Chen Feng-led HNA Group has transformed from an aggressive buyer to an active seller
HNA Group continues to shed US assets to pay off its debt burden, with the Hainan-based conglomerate this past week having been reported this past week to have sold the Minneapolis City Center mall and an adjacent office building for $320 million.
The Chinese transportation giant’s Minnesota sale came just one week after it was said to have sold an office building in San Francisco for $290 million, as reports of the HNA’s US asset sales have now exceeded $1.3 billion within this month.
Cold Weather and Chilly Returns
Records from the Minnesota Department of Revenue show that an HNA subsidiary sold the one million square foot (100,530 square metre) 33 South Sixth Street office tower and the City Center complex for $320 million to real estate firm Ryan Companies.
However, reports in the Minneapolis Star Tribune (where Mingtiandi’s founder worked as a last mile logistics and customer service specialist from 1976 to 1980) identified the ultimate buyer of the complex as Samsung SRA Asset Management, citing county mortgage records.
HNA had purchased the 52-storey office building and the accompanying 600,000 square foot (57,000 square metre) shopping mall along the city’s Nicollet Mall from San Francisco-based Shorenstein Properties in late 2016 for $315 million as part of a $45 billion-plus acquisition binge.
Targetting a 90% Occupied Tower
33 South Sixth Street is Minneapolis’ fourth tallest building
With its purchase of the 1983-vintage, Samsung SRA will now become the landlord for Minnesota-based Target Corporation, which occupies some 70 percent of the office tower and has some ten years remaining on its lease, according to local media reports. The office tower is said to be 90 percent occupied.
The acquisition does not include the 583-room Minneapolis Marriott at City Center hotel, which is connected to the office tower and three-storey mall via the city’s network of skyways which guard unsuspecting out of town visitors against close encounters with frostbite and windchill.
The Skidmore, Owings, Merrill-designed complex is a four-minute walk from the Nicollet Mall Station light rail station and is close to the Minneapolis City Council.
Korean Investor Snapping Up Overseas Assets
The new owner of the downtown Minneapolis property, Samsung SRA Asset Management, is the real estate investment arm of Samsung Life Insurance, which is becoming increasingly active in US and European real estate markets. Samsung SRA is said to be following through with plans to renovate the retail portion of the complex.
The Seoul-based firm adds this Minneapolis asset to its overseas portfolio after picking up 200 Aldersgate, a 434,000 square foot (40,320 square metre) office building in the City of London from UK property investment firm AshbyCapital for a reported £315 million ($450 million) in February.
The real estate investment firm has 16 REITs under its management, six of which focus on US assets, its corporate website shows.
Cashing in $1.3B in Two Weeks
HNA has been selling its assets to pay off its debts estimated at $100 billion built up during its shopping spree from 2015 to 2017. The once-acquisitive conglomerate has reportedly spent over $45 billion buying trophy assets from Deutsche Bank to Hilton Worldwide during the period.
The Minneapolis sale comes in the same week that HNA sold its stake in Spain’s NH Hotel Group to Thailand’s Minor International for €619 million ($726 million).
Just last week, the Hainan-based group sold the office building 123 Mission Street in San Francisco to New York-based real estate investment firm Northwood Investors for $290 million, as part of its selling spree to raise more cash.
The recent sales totalling $1.3 billion over the past two weeks boost HNA’s total amount of disposals this year to more than $14.5 billion, according to Bloomberg.
HNA Gets HK$5B Loan For Kai Tak Plot
While the group has been offloading its overseas assets to deleverage, a Hong Kong-listed subsidiary has secured a HK$5 billion ($637 million) loan to refinance and begin construction on HNA’s sole remaining condo project in Hong Kong’s Kai Tak area.
The loan, borrowed from a bank among other financial institutions, is expected to enable HNA to develop Kai Tak 1L Site 2, which it purchased in March 2017 for HK$7.44 billion (then $960 million), independently.
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