Why HNA is putting the brakes on deals

Company targeting fewer acquisitions as Chinese regulators try to get a handle on debt

TRD New York /
Jul.July 14, 2017 02:20 PM

From left: 245 Park Avenue, the Midtown Hilton at 1335 Sixth Avenue and HNA Group’s Chen Feng (Credit: Brookfield, Hilton, and Getty Images)

HNA Group, one of China’s biggest conglomerates and the new owner of the trophy office tower at 245 Park Avenue, has put a freeze on merger-and-acquisition deals as Chinese officials crack down on debt to curb overseas investments.

People familiar with HNA’s strategy told the Wall Street Journal that the company said it is putting M&A activity on hold for now. Another person familiar with the plans told the newspaper that the company is targeting fewer deals and holding fewer talks about potential acquisitions.

HNA is, however, still talking about investing in asset-management firms and financial institutions.

In June, the China Banking Regulatory commission started investigating five big Chinese international investors as it tried to control debt levels.

The companies included HNA along with Anbang Insurance Group, Fosun International and Dalian Wanda Group.

HNA is one of China’s biggest spenders, and made a big splash in New York City in March when it went into contract to buy 245 Park Avenue for $2.21 billion, as The Real Deal first reported. Last year, the company paid $6.5 billion to buy a 25 percent stake in Hilton Worldwide Holdings.

Outbound Chinese investments have fallen off sharply this year after Chinese regulators made a push last year to stem the flow of spending abroad. A recent report from Juwai predicted that Chinese investment in U.S. real estate will likely continue to fall in 2017.

So far this year, HNA has announced $5.66 billion worth of overseas deals. The company is now the largest shareholder in Deutsche Bank after borrowing $3 billion to buy a larger stake, and is trying to expand in the financial services sector.

Overseas spending by Chinese companies in sectors outside finance in the first half of the year dropped 45.8 percent year-over-year to $48.19 billion, according to Ministry of Commerce data cited by the state-run Xinhua News Agency. [WSJ]Rich Bockmann


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Renderings of 130-02 South Conduit Avenue and Triangle Equities’ Joshua Weingarten (Credit: Terminal Logistics)

Triangle Equities lands $87M loan for massive JFK warehouse project

From left: 172 Madison Avenue, 100 East 53rd Street, Woolworth Tower, 53 West 53rd Street, 615 10th Avenue

Loan wolves: Bankers are stalking developers as debts come due

State Sen. Julia Salazar and Assembly member Harvey Epstein proposed the tax this month in an effort to disincentivize real estate speculation (Credit: iStock, Getty Images)

Experts take issue with proposed tax on mezzanine loans

As the years go by_A look back at 17 years of real estate history

A look back at 17 years of real estate history

Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Some investors continue to find U.S. commercial real estate as attractive places to park their capital (Credit: iStock)

Brexits and Bubbles: How investors view Europe’s shaky real estate market

arrow_forward_ios
Loading...