HNA’s fire sale continues with One57 deal

“It doesn’t represent the real world price,” Barnett says

TRD New York /
Jul.July 29, 2020 08:30 AM
HNA Group’s Guoqing Chen, One57 and  and Gary Barnett (Godsfriendchuck via Wikipedia)

HNA Group’s Guoqing Chen, One57 and  and Gary Barnett (Godsfriendchuck via Wikipedia)

HNA Group has sold a third condo unit at One57 at a significant loss, the latest in a long-running series of trophy dispositions for the once high-flying Chinese conglomerate.

An entity affiliated with the firm sold a 67th-floor unit at Extell Development’s Billionaires’ Row tower for $17.2 million, property records show. That’s a 43 percent loss from the $30 million the company paid for the 4,500-square-foot pad in 2015.

HNA grabbed the spotlight with splashy purchases of trophy towers including 245 Park Avenue and spent a reported $45 billion from 2014 to 2017 on real estate and other assets. In 2018, HNA began selling off its holdings outside of China amid pressure from the Chinese government, which was cracking down on debt-laden companies making big plays abroad with capital controls.

HNA picked up at least four condos at Extell’s 93-story tower during its buying spree, and the sale of unit 67A is its third for well under the purchase price. In May, HNA’s New York-based subsidiary Pacific American Corporation sold a unit on the 88th floor for $19.4 million less than it paid in 2015. Earlier that month, another affiliate sold a unit on the 66th floor for $12.3 million less than it paid in 2014.

In each deal, the buyers are entities tied to WK Law Firm, which has offices in New York and Tianjin, China. The firm specializes in working with Chinese clients and companies entering the U.S. market, according to its website. The LLC in the deal on the 88th floor lists HNA’s head of human resources and communications as its manager.

HNA has had better luck with other parts of its residential portfolio. It sold the Wildenstein townhouse on the Upper East Side to Len Blavatnik for $90 million in 2018 after buying it for $79.5 million a year earlier.

Representatives for HNA declined to comment, but Extell’s Gary Barnett confirmed that all three transactions were affiliated sales.

“It doesn’t represent the real-world price,” the developer said, though he admitted feeling frustrated about the deals, given that Extell is still trying to sell sponsor units.

“We’ve already taken the damage in the market,” he said, referring to the May sales reported by the Wall Street Journal.

One57, designed by Christian de Portzamparc, set the record for the most expensive Manhattan closed sale when Michael Dell paid $100.5 million for a penthouse in 2015. The record was broken by Ken Griffin’s $238 million buy at 220 Central Park South, which closed last year. Extell’s pricing hasn’t veered much from its original 2011 offering plan, which targets a $2 billion sellout.

Related: One57 made Billionaires’ Row. Will it now destroy it?

At the end of the first quarter of 2020, Extell still had 25 condos to sell at the 132-unit building, according to disclosures on the Tel Aviv Stock Exchange, where the developer issues bonds. Property records show two sponsor units have traded since. Barnett said five units were in contract as of late July.

In late 2018 the developer offered free common charges for up to five years. Last year Extell sold a unit on the 60th floor for $22 million, a 24 percent discount from its original ask of $28.9 million.

Barnett said Extell closed on an $18 million condo inventory loan for One57 in June.

Guoqing Chen, HNA co-founder and CEO of Pacific American Corporation, shelled out $47.4 million in 2015 for a unit on the 86th floor. The unit is listed for sale with the Corcoran Group’s Carrie Chiang for $45 million.

Write to Erin Hudson at [email protected]


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