Judge confirms HNA must pay $185M to SL Green
Office landlord got restraining order against Chinese investor at 245 Park Avenue
SL Green has secured another victory in its long-running dispute with the HNA Group at 245 Park Avenue.
A judge confirmed that HNA must pay SL Green the $185 million awarded in arbitration. The amount represents SL Green’s investment in 245 Park Avenue and other fees. It stemmed from HNA allegedly breaching agreements regarding SL Green’s initial investment and terms of guarantee.
In the order filed Monday, the judge said that the SL Green affiliate involved appeared to have a valid cause of action to confirm its final arbitration award. The ruling went on to say that the affiliate would “probably” succeed on the merits of its claims.
Lawyers representing HNA did not respond to a request for comment. The law team representing the SL Green affiliate also did not respond to a request for comment.
The latest ruling comes weeks after the same judge granted SL Green’s request to stop an affiliate of HNA from dumping assets to avoid paying the arbitration award. The REIT obtained a temporary restraining order against the Chinese conglomerate, preventing its entity from selling assets until SL Green gets its money.
SL Green pursued the restraining order after an affiliate of HNA allegedly tried to sell the Palisades Premier Conference Center in Rockland County. According to SL Green, HNA agreed to terms with a buyer for the conference center in May.
The dispute at 245 Park Avenue goes back years. PWM Property Management, the HNA affiliate, accused SL Green of failing to find a tenant to replace Major League Baseball and said the building had not signed a new lease since November 2018. An arbitrator, however, said HNA didn’t prove that allegation.
PWM also said SL Green was trying to put the tower into financial duress, claiming the REIT would benefit because of its interest in the building and foreclosure possibility.
SL Green invested $148 million in 2018 when it joined as property manager. The REIT negotiated protections for the investment in case of issues such as bankruptcy.
That proved to be prescient, as PWM did go into bankruptcy and pushed SL Green out as property manager. In December, a bankruptcy judge ruled PWM could cancel the property management contract; SL Green said it was not aware of PWM’s plans to file for bankruptcy.
The arbitrator said SL Green had met its burden to show a “cause event” had occurred. HNA, meanwhile, argued that the bankruptcy filing by PWM in October should have stopped SL Green’s efforts to recover its investment.
Last October, a Chinese judge approved a corporate restructuring of HNA, allowing creditors to sell its assets.
The office building at 245 Park appears poised to fall into the hands of SL Green. According to MarketWatch, the office REIT was named the successful bidder for the owner of the building, as PWM didn’t receive any other offers.
The proposed deal reportedly includes $1.2 billion of mortgage debt, $568 million of mezzanine debt, $68 million in cash and an exchange of $40 million of preferred equity for 100 percent of the building’s owner.