What can HNA Group expect from the city’s largest investment sale so far this year? Aside from increased scrutiny by Chinese regulators, somewhere between $108.8 and $115.3 million in net operating income annually over the next decade.
That’s according to a recent report by Fitch Ratings on an $811 million commercial-mortgage-back-securities issuance, of which the securitized part of HNA’s $1.75 billion financing package to purchase 245 Park Avenue is the largest part.
JPMorgan Chase underwrote NOI at 245 Park of $115.3 million when the bank put together a the large debt package for HNA in May to finance the its purchase of the 1.7 million-square-foot tower for $2.21 billion, according to the report by Fitch.
Sign up for China Watch for weekly emails on Chinese real estate investments.
The ratings agency, on the other hand, projected a slightly lower figure of $108.8 million on average per year over the 10-year life of the loan.
By comparison, net operating income at Boston Properties’ General Motors Building was recently calculated at $227.3 million and $184.3 million by lender Morgan Stanley and Fitch, respectively, according to a report on the property’s $2.3 billion refinancing in June.
SL Green Realty projects NOI at the planned 1.7 million-square-foot One Vanderbilt office tower to be $198 million per year once it’s fully leased, and net operating income at Kushner Companies’ troubled 666 Fifth Avenue was reported in April to be $41.3 million in 2016, though the building lost $14.5 million after debts were accounted for.
HNA’s purchase is the largest investment-sale of 2017, but it’s unlikely the Chinese conglomerate will be shelling out for more trophy properties anytime soon. The company has reportedly put mergers and acquisitions on hold after Chinese regulators started eyeing HNA and four other heavy spenders amid a crackdown on debt.
HNA is reportedly focusing now on investing in asset-management firms and financial institutions.
(To view more details on HNA Group’s purchase of 245 Park, visit our Deal Sheet page for the transaction)