HNA Seeks to Raise RMB 2.7B From Sales of Shanghai, Sanya Hotels

HNA Group is putting up for sale a pair of hotels, one each in Shanghai and in Hainan province, as the financially troubled mainland fights to stay solvent.

The two hospitality properties, both of which are fully completed and operational, could bring in a total of over RMB 2.7 billion ($393 million) for the cash-starved parent company of China’s Hainan Airlines.

During the last week, the company has listed both the Renaissance Shanghai Pudong Hotel and the Crowne Plaza Resort Sanya Bay, along with other Hainan resort assets, for sale on government-run asset exchanges in China, a move which is often a final step before a transaction is announced.

Renaissance Pudong Available for RMB 803M

HNA is asking RMB 803 million for 100 percent of the equity in the holding company for the Renaissance Shanghai Pudong, according to a notice posted on the Shanghai United Assets and Equity Exchange on July 16.

The 370-room hotel, which first opened in 2003, is located 600 metres from the Pudong Expo Centre on Chang Liu Lu in the district’s Lianyang area and is jointly owned by HNA Group subsidiary Shenzhen Qianhai Futai Investment Partnership and HNA Asset Management Group. The five-star hotel has a total gross floor area of 51,436 square metres (553,652 square feet), spanning 27 above ground storeys with three more floors underground.

According to public information, as of the end of 2018, the holding company for the Marriott-managed hotel had total assets of RMB 2.01 billion, RMB 2.22 billion in liabilities and accounts receivable of RMB 1.08 billion.

A valuation of the holding company commissioned by HNA Asset Management last year put a price tag of RMB 1.8 billion on the asset, implying that a buyer would be taking over existing debt associated with the company.

HNA has yet to make a statement regarding a potential buyer for the property

Hainan Resort Project Now Available

Just four days before the Shanghai property was listed on the local asset exchange, HNA had posted its Sanya project for sale on the China Beijing Equity Exchange.

In that sale HNA is making available the 472-room Crowne Plaza Resort Sanya Bay, along with a residential tower and additional land through a sale of the equity in the project holding company, although two of the project’s creditors will also be involved in the sale.

The resort project, which HNA holds through Hainan Fortune Haiwan Real Estate Co, lost RMB 11.11 million in 2017 and chalked up another RMB 52.24 million in losses last year, according to public records. The company, which was originally established in 2003, owns a 55,000 square metre beachfront site, with the hotel project amounting to 90,000 square metres.

The Hainan branch of Bank of China, has made a mortgage loan to the project company and Bohai International Trust, having extended a separate trust loan on the property, with both lenders having agreed to facilitate the liquidation of the project.

No indication has yet been made of a potential buyer for the Hainan asset.

HNA Keeps Selling Down Portfolio

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.

Earlier this month, the group sold its remaining 75.10 percent stake in a Beijing commercial complex to a subsidiary of China Vanke for a total consideration of RMB 1.3 billion ($190 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.