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11/02/2024 09:40:36 am

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Waldorf-Astoria Sale to Chinese Firm Still Held Up by U.S. Over Security Concerns

The Waldorf Astoria is pictured at 301 Park Avenue in New York October 6, 2014.

(Photo : REUTERS/Brendan McDermid) The Waldorf Astoria is pictured at 301 Park Avenue in New York October 6, 2014.

Although Hilton Worldwide Holdings Inc. last month announced a nearly $2 billion deal to sell its flagship Waldorf Astoria New York hotel to a Chinese insurance company, the deal is being held up by U.S. security concerns.

The iconic Park Avenue hotel that once housed the likes of Marilyn Monroe and U.S. presidents, is also home to many United Nations visitors and worldwide leaders. The U.S. ambassador to the U.N. lives there.

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American officials were concerned it could be used by Chinese entities to spy on the U.S.

The Blackstone Group, an international private investment company, owns the hotel. It reached an agreement on Oct. 6 to sell the landmark property to China's Anbang Insurance Group Co, Ltd. for nearly $2 billion or $1.4 million per room. That's the highest price ever paid per room for a U.S. hotel.

The deal was supposed to close on Dec. 31 although provisions say it could be extended to March 31, 2015. China even adjusted regulatory rules to allow Anbang to invest more than 15 percent of total capital into a foreign holding.

The 83-year-old Art Deco icon is one of two New York City hotels deemed safe enough for high level officials by the State Department Bureau of Diplomatic Security. But not so fast, according to U.S. regulators.

The Committee on Foreign Investment in the United States, or CFIUS, is deeply divided over whether to let the deal close. Department of Treasury officials head CFIUS, which also includes key Department of Homeland Security and Department of Defense officials.

CFIUS must approve the sale for it to go through. However, it hasn't publicly revealed a timeline for doing so and doesn't have to.

Blackstone officials led by CEO Steve Schwarzman can request an investigation, which would speed up the process. Officials said they were considering such a request and were confident the deal would pass.

They noted that the president stays at foreign hotels where security details sweep the rooms for listening and security devices regardless of who owns the hotel.

Blackstone officials expressed confidence the deal would go through, but still no word on when.

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