Sunday 21 October 2018

HNA weighs sale of London offices

Troubled Chinese conglomerate HNA is unlikely to recoup the ¤413m it paid for the two London buildings in Canary Wharf
Troubled Chinese conglomerate HNA is unlikely to recoup the ¤413m it paid for the two London buildings in Canary Wharf

Jack Sidders and  Scott Deveau

Troubled Chinese conglomerate HNA Group Co has held initial talks with investors about selling a pair of office buildings in London's Canary Wharf district, people with knowledge of the matter said.

Private-equity firms including Brookfield Asset Management Inc are considering making bids after HNA asked suitors to submit letters of intent before it would allow access to view the buildings, the people said, asking not to be identified because the process is private.

Toronto-based Brookfield, which is one of the owners of the buildings' original developer, Canary Wharf Group Plc, is weighing an offer that could also include other properties from HNA's global portfolio, the people said. Spokesmen for Brookfield and HNA declined to comment.

HNA, the aviation-to-hotels conglomerate, plans to sell about 100 billion yuan (¤13bn) of assets in the first half of this year as it attempts to stave off a liquidity crunch, people with knowledge of the matter said last month.

The company, which started as a regional Chinese airline before buying stakes in everything from Deutsche Bank AG to Hilton Worldwide Holdings Inc, is also looking to offload assets to conform with a campaign by its government to stem capital outflows.

No single adviser has been mandated to conduct a formal global sales process, and HNA is engaged in piecemeal discussions with bidders interested in multiple buildings around the world, the people with knowledge of the talks said. A deal has yet to be agreed upon for the Canary Wharf properties at 30 South Colonnade and 17 Columbus Courtyard, and there's no certainty a transaction will take place, they said.

HNA is unlikely to recoup the Stg£366m (¤413m) it paid for the two buildings because the tenants of both properties intend to leave and prices have fallen in the district since the Brexit vote, the people said. One potential hurdle to a deal is that Canary Wharf Group, owned by Brookfield and the state of Qatar, retains some redevelopment rights over 30 South Colonnade, which will soon be vacated by Thomson Reuters Corp, according to the people.

HNA has amassed about $14.5bn of property over the past decade, estimates by Real Capital Analytics show.

The conglomerate is also in the process of selling $4bn of US properties.

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