Continuing HNA’s ongoing series of asset sales, local media reports emerged today that the mainland conglomerate’s Hainan Airlines Real Estate unit is selling a mixed-use complex in Shenzhen for RMB 1.6 billion ($240 million).
The latest asset to go out the door as HNA attempts to climb out of a $100 million debt hole is Shenzhen Haihang City, a partially completed residential, office and retail complex covering nearly 623,000 square metres in the southern Chinese megacity of 12 million people.
While HNA has grabbed international headlines for its sale of assets in New York, Minneapolis, Spain and Singapore since the beginning of the year, over the same period the Hainan-based firm has also sold nearly $1.4 billion in mainland real estate in an effort to meet its financial obligations.
Selling Two City Blocks of Shenzhen
HNA’s latest asset disposal is a two city-block project in Longgang District, in the northeastern section of the Guangdong border city. Shenzhen Haihang City covers a 143,300 square metre site with the first stage of the project’s 344,300 square metres of residential space completed in 2015. Prices for second-hand homes in the complex now average over RMB 37,000 per square metre according to data on Fang.com.
The Haihang City Retail Plaza shopping mall opened in January of this year and the five-storey community complex primarily hosts domestic apparel brands, casual international labels such as Adidas and Nike, and food and beverage outlets across its 70,000 square metres of space. Haihang City also includes 82,000 square metres of office space.
Only the first of the project’s four phases has been completed, according to an account in Caixin, and in fund-raising documents, Tianji put the value of the finished portion of the project at more than RMB 2 billion. The complex at the intersection of Longgang Avenue and Bixin Road, just north of the G15 expressway, was HNA’s first real estate project in Shenzhen.
Former Ping An Execs Set Up Fund for Acquisition
HNA is selling its southern China complex to Tianji Wealth (深圳前海天玑财富管理有限公司), a four-year-old wealth management firm based in Shenzhen and headed by former Ping An Bank executive Tang Wei along with fellow Ping An alum Han Deyou.
A report in mainland real estate news site guandian.cn indicated that Tianji Wealth has launched a private equity fund to raise the funds necessary for the acquisition.
HNA Said to Invest Over RMB 600M
HNA acquired the Shenzhen site in 2010 and quickly was able to change the planning approvals to allow for development of the project, according to Guandian, with CITIC Trust providing much of the financing.
In February 2011, HNA teamed up with CITIC Trust to arrange RMB 300 million in trust financing for Shenzhen HNA City, and the partners teamed up again in September of that year to sell another RMB 200 million in debt supporting the project. Residential sales at Haihang City began in 2013. In total the company is said to have paid more than RMB 600 million to CITIC Trust to finance the project.
Shenzhen Sale Follows Disposals in Shanghai and Hainan
The sale of Shenzhen Haihang City is HNA’s third sale of a major mainland asset this year, after the company sold projects in Shanghai and Hainan during April and May.
The financially-challenged group raised RMB 5.7 billion in April when it agreed to “cooperate” with Guangzhou R&F Properties in the development and construction of Haihang Shoufu (海航首府), a high-end housing and commercial project in Hainan’s capital city, Haikou.
In April the company sold a mixed-use project in Pudong’s Qiantan area to local developer Fusheng Group for RMB 2.9 billion. Should the Shenzhen sale be confirmed, HNA would have sold off RMB 10.2 billion in mainland real estate assets so far this year.