HNA Said to Sell Hainan Site to Sunac for $125M

HNA’s sales of European and US assets have been grabbing headlines internationally, but the indebted Chinese conglomerate is also selling assets closer to home, including this week selling the site of its former corporate headquarters, according to accounts in the local media.

Citing local land registration documents, a report in the paper.cn shows that a unit of Sun Hongbin’s Sunac China has taken over 100 perent of the equity in a company named Hainan Island Hangxiang Investment Development, as of the 13^th of this month. A report on the Cailian website today indicates that the consideration paid for the purchase by Sunac was RMB 981 million ($125 million), a sum which matches the registered capital of the entity.

The equity transfer gives Sunac, which ranked as China’s fourth largest developer in terms of sales in 2017, control over a commercial project site in Haikou which is approved for construction of a 51,800 square metre (558,000 square foot) building.

The transaction is Sunac’s third acquisition of HNA assets this year, following a pair of earlier Haikou pick-ups. Neither HNA nor Sunac have made any official announcement regarding the reported transaction at the time of publication.

Sunac Wins Rights to Central Haikou Site

This latest deal gives Sunac the rights to build a 27-storey commercial tower, approved for both retail and office development, in the capital of Hainan province. In April of this year the island province was designated as a free trade zone by China’s central government, leading to a boost of interest in real estate in China’s only tropical destination.

The site is located 1.3 kilometres southwest of People’s Park on Haixiu East Road in central Haikou’s Longhua district. When first developed in 1994, the 11,602 square metre plot had been home to HNA’s global headquarters until the company gradually migrated its business units to a new home on the city’s Guoxing Road.

The 30-storey building which formerly occupied the Haixiu Road site was demolished in December 2012, with HNA later winning approval to redevelop the site as a project dubbed Wanghai Science and Technology Plaza (望海科技广场). Including below ground space, the project permits construction of up to 70,259 square metres by gross floor area.

Sunac Grabs Third HNA Asset

Sunac, which has shown a preference for distressed assets including buying a $2.2 billion stake in Jia Yueting’s LeEco earlier this year, made this latest acquisition some five months after it previously rummaged through HNA’s bin of real estate bargains.

In mid-March of this year HNA notified the stock exchange in a pair of separate filings that it was selling a property subsidiary and a logistics unit to Sunac China for a combined RMB 1.9 billion ($300 million).

That set of deals gave Sunac 100 percent equity in Hainan Gaohe Property Development, which controls a real estate project on Hainan in return for compensation of RMB 1.13 billion. The second transaction gave Sunac 100 percent equity in Hainan Haidao Construction Logistics, a logistics provider with warehouse assets on the island for RMB 797 million. Both purchases were from units of HNA Infrastructure Investment.

Haikou Sale Follows Deals in Wuhan, Shenzhen

After building up a debt load said to be as much as $100 billion, HNA has sold off more than $17 billion in assets so far this year as it scrambles to meet maturing debt obligations in the next 12 months in the face of a clampdown on new loans by the mainland government.

Earlier this month HNA sold its stake in the Radisson Hotels group to Shanghai’s Jin Jiang for $332 million, and in late July sold an 80 percent stake in a Wuhan logistics project to an affiliate of superinvestor Fang Fenglei’s Hopu Capital for RMB 312 million ($45.8 million).

Also last month the group was reported to be selling a supertall tower project in Haikou to China Poly Group, one of the mainland’s largest developers, after selling a 623,000 square-meter mixed-use complex in Shenzhen for RMB 1.6 billion to local investment manager Tianji Wealth.