The Real Deal New York

Third time’s the charm: HNA once again borrows against Hilton stake

Company purchased 25% stake in hotel chain for $6.5B
January 02, 2018 09:45AM

HNA Group’s Adam Tan

HNA Group has once again borrowed against its stake in a Hilton Hotel chain, adding half a billion dollars to a $3 billion share-backed loan.

This was the third time in December that the Chinese conglomerate raised debt using its 25 percent stake in Hilton Worldwide Holdings, the Wall Street Journal reported. HNA purchased the 25 percent stake in Hilton for $6.5 billion in 2016 from the Blackstone Group, as part of a spending spree that’s totaled about $40 billion since 2015.

The company has pulled back significantly on its purchases and has plans to sell $6 billion worth of real estate to pay off its debt. HNA has announced plans to sell 1180 Sixth Avenue and 850 Third Avenue, though the company says it will be keeping 245 Park Avenue, which it bought last year for $2.21 billion.

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In November, CEO Adam Tan announced that the company was considering shedding assets amid pressure from the Chinese government to limit capital from flowing out of the country.

“We will not invest in anything the government does not support,” Tan said at the time. In December, HNA added debt to its stake in Deutsche Bank and pledged shares in one of China’s largest banks, Postal Savings Bank of China. [WSJ] — Kathryn Brenzel