Hilton Uses Proceeds From World’s Largest Hotel Sale to Acquire 5 Luxury Properties

Using proceeds from the sale of the Waldorf Astoria, Hilton Worldwide is purchasing buy five luxury hotels.

As soon as Hilton sold New York’s Waldorf Astoria to China’s Anbang Insurance Group for $1.95 billion, a 180-day tax-deferral law clock began ticking, pressuring Hilton to reinvest its proceeds — and finally, the company is doing just that.

Hilton is using $1.76 billion to purchase five high-end hotels across the U.S. One of the properties being acquired is in San Francisco — the Parc 55 hotel — but less is known about the other four, two of which are in Orlando and two of which are in Key West.

Nikhil Bhalla, an analyst with FBR & Co., told Bloomberg that the fresh acquisitions are part of a wise business move on Hilton’s part. According to Bhalla, selling properties in New York and then buying properties in other markets accelerates room-revenue growth.

“New York has slowed, in great part due to all the new hotels that have been added,” said Bhalla. “In markets like Key West and San Francisco, it’s a very long and expensive process to build new product, which makes it a great argument to buy there.”

The Parc 55 is one of the largest hotels in San Francisco with a total of 1,024 rooms. Each of the three locations where Hilton recently purchased properties — San Francisco, Orlando and Key West — have a consistently high average of room occupancy rates, and all are top lodging markets in the U.S.

Hilton plans to use the remainder of the proceeds from the Waldorf Astoria’s sale to purchase additional properties over the next six months.

[Photo: Parc 55 San Francisco]