HNA Sheds Unused HK Trophy Office in Battle for Liquidity

Cash-strapped mainland conglomerate HNA is shedding all eight floors of its unused office space in Hong Kong’s Central district, in a bid to trim HK$12 million per month in rent from its wall of liabilities, according to sources familiar with the rental negotiations who spoke with Mingtiandi on condition of anonymity.

The aviation-to-financial services group is giving up its lease for the 88,000 square foot (8,175 square metre) trophy office location in Three Exchange Square in Central prematurely after agreeing more than one year ago to pay HK$140 per square foot per month for the former home of French bank BNP Paribas.

HNA in Total Office Surrender

Records from Hong Kong’s Land Registry show that the contract, the largest by value in recent years in Hong Kong’s famously expensive business district, gave the mainland group the right to the office location from June 2017 through May 2027. But, HNA Group never moved into the iconic building or renovated the space. As Mingtiandi reported in June of this year, the company had already asked the landlord of the prime office building, Hongkong Land, to look for new tenants to take up half of its leased space, before reports this week confirmed HNA’s total surrender.

Giving up the prime lease could save HNA HK$144 million per year as it continues to struggle with debts that are said to have reached $100 billion after acquiring $40 billion in businesses and corporate stakes in a three-year global acquisition spree that included becoming the largest single shareholder in Germany’s Deutsche Bank and setting new prices records in a series of four land purchases in Hong Kong’s Kai Tak area.

Mega-Buyer Shifts to Selling

Since the beginning of this year, the once-super buyer has scaled back its operations and accelerated an asset-selling streak that reached more than $17 billion in the first six months of this year.

Last week, 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, according to The Wall Street Journal. In August, HNA agreed to sell off its interest in Minnesota-based hotel group Radisson Hospitality to a consortium of investors led by China’s Jin Jiang International Holdings for a reported $2 billion.

The company is also said to be in talks to sell a Manhattan office building for $452 million after the US government reportedly ordered the Chinese firm to offload the property located four blocks from Trump Tower. In Hong Kong, HNA has already sold off three of its four prized sites in Kai Tak, most recently selling a plot to local developer Wheelock for the equivalent of $811 million.

The once high-flying company plans to reduce its total assets by about a third to around RMB 800 billion, according to media reports. HNA’s assets stood at RMB 1.1 trillion at the end of June, according to its recent financial statements.