The makeover of the Waldorf Astoria in New York City may have repercussions in Santa Monica, as City leaders look for ways to prevent luxury condominiums from popping up by the beach.
Nearly two years after China’s Anbang Insurance Group Co. bought the Waldorf for nearly $2 billion, the hotel has become a construction zone. When the building finally reopens, the hotel’s function will be permanently transformed with hundreds of new private condominiums hitting New York’s luxury real estate market. Only some of the historic building’s 47 floors will remain a hotel in two or three years.
“International investment trends show multi-national corporations gobbling up American hospitality facilities, sometimes to cash them out by conversion of hotels into luxury condos,” said Councilmember Kevin McKeown, who has introduced an item on Tuesday’s Council agenda to direct staff members to look into ways to keep it from happening here.
The memorandum looks to “explore ways to protect hotel tax revenue, jobs and employment opportunities, preservation of visitor-serving uses in the California Coastal Zone and controls on coastal land use intensification under Santa Monica’s 1990 Prop S.”
Anbang also owns Loews Santa Monica Beach Hotel on Ocean Avenue near Olympic Drive. Santa Monica’s largest union, Unite Here Local 11, is in the middle or negotiating a new labor contract there for housekeepers, bellmen and other workers. Unite Here also represents workers at two other hotels Anbang purchased as part of a $6.5 billion deal with the Blackstone Group that included a total of 16 properties in 2016.
“We are very concerned because we really don’t know who owns Anbang,” said Elliott Mallen, a researcher for Unite Here. “There’s been a lot of unanswered questions about their ultimate sources of financing and who controls the company. Those questions have remained unanswered.”
In a letter to Anbang’s managing director Philip Yee in May, Unite Here requested to see the group’s hotel management agreement regarding the Loews, residential conversion documents and Anbang ownership documents.
“Anbang’s willingness to pay much more than the previous owner for the properties heightens our concern that Anbang may be seeking an alternative use for some or all of the hotels. Any conversion – either partial or full – would have a significant impact on the number and quality of jobs at the hotel,” reads the letter obtained by the Daily Press.
Anbang is an insurance, banking and asset management company based in Beijing and could not be reached for comment. Its website lists real estate investment as one of it’s five investment strategies, according to a Chinese/English Google translation.
Mayor Ted Winterer and Councilmember Tony Vazquez also backed McKeown’s request for staff members to explore ways to protect hotel rooms near the coast.
“While the existing hotels provide solid middle-class jobs and reliable revenue to pay for City services, luxury condos would do neither, and would diminish the visitor-serving facilities encouraged by California’s Coastal Act,” McKeown said in an email to the Daily Press. “Multi-national corporations might profit, while luxury condo owners would further gentrify our beachfront, and our Santa Monica community would be the loser. We need to explore ways to control what international money can do with our beach.”
Santa Monica voters passed Proposition S in 1990 to prevent new construction along the coast, expressly prohibiting large, new construction west of Ocean Avenue between the Santa Monica Pier to the north and Seaside Terrace to the south. The proposition established the “Beach Overlay District” in the area and limited its uses to open space, public beaches, parks, parking, gardens and recreational buildings. New structures are limited to 2,000 square feet and one story in height.