business

HNA Sells Sydney Building to Blackstone for A$200 Million

Updated on
  • Blackstone is said to pay about $161 million for building
  • Sale comes as Chinese conglomerate comes under pressure

HNA Crisis Deepens Amid $2.4B Cash Crunch

HNA Group Co. agreed to sell a Sydney office building to Blackstone Group, according to people familiar with the matter, in what could be the acquisitive conglomerate’s first-ever disposal of an overseas property as it struggles with mounting debts.

Blackstone Real Estate Partners (BREP) Asia agreed to buy the building located at 1 York Street, said the people, who asked not to be identified because the information is private. HNA Group’s Hong Kong International Investment Group sold the tower for A$205 million ($166 million), it said in an emailed statement Friday, without identifying the buyer. It paid A$117 million for the property in Jan. 2012, the company said.

1 York Street.

Photographer: Brendon Thorne/Bloomberg

A Blackstone spokeswoman declined to comment.

The sale comes as the Chinese conglomerate comes under mounting financial pressure after the group spent tens of billions dollars on a debt-fueled acquisition spree. HNA’s debts surged last year as financing costs more than doubled, according to the group’s latest half-year financial report. Since then, investor concerns about the conglomerate’s finances have increased, driving its borrowing costs higher.

Hannah Dormido

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.

In Hong Kong, HNA is taking the rare step of inviting outside investors to buy into two Hong Kong plots it purchased for $1.8 billion just over a year ago. The conglomerate was said to approach brokers earlier about the possible sale of two office buildings in London’s Canary Wharf financial district, while the group is also seeking to dispose its stake in 1180 Avenue of the Americas building.

This isn’t HNA’s first deal with Blackstone. The New York-based private-equity firm agreed to sell a 25 percent stake in Hilton Worldwide Holdings Inc. in 2016. Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.

(Adds HNA statement in second paragraph.)
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