The Real Deal New York

HNA could take a loss on 850 Third. Here’s who it’s negotiating with

Caiola family discussing deal that values tower at $452M
August 16, 2018 01:04PM

Alfred and Luigi Caiola of B & L Management and 850 Third Avenue (Credit: Getty Images and ATCO)

As federal regulators scrutinize HNA Group’s ownership stake in 850 Third Avenue, the embattled Chinese company is in talks to sell its position to the Caiola family’s B&L Management Co. at a price that values the 21-story building at $452 million.

The deal would cause HNA to realize a loss on its investment, according to Bloomberg, which first reported talks about the deal.

No contract has been signed and B&L Management has not made a deposit, people with knowledge of the talks said.

HNA owns 90 percent of the building. Minority partners MHP Real Estate Services and ATCO Properties & Management own the rest and have waived their rights to match the offer, which would have required an equity partner to come in and take HNA’s stake.

The owners refinanced the property in June with a $342 million loan from French bank Natixis, the real estate investment trust Paramount Group and Virginia-based investment Harbor Group International.

Any deal would likely satisfy concerns from the Committee on Foreign Investment in the U.S., which has concerns HNA’s ownership because of the building’s proximity to Trump Tower.

HNA and its partners paid $463 million for the building in 2016, and the Chinese firm has been looking to sell the tower since at least February.

B&L Management, meanwhile, is expanding from its roots investing in multifamily buildings and getting into the office sector.

The company sold what’s known as the Caiola portfolio — 24 buildings with 979 units in Manhattan — to Fairstead Capital and the Blackstone Group in 2015 for $690 million. [Bloomberg] – Rich Bockmann