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Espionage Fears May Stall Blackstone’s $1.95 Billion Sale of Waldorf to Chinese


As Blackstone looks to raise $13 billion for its next global real estate fund, according to Reuters, it is under investigation for its sale of New York’s Waldorf Astoria to Chinese investors for $1.95 billion.

Steven Schwarzman’s firm is anxious to finally see the close of its sale of the Waldorf by its subsidiary Hilton Worldwide Holdings to Beijing-based Anbang Insurance Group. That was expected to happen by the end of this year.

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But The Committee on Foreign Investment in the United States – an organization run jointly by the U.S. Treasury, Defense and Homeland Security Departments — has concerns about the acquisition of such a significant asset by a foreign group. The Waldorf also happens to be home to the U.S. Ambassador to the United Nations. American regulators are actually worried about the possibility that the deal could enable foreign espionage on U.S. soil.

President Obama stays at the hotel when visiting New York and so do many foreign VIPs.

The company could, however, push for such an investigation itself in order to just get it over with.

Meanwhile, the company hopes to repeat the success of its Blackstone Real Estate Partners VII, which raised $13.4 billion in 2012 and reported a net internal rate of return of 27% as of the end of September. According to Reuters, it has started preliminary conversations with potential investors about the new $13 billion fund and expects marketing documents to be ready in the next few weeks.

Also, Blackstone’s head of real estate, Jonathan Gray, is being viewed as a potential successor to Chief Executive Stephen Schwarzman.

Jonathan Gray, global head of real estate at Blackstone, also told Bloomberg that the firm is looking to markets India for its next big moves in real estate. He also said that commercial property in the U.S. is moving into a moderate growth phase. “We are clearly past the distressed phase, ” Gray said.



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