HNA Said Selling Last London Asset at 24% Markdown in Escape From UK

HNA Group has sold its last asset in the UK to Hong Kong-based investment firm Sun Hung Kai & Co and Australia’s Macquarie Group for £100 million ($129 million), with the troubled mainland conglomerate completing its business Brexit while UK politicians continue to debate their larger more political task.

Like their counterparts in the political world, HNA’s Brexit is coming at considerable cost, as the company sells 17 Columbus Courtyard in London’s Canary Wharf, the last of its London properties, at a 24 percent markdown on the £131 million it paid to acquire the commercial building in 2016, according to a mainland media account.

The sale to Sun Hung Kai Investment, which shares a heritage with, but is not directly related to developer Sun Hung Kai Properties, comes nearly six months after HNA had sold 30 South Colonnade in London, also known as the Reuters building, at a 60 percent discount of the price it paid to acquire that Canary Wharf office property in 2015.

Leaving London at Any Price

HNA has reached the reported deal for the 195,443 square foot (18,157 square metre) office property more than two years after the former champion of China’s outbound investors began liquidating assets in the US, Europe and Greater China as it struggled to manage debts which in mid-2018 were estimated at $100 billion.

The Chinese airline-to-finance conglomerate had put the Canary Wharf property on the market, along with the 305,000 square foot Reuters Building, earlier this year as it continued to struggle to pay down debt.

HNA had purchased 17 Columbus Courtyard for £131 million in 2016, a year in which the parent company of China’s Hainan airlines acquired commercial properties in Seattle, San Francisco and Minneapolis as part of a $35 billion overseas acquisition spree.

When HNA acquired the building it was let entirely to investment bank Credit Suisse, however, the financial institution was said last year to be planning to vacate the premises as part of a global restructuring. The mainland firm made the acquisition through what is now CWT International, a Hong Kong-listed subsidiary which was sued by its creditors in April this year after failing to make payment on its debt obligations.

HNA sold 30 South Colonnade, which is located 200 metres away from 17 Columbus Courtyard to Beijing-based private equity firm Cindat Capital Management for £135 million in a deal which closed in June this year at a price reported to be 60 percent less than the ₤215 million that the mainland firm paid to acquire the asset in 2015.

Shedding Overseas Assets After $100B Shopping Frenzy

The London sale was reported during the same month that CWTI announced in a filing to the Hong Kong Stock Exchange that it had agreed to sell eight golf courses in the Seattle area for a total consideration of $86.5 million in an effort to pay down its outstanding debt and free up working capital.

The pair of November assets sales come after a lender to CWTI’s sued the company in May this year for failure to make payment on interest and fees on a HK$1.4 billion ($179 million) loan, prompting lenders to seize assets including 17 Columbus Square.

Since that time, HNA Group has continued to sell holdings both in China and globally, including a July deal to sell 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 ($180 million).

Sun Hung Kai & Co

HNA’s partner in this latest disposal, Hong Kong-based investment firm Sun Hung Kai & Co, which is buying 17 Columbus Courtyard with Macquarie Group, has a shared heritage with Hong Kong’s largest developer, Sun Hung Kai Properties.

The company was established in 1969 by Fung King Hey, Kwok Tak Seng (the father of current Sun Hung Kai Properties chairman Raymond Kwod) and Lee Shau Kee, who recently retired as the head of developer Henderson Land.

Kwok and Lee later went on to focus on Sun Hung Kai Properties, with Fung concentrating on financial services. Lee Shau Kee parted ways with Sun Hung Kai before going on to found Henderson Land.

In 1996, Hong Kong-listed Sun Hung Kai & Co was acquired from the Fung family by Allied Properties Limited, which has business interests in property investment and development, hospitality related activities and elderly care services in Hong Kong and overseas.