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China-owned Waldorf reduces number of condos

By Aaron Hagstrom in New York | chinadaily.com.cn | Updated: 2018-03-21 22:40

A total of 352 condominium units will be built at the Waldorf Astoria hotel in midtown Manhattan, fewer than its new owner had planned, and real estate industry executives say they may sell at high prices.

An affiliate of Anbang, which acquired the iconic hotel on Park Avenue for $1.95 billion in 2014, on Monday, filed an offering plan for the "The Towers at 301 Park Avenue" on the website of the New York state attorney general's office. No prices were listed. The sponsor is AB Stable LLC, according to the Real Deal.

Anbang bought the Waldorf from Hilton Hotel Group when there was a rise in Chinese investment in US real estate.

China's insurance regulator seized control of Anbang in February. It said Anbang had violated regulations, putting into question its ability to pay insurance claims. The move caused concern in the New York real estate sector over whether the hotel's conversion plans made last year would proceed.

According to the filing, the number of condos planned for the Waldorf is fewer than the 409 that Anbang envisioned last year when it filed a "test-the-market" condo application.

The lower number of condo units may be due to the luxury market slowing at the end of 2017. Median sales price for luxury condo units were down 13.2 percent to $5.7 million during 2017's fourth quarter, according to Miller Samuel real estate appraisers and consultants.

But the condo market is back on pace, according to Douglas Wagner, director of Brokerage Services at Bond New York.

He said a typical two-bedroom condo is 1,400 square feet, which cost $4.2 million at a price closer to $3,000 per square foot in some cases. The most expensive apartment on Billionaire's Row – the ultra-luxury residential skyscrapers constructed or in development on West 57th Street -- sold for about $100 million.

"I wouldn't be surprised if all the condos are north of $2,500 and close to $3,000 per square foot," he said. "And for the most luxurious units, I wouldn't be surprised if the sponsor were to price them like some of the Billionaire's Row stuff."

"Because it is such a landmark address, there is underlying justification to charge a premium," he added.

Wagner said changing the name of the Waldorf would give it an "updated identity''.

"Anyone who knows New York knows that that is the Waldorf Astoria," Wagner said. "To change the name gets out of the expectation that it's a hotel and more into the idea that it is a destination condominium residence."

Martin Heistein, an attorney with Belkin Burden Wenig & Goldman, LLP, said that he understands that Anbang is taking advantage of a tax exemption known as 421a that could possibly make condo sales easier and more lucrative. "Most of the real estate offerings say they are subject to 421a for period of 10 or 12 years, and this reduces the building's property taxes," he said.

In March 2017, Anbang, begin a three-year conversion of 1,413 rooms into several hundred condos and fewer hotel rooms. According to construction plans filed with the city's Department of Buildings, condos will be located on floors 14 through 43. Floors 14 and 15 will have 28 units each. Higher floors will have fewer units: floors 40, 41 and 42 will have two units a piece.

China's insurance regulator said that Anbang would be overseen for a year by a group that included China's central bank, its securities and banking regulators, the country's foreign exchange regulator and other government agencies.

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