Caixin
Mar 13, 2018 04:07 PM
M&A

HNA Sells Two Property Firms to Sunac for $300 Million

A view of the HNA Group's Beijing building. Photo: VCG
A view of the HNA Group's Beijing building. Photo: VCG

In its latest move to divest its assets, debt-ridden Chinese conglomerate HNA Group Co. is selling two real estate-related companies on tropical Hainan Island to Sunac China for a total of 1.93 billion yuan ($304.9 million).

The company’s listed unit, HNA Infrastructure Investment Group Co. Ltd., said in a filing to the Shanghai Stock Exchange late Monday that it plans to sell Hainan Gaohe Property Development and Hainan Haidao Construction Logistics to Sunac China, one of the country’s largest developers.

Gaohe will be sold for 1.14 billion yuan and Haidao for 797 million yuan, offering a total gain of over 429 million yuan, it said.

“The deals will help the company consolidate resources, optimize asset structure, speed up corporate strategic transformation, and improve our business of infrastructure and construction investments, which will lift our earnings as a result,” the filing said.

A foreign investment banker told Caixin that HNA has to divest some of its quality profitable assets. “This is inevitable as these assets are easier to be sold thanks to their liquidity and potential valuation rise in the future,” the banker said.

HNA has been pushing to divest its assets after embarking on debt-fueled buying spree for the last two years to acquire international assets. Reuters said the amount spent was more than $50 billion during the period.

The move has invited scrutiny from Chinese authorities, who have tightened their grip on companies’ major offshore investments. Others on the watchlist include Dalian Wanda, Anbang Insurance Group and Fosun Group.

Sunac China, controlled by Chinese tycoon Sun Hongbin, last year forked out 63.2 billion yuan to acquire 76 hotels and a 91% stake in 13 tourism projects, including theme parks from Dalian Wanda.

In related news, The Wall Street Journal reported Monday that HNA is in talks to sell part or all of its 25% stake in Hilton Grand Vacations Inc., a time-share business spun off last year from Hilton Worldwide Holdings.

This comes roughly a year after HNA become a major shareholder in the companies related to the Hilton hotel chain.

Caixin also learned from sources close to the matter that HNA has held talks with domestic institutions on the possible sales of some of its China assets, including properties in Shanghai, Haikou, Beijing and Suzhou.

A document viewed by Caixin listed assets that HNA is considering selling, including the Tangla Hotel in Beijing, a commercial complex in Haikou, and the Crown Plaza Resort in Sanya. Most of the assets are priced from 2 billion to 6 billion yuan.

Contact reporter Jason Tan (jasontan@caixin.com)

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