Date
23 July 2018
The debt-laden conglomerate is able to dispose of its assets at a profit at a time when it really needs cash. Photo: Reuters
The debt-laden conglomerate is able to dispose of its assets at a profit at a time when it really needs cash. Photo: Reuters

The biggest thing HNA should be grateful for

HNA Group is a lucky dog.

The debt-laden conglomerate seems to have a change of fortune, disposing of its assets at a profit at a time when it really needs cash.

Its subsidiary Hong Kong International Construction Investment Management Group (HKICIM) is poised to sell another piece of land at the former Kai Tak airport site to Wheelock Properties for HK$6.35 billion, according to an announcement from Wheelock, which paid a HK$500 million deposit.

That followed the sale of two HKICIM properties at Kai Tak last month to Henderson Land for HK$15.95 billion, leaving it with only one plot at the site.

In both cases, HNA Group, headquartered in Haikou, Hainan, made a profit. The lot sold to Wheelock had been acquired in January 2017 for HK$5.53 billion, which means a 15 percent return, higher than the 12 percent gain from the deal with Henderson Land last month.

HNA Group stunned the local property market by paying over HK$22 billion for the four plots in a government land tender between November 2016 and February 2017 because it was 50 percent higher than the market price at the time.

The group originally planned to combine the four pieces of land for the development of an HNA City, only to face tight liquidity. So it made a quick profit instead by dumping three-quarters of the acquisitions.

Beijing, bent on cutting the country’s debt, told HNA Group, along with Wanda and Anbang Insurance, to dispose of overseas assets they accumulated during previous shopping sprees.

Wanda was able to sell its commercial investment and hotel portfolio to Sunac and R&F Properties, as well as a stake in Spanish football club Atletico Madrid.

Anbang was less fortunate. Chairman Wu Xiaohui, who shocked the world by snapping up the historic New York landmark Waldorf Astoria in 2014 for nearly US$2 billion, was detained and his group was placed under the custody of the China Insurance Regulatory Commission.

Now HNA is still in talks to dispose of its stake in Deutsche Bank and Hilton Worldwide Holdings in a fire sale to raise over 15 billion yuan (US$2.36 billion) in the first quarter and 100 billion yuan this year.

Anyway, the group’s dream of establishing its own city in Kai Tak is over. But the good thing is, it is able to survive.

– Contact us at [email protected]

CG

EJ Insight writer

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