HNA Shopping $11B in Properties as Cash Crisis Continues

Troubled Chinese conglomerate HNA Group has put on the market property assets said to be worth up to $11 billion in its latest move to steady the ship, according to a Reuters account.

HNA has provided lists containing some 82 properties available for sale to potential buyers, according to the report, which cites team members from the would-be acquirers in specifying some of the primarily mainland China assets.

HNA’s clearance sale comes just one month after the mainland conglomerate admitted to defaulting on a RMB 300 million ($43.82 million) loan obligation in September. The Hainan Group has been under pressure from the Chinese government to pare down its leverage, after taking on liabilities of as much as $100 billion in a global shopping spree.

Adding to $20 Bil in Asset Sales

The list of real estate projects available for purchase were distributed in at least two documents sent to prospective investors in August, and it was not clear how many of the hotels, commercial and residential buildings have already been sold.

In September, agreed to sell a Beijing office complex to China Vanke for RMB 1.29 billion ($190 million), and in August the group sold the site of its original headquarters, Wang Hai Technology Plaza (望海科技科技广场), in the Hainan island city of Haikou to Tianjin-based developer Sunac China for RMB 981 million.

Most of the assets are said to be in HNA’s home province of Hainan, and one of the documents indicated that the company aims to sell 18 of the properties before the end of this year, and to dispose of another 23 in 2019.

HNA has already sold or agreed to sell around $20 billion in assets across Sydney, New York and Hong Kong since January. The company’s debt was listed at $95 billion through June, which was down 10.7 percent from the end of 2017, according to Reuters.

NYC Tower on Close-Out List

Listed in the two sets of documents reviewed by the news agency were 11 overseas properties, including the controversial 850 Third Avenue property in New York which HNA has had on the market since August, after US authorities found the Manhattan property to be a bit too close to Trump Tower to have a Chinese owner.

HNA bought the Manhattan commercial building in 2016 in a deal valued at around for $463 million. The cash strapped HNA Group was said in August to be in talks to sell the 21-storey tower for $452 million after the US government reportedly ordered the Chinese firm to offload the property located four blocks from Trump Tower.

“Not a Fire Sale”

“We are strategically exiting some areas but it’s not a fire sale,” an HNA source reportedly told Reuters while explaining the panic disposal.

Earlier last month, HNA was reported to have plans to sell its remaining 7.6 percent stake, worth around 1.5 billion euros ($1.8 billion) in German lender Deutsche Bank over the next 18 months. To ease its financial crisis, the debt-ridden company also listed a $1.4 billion stake in Hilton spinoff Park Hotels & resorts to dispose a portfolio of 50 airport hotels, resorts and urban hostelries spread across the US, as well as in Europe and Latin America.

In September, HNA broke the lease agreement it had for eight floors in Three Exchange Square in Hong Kong’s Central district that it had never used. At HK$140 per square foot per month, the office was a monthly liability of HK$12 million that the company couldn’t afford.

Led by chairman Chen Feng, HNA has invested in real estate, high technology and a wide range of other industries, but the group is currently under pressure from Chinese regulators to get rid of assets not related to its core transportation business.

When asked about its sales plans, a company spokesman told the Wall Street Journal recently, “We are committed to streamlining our strategy to focus on our core aviation, tourism and logistics business, improve our operations and strengthen our balance sheet.”