Debt-laden HNA Group sells prime waterfront office tower in Shanghai for US$509 million

By Pearl Liu / | April 28, 2020 12:09 PM SGT
The aviation-to-finance conglomerate HNA Group has completed the sale of a 20-storey office tower in Shanghai to a state-backed bad debt manager for 3.6 billion yuan (US$509 million) as it sheds assets to trim its multibillion-dollar debt load.
China Cinda Asset Management, one of the country's four state-owned bad debt companies, will own most of the Shanghai HNA Tower, in Pudong's Lujiazui area after it was reported that it had sold its lower floors earlier, Colliers International said.
The sale comes after the Hainan provincial government, China's civil aviation administrator and policy lender China Development Bank formed a special task force in late February to help HNA Group manage its liquidity.
Cinda will own floors one to five and floors 12 to 20 or 47,500 square metres of the 85,000 sq metre grade A building whose sale was first reported in January.
In January 2019, HNA sold a 70 per cent stake it held in another Shanghai office building to Singapore property giant CapitaLand for 2.75 billion yuan.
In 2009, HNA had paid a then record 1.82 billion yuan or 36,481 yuan per square metre for land along Huangpu River to construct the prime waterfront building designed by GMP Architects.
Cinda was set up by the State Council in 1999 to remove distressed assets from the books of major Chinese banks, and to restructure and manage troubled financial institutions, securities firms, insurers as well as state-owned entities.
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In February, HNA Group sought the help of the Hainan provincial authorities. HNA's liquidity will be managed by a working committee comprising representatives from the Hainan government units, the country's civil aviation administrator and China Development Bank. Gu Gang, chairman of state-owned Hainan Development Holdings, was appointed executive chairman of HNA.
HNA Group, which began as a regional airline based in Hainan's capital of Haikou, went on a global shopping spree between 2015 and 2017 " mostly fuelled by loans " for assets.
At its peak, HNA Group owned stakes in Deutsche Bank, Hilton hotels, a portfolio of office towers and real estate all over the world as well as waterfront land parcels in Hong Kong. After Chinese regulators cracked down on its debt-fuelled acquisitions, HNA turned into a net seller of assets, cutting its debt by 40 per cent to 525.6 billion yuan as of June 2019.
The conglomerate has been selling assets since 2018, including real estate acquisitions, company equity and " recently " even its airline and aircraft.
In 2018 it disposed off about 300 billion yuan worth of assets, and the company was starting "to see the twilight", Chen Feng, its chairman, said in December 2019. He also said the company was "too hasty" in trying to set up a world-class aviation conglomerate for China, and that growth had been "too rough due to lack of experience".
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