China's Troubled HNA Is Said in Talks to Sell NYC's 245 Park
China's HNA Is Said in Talks With SL Green on Park Avenue Tower
(Bloomberg) -- Less than a year after HNA Group Co. paid $2.21 billion for 245 Park Ave. -- a purchase that raised eyebrows for its near-record price -- the troubled Chinese conglomerate is in talks to sell the Manhattan office tower.
SL Green Realty Corp., a lender to 245 Park, is in discussions with HNA to purchase the building, according to people with knowledge of the matter. In addition to a sale, another option being discussed is a debt recapitalization of the property, said the people, who asked not to be identified because the matter is private. The talks may not result in any deal being done. Spokesmen for HNA and New York-based SL Green declined to comment on the discussions.
The price HNA paid for the building was one of the highest ever for a New York skyscraper, following a bidding war that also involved SL Green and RXR Realty LLC. In a deal that closed last May, the Chinese company paid $1,282 a square foot for the 45-story building, according to research firm Real Capital Analytics Inc. The property was purchased from Brookfield Property Partners LP and the New York State Teachers’ Retirement System.
Sales of New York City commercial properties have slowed following a retreat by the overseas buyers that helped propel values to records, HNA among them. Facing one of the biggest-ever debt burdens and pressure from Chinese authorities to unwind its global spending spree, HNA has sold holdings worth $13 billion this year, including its $6.5 billion Hilton Worldwide Holdings Inc. stake.
After losing out on an outright acquisition of 245 Park, SL Green ended up with a link to the late-1960s era building: It provided a $110.5 million mezzanine loan to HNA, according to a December shareholder presentation. Even if a deal for 245 Park is reached with SL Green, HNA won’t be cashing a multibillion-dollar check. The company financed its purchase of the building with almost $1.8 billion of debt, according to filings.
The Park Avenue tower, near Grand Central Terminal in Midtown, is home to a collection of high-profile tenants such as French bank Societe Generale SA, Ares Management LP and Major League Baseball. Another is JPMorgan Chase & Co., which announced plans to erect a new skyscraper at the site of its current headquarters, at 270 Park Ave.
To contact the reporter on this story: Gillian Tan in New York at firstname.lastname@example.org.
To contact the editors responsible for this story: Daniel Taub at email@example.com, Peter Jeffrey
©2018 Bloomberg L.P.