HNA’s global real estate sell-off touches $8.6bn

The Chinese conglomerate has been selling real estate holdings as well as stakes in major global hotel operators such as the Radisson Hospitality deal, which was announced this week.

Hainan Airlines Group, the Haikou-based aviation-to-financial services conglomerate and once China’s most-acquisitive cross-border investors, has sold real estate assets for around $8.6 billion over the past two years, according to data provided to PERE from Real Capital Analytics.

These ongoing sales of assets owned by different HNA subsidiaries are part of HNA’s attempts to reduce its massive debt accumulated from a global acquisition spree. According to its annual report released in April, HNA’s total debt touched around 598 billion yuan ($94 billion; €79 billion) by end-2017, up 21 percent year-on-year.

Around $3.3 billion, almost 40 percent of the total exit proceeds estimated by RCA, has come from exiting real estate assets in the US. The US disposals have been carried out within New York, San Francisco, and Minneapolis, as the data shows.

PERE understands that these exits include the 1180 Avenue of the Americas building in Manhattan, New York and the San Francisco office tower 123 Mission Street, both of which were sold by HNA to the Denver-based investment manager Northwood Investors.

In February, HNA Group also announced the sale of two Hong Kong land sites to Hong Kong-listed developer Henderson Land Development for HK$16 billion ($2 billion; €1.8 billion).

In addition to real estate assets, HNA has also been selling some marquee global hotel operators. Last week, the parties involved announced that HNA has agreed to sell the Brussels-headquartered and Swedish-listed hotel operator Radisson Hospitality AB to a consortium led by the Shanghai-based hospitality group Jin Jiang International Holdings.

That transaction is expected to be completed by the end of 2018 at a price of SKr35 ($3.82; €3.37) per share. The Jin Jiang-led consortium would buy an additional 18.5 percent stake in Radisson Hospitality that HNA has pledged and transferred to a lender as security for a loan, the companies said in the announcement. After the share purchase, the consortium would also acquire 100 percent of Radisson Holdings Inc for an undisclosed amount.

In 2016, HNA’s tourism unit bought 100 percent of the US-based Carlson Hotels Inc for an undisclosed sum, including its 51.3 percent stake in the Swedish-listed Rezidor Hotel AB, which was later renamed to Radisson Hospitality AB. HNA offered SKr34.86 ($3.81; €3.36) per share at the time and was reported by Reuters to have spent more than $2 billion in the transaction. The deal added 1,400 hotels in 115 countries to HNA’s operating portfolio as well as hotel brands including Radisson, Park Plaza, Country Inns & Suites.

This was preceded by the Chinese conglomerate selling a 25 percent stake in a pair of Hilton Hotel-related groups for a combined value of $2.5 billion in March. A month later, HNA notified US regulators that it would be selling down its entire $6.5 billion stake in Hilton Worldwide Holdings. HNA had bought the Hilton Worldwide stake from the New York-based investment firm Blackstone back in October 2016.

In an attempt to raise third-party capital, HNA also reportedly launched a $1.5 billion private equity fund called the Overseas Aviation and Tourism Industry Fund earlier this year to invest in overseas real estate, travel and aviation assets.

HNA did not respond to PERE’s email queries about the ongoing sales.