HNA sells US property to Samsung, tapping Korean buyers for US asset: report

HNA Group has sold a Minneapolis office tower to Samsung SRA Asset Management Co. Ltd. for $320 million and is now tapping South Korean institutional investors to sell a Silicon Valley office building, according to media reports.

The debt-ridden Chinese conglomerate made a profit of about $5 million from the sale of the Minneapolis City Center and an adjacent office building to Samsung SRA, wholly owned by Samsung Life Insurance Co. Ltd.

It was first reported by Bloomberg and sources with knowledge of the matter confirmed the transaction on June 8.

But no details were disclosed about the Silicon Valley building up for sale and its asking price.

About 70% of the City Center is occupied by US retailer Target Corporation reportedly with ten years remaining on its lease.

HNA Group’s financial distress and efforts to shed assets may offer a chance for South Korean investors to get a bargain. But some voiced caution.

“It is not that HNA Group is directly looking for Korean investors, but that a few deals undigested in overseas markets are being brought to us,” the Seoul Economic Daily quoted an unnamed industry source as saying on June 8.

“From the perspective of a Korean investor, the worrying factors are squeezed yields from dollar assets because of the falling dollar/won rate and higher currency hedging costs, and the view (the US) property market is at the peak.”

Last year, South Korean institutional investors, including Shinhan Investment Corp., extended nearly $600 million in senior and mezzanine loans to fund HNA’s recent global acquisitions.

In March, Samsung SRA bought twin office towers in Seoul, The K-Twin Towers, for 713 billion won from US private equity firm KKR & Co. and Hong Kong-based investment firm LIM Advisers.

The acquisition price per unit set a record for a South Korean office building at 28 million won per 3.3 square meters.

By Daehun Kim

daepun@hankyung.com