China Vanke Buys Out Beijing Complex in RMB 1.3B Deal with HNA

Financially troubled HNA Group has sold the remaining 75.10 percent stake of a Beijing commercial complex to a subsidiary of China Vanke for a total consideration of RMB 1.304 billion ($190 million), according to a filing to the Shanghai Stock Exchange.

Vanke, which had agreed to pay RMB 430 million to acquire 24.90 percent of Beijing HNA Plaza from the parent company of Hainan Airlines less than a month ago, has signed up to purchase the remaining shares in the vehicle holding the asset at a price of approximately RMB 1.75 per share, HNA said in the statement.

HNA’s sale of the two-building complex comes just under a year after the default-addled investment firm first signed, and later rejected, an agreement to dispose of the Chaoyang district property to Vanke for RMB 1.29 billion.

China Vanke Picks Up Its Prize

This latest deal for the 18-storey complex 2 Northeast Third Ring Road in the bustling Sanyuanqiao area values the property at RMB 44,348 per square metre of gross floor area, according to Mingtiandi’s calculations, with Vanke now owning a 99.99 percent stake in the holding company for the asset.

Beijing HNA Plaza comprises an 18-storey tower flanked by a nine-storey companion, with the complex providing both grade A office space and the Beijing Marriott Hotel Northeast.

On June 19 of this year, HNA had revealed that it had sold a 24.90 percent stake in Beijing HNA Plaza to China Vanke for RMB 430 million. That earlier sale, like this most recent disposal, came at a price per share of RMB 1.75, with Vanke paying a total of over RMB 1.73 billion to take full ownership in the complex.

Not considering debt and other potential liabilities, Vanke’s 2019 price for the 2009-vintage asset exceeds the 2018 agreement by around 34 percent.

HNA Financial Challenges Continue

HNA has been conducting an 18-month fire sale of more than $20 billion in assets globally as it races to meet credit obligations estimated at this time last year at $100 million.

Last month, lenders to HNA’s Hong Kong-listed subsidiary CWT International Ltd, put the company’s Singapore-based metals trading and logistics units up for sale after the company defaulted on a HK$1.4 billion ($179 million) loan in April.

Earlier in June, HNA Group’s primary real estate subsidiary, which had overdue credit obligations of RMB 1.3 billion as of 31 December, was asked by the Shanghai Stock Exchange to explain apparent financial irregularities regarding its 2018 accounts.

The exchange was probing in particular an apparent mismatch between the group’s declared RMB 15.6 billion in cash and equivalent assets and its apparent inability to make payments on loans and other liabilities totaling just over 8 percent of that amount during last year.

During May, HNA-controlled Hongkong Airlines reported that its auditor had resigned less than one month after directors in the company had raised allegations of fraud amid a shareholder revolt. The troubled airlines revealed late June that it was reviewing its entire route network and had not ruled out axing all long-haul flights.