The Firesale Begins: China's HNA Starts Liquidating Billions In US Real Estate

According to Real Capital Analytics estimates, HNA owns more than $14 billion in real estate properties globally. The problem is that the company has a lot more more debt. As of the end of June, HNA had 185.2 billion yuan ($29.3 billion) of short-term debt -- more than its cash and earnings can cover. The company's total debt is nearly 600 billion yuan or just under US$100 billion. Which means that the HNA firesale is just beginning, and once the company sells the liquid real estate, it will move on to everything else, including its stake in all these companies, whose shares it has already pledged as collateral.

So keep a close eye on Deutsche Bank stock: while HNA may have promised John Cryan it won't sell any time soon, companies tend to quickly change their mind when bankruptcy court beckons.

Finally, the far bigger question is whether the launch of HNA's firesale will present a tipping point in the US commercial (or residential) real estate market. After all, when what until recently was one of the biggest marginal buyers becomes a seller, it's usually time to get out and wait for the bottom.

 

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