China’s HNA Group has disposed of another of its property assets, according to mainland news reports, with one of the country’s top bad asset banks said to have taken over a Shanghai office building developed by the financially troubled conglomerate.
The parent company of China’s Hainan Airlines has sold the Shanghai HNA Tower, a 26-storey commercial building near Pudong’s Lujiazui area, to China Cinda Asset Management, according to a report earlier this month by government news website ThePaper.cn.
The five year old office tower at 898 Puming Road in Shanghai had been among a set of nine mainland properties that HNA had made available for sale in 2018 in a liquidation process that has stretched on while creditors seize real estate and airplanes belonging to the cash-strapped group as it struggles to service its debts.
Eight Office Floors Sold Off
Neither HNA Group nor China Cinda has yet to make a statement regarding the sale of the Shanghai HNA Tower, an 87,395 square metre (940,711 square foot) building along the banks of the Huangpu River near the site of the city’s 2010 expo.
Financial details of the reported sale have not yet been revealed, however, the sale is said to involve all of HNA’s remaining holdings in the building. The assets said to have been traded include 5,895 square metres of retail space, representing the entire podium of the building, as well as floors 12-20 of the office portion of the project, adding another 34,500 square metres to the transaction.
HNA had previously sold off the lower office floors of the building on a strata-title basis.
Pudong Building Currently 70% Occupied
At present, the office project is estimated to be 70 percent occupied, with asking rentals at around RMB 10 per square metre per month, according to online property listings. and to have produced annual revenue of approximately RMB 140 million during 2018.
Occupiers in the building include a number of Korean companies, with Samsung and Hyundai Heavy Industries among the better known corporates which make up the tower’s 55 tenants.
HNA had originally purchased the project’s 20,800 square metre site in September 2009 for RMB 1.82 billion ($263 million) – a nearly 66 percent premium over the property auction reserve and a rate which set the record for price per square metre of land that year. At the time, HNA indicated that the property would serve as its future headquarters in the city.
HNA Asset Sales Drag On
The sale of the Shanghai HNA Tower to China Cinda comes around six months after HNA Group had sold off a Beijing office asset, and comes as the group continues to struggle to pay its creditors.
In July last year HNA sold a 75 percent stake in Beijing HNA Plaza to developer China Vanke for RMB 1.3 billion. Shenzhen-based Vanke had first agreed to buy around a 25 percent stake in the two building complex in June of last year.
One year ago, HNA had sold another Pudong office asset, a set of floors representing 70 percent of the space in the Pufa Tower in Lujiazui, to a joint venture between CapitaLand and AEW for RMB 2.75 billion.
In November, HNA’s CWT International subsidiary went on to sell a set of golf courses in the US for $86.5 million, after creditors of the Hong Kong-listed company had seized some of its assets in an effort to collect on debts owed by the company.
Despite that asset sale, in December Hong Kong’s airport authority seized seven planes belonging to HNA’s Hong Kong Airlines affiliate, after the carrier failed to pay airport fees for the aircraft.
While HNA Group boosted its balance sheet to a level that prevented Hong Kong’s air transport authority from revoking its license in December, news reports this month indicate that the airline is likely to cut staff by as much as one-third after reducing its fleet of planes from 39 to 28.