HNA's Fire Sale Gets Into Full Swing From Hong Kong to London
HNA Group Co., the once-voracious hunter of global trophy assets, is seeking to sell more than $6 billion in properties worldwide as pressure intensifies for the Chinese conglomerate to speed up disposals so it can repay its debts.
The group on Tuesday said it agreed to sell two plots of land in Hong Kong it bought less than a year ago for HK$16 billion ($2 billion) to the city’s second-richest man. HNA is also said to have been in talks to sell a pair of office buildings in London’s Canary Wharf district it bought for more than $500 million and offering a raft of properties in the U.S. valued at about $4 billion.
After spending tens of billions of dollars investing in big stakes in Deutsche Bank AG to skyscrapers in New York, the conglomerate that once symbolized China’s insatiable appetite for global assets is reversing course after the government soured on overseas acquisitions and debts piled up beyond the company’s means. The group is said to have told creditors it could have a liquidity shortfall of at least 15 billion yuan ($2.4 billion) this quarter and that it’s targeting about 100 billion yuan in asset sales during the first half.
In Hong Kong, HNA plans to sell the properties to billionaire Lee Shau Kee’s Henderson Land Development Co. by Feb. 14 for about 12 percent more than what local land registry records show HNA had spent. HNA bought those plots, along with two others, at the former Kai Tak airport area for a total HK$27.2 billion between November 2016 and March last year, outbidding local developers for sites that were among the most hotly contested during that period.
"Without a doubt, HNA is making a strategy U-turn," said Warut Promboon, managing partner at credit research firm Bondcritic Ltd. "Developers do not buy land to only make 12 percent gross profit, in our view. The fact that HNA simply could not develop the land into residential properties indicates rising execution risk within the group."