HNA Might Be Selling Office Tower In San Francisco For $290M
New reports reveal that HNA might be selling the San Francisco office building for $290 million. Reports reveal that the company might be selling the office tower to Northwood Investors. According to reports, HNA Group has sold the office tower in order to generate funds for the company to pay off its debt as its debt is piled up at a whopping $100 billion.
HNA Group, which is an airline-to-property group, has been revealed to have sold on 123 Mission Street to Northwood Investors, who are a US based real estate firm. The company is paying a massive price of $290 million or per square foot terms, it is paying $840. That is a price within itself. HNA purchased the property in August 2016 for $255 million and it acquired it from Great Eagle Holdings, a Hong Kong based firm which is also a US subsidiary.
The office tower in San Francisco is a huge 29-storey building that is located in San Francisco, towards the South of Market neighborhood. It is providing about 339,000 square feet worth of office space. The building was built in 1987 and it is a fully leased property with new house tenants. Some of the tenants of the building include Salesforce and McKesson Corporation. Additionally, the tower also has about 2577 square feet worth of retail space for about four vendors so that they can build amenities there.
Northwood Investors were not the only one who were looking at this massive property as previously, two other big names in the industry were also doing the same. The company has been founded by the ex-Blackstone executive, John Z. Kukral. The company has a whopping $7 billion under its asset management. It is also being revealed that Gaw Capital and JP Morgan held meetings with HNA Group in the past to buy the same building which Northwest has just now.
One of the biggest reasons for the sale of this building at such a whopping cost is the fact that it is located very strategically. San Francisco itself experienced a 10.1% rise in its office space rents on a year on year basis during the first quarter of the year. It is only natural that once the overall rents have also increased, rents of buildings will increase consequently.
HNA’s motive of alleviating its debt of billions might be fulfilled with the sale of the whopping $290 million. HNA had an increase in its liabilities to RMB 736.5 billion by 31st December, which was a 22% increase from the last year. The debt to asset ratio of the company during the same period also increased by 0.35%, as it settled at 59.78%.
HNA, which is a company based in China, is also getting rid of its mainland assets in order to raise money. The company also sold a subsidiary that holds rights to develop a new mixed motive project in the Pudong Qiantan region for RMB 2.9 billion, which is equal to $456 million.