HNA Is Said to Weigh Sale of Two London Canary Wharf Offices
By: | Jan 05 2018 at 12:21 PM | Air Cargo
HNA Group Co. has approached brokers about the possible sale of two office buildings in London’s Canary Wharf financial district as it seeks to shed assets and cut its debt burden, two people with knowledge of the discussions said.
The Chinese conglomerate has sought advice from brokers on the value of 30 South Colonnade and 17 Columbus Courtyard with a view to selling them, two of the people said, asking not to be identified because the plan is private. It has also approached investors that may be interested in purchasing the properties, which cost HNA about 366 million pounds ($496 million) in total, a separate person said.
No final decision about a sale of the buildings has been made, the people said. A spokesman for HNA declined to comment.
The company, which started as a regional airline, is planning to sell about $5 billion of assets by April, Bloomberg News reported on Friday. Chief Executive Officer Adam Tan said in November that the group was looking to sell assets to conform with Chinese government policies. HNA plans to sell buildings in New York and Sydney, while the company wants to cash out of properties in Hong Kong through real-estate investment trusts, he said, without elaborating.
HNA went on a debt-fueled buying spree in recent years, spending tens of billions of dollars on assets including trophy properties and stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc. The purchases strained its finances and drove up borrowing costs. To assuage concerns about its finances, HNA has taken various measures such as touting credit support and announcing stock purchases to bolster confidence.
HNA purchased 30 South Colonnade in 2015 for about 235 million pounds, the people said. Thomson Reuters Corp., which leases the property, has since agreed a deal to move staff to another building in the district.
The conglomerate paid 131 million pounds to acquire 17 Columbus Courtyard the following year, according to a statement released by the company at the time. Credit Suisse Group AG rents the whole of the building, plans to vacate it in about two years and will not renew its lease when it expires in 2024, people with knowledge of the plan said.
The need to find new tenants for both properties means the buildings would probably sell for lower prices than HNA paid for them, two of the people said. The Brexit vote has also made Canary Wharf less attractive to some investors due to the risk that bank jobs might leave the U.K., they said.
HNA is considering restructuring the leases, finding new tenants or gaining approvals for redevelopment of the properties, all of which could help increase their value ahead of a sale, they said. Another option would be selling the assets as part of a wider deal, they said.
The conglomerate has made an estimated $14.5 billion of property investments in the past decade, according to data compiled by Bloomberg and Real Capital Analytics Inc.