimidating for a developer.”
the real estate broker marketing the condos, said in March that agents representing buyers could collect their commission once the contract is signed. Typically, brokers receive their commissions upon the closing of a sale. The move was intended to incentivize buyer brokers who might have been put off by the wait for the project to be completed, people familiar with the matter said.
Dan Tubb, who oversees residential sales at the Waldorf, declined to give specific numbers. But he said April was “probably the busiest month we’ve had”. The 3% contract signing commission boosted broker traffic about six times the monthly average and doubled sales appointments compared to March, resulting in “many contracts signed”, he added.
Kemdi Anosike, a Coldwell Banker Warburg broker, has an accepted offer for his overseas client and hopes to sign the contract by the end of this week.
“The location is great,” he said. “I think what a lot of people buy into the Waldorf is nostalgia and what the name stands for: luxury and what New York was known for back then.”
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