US tells HNA to sell NYC building

HONG KONG • The US government has ordered Chinese conglomerate HNA Group Co to sell its majority stake in a Manhattan building whose tenants include a police precinct tasked with protecting Trump Tower, the Wall Street Journal reported on Friday.

The Committee on Foreign Investment in the US (CFIUS), which reviews foreign investments to weigh whether they present national security concerns, told HNA several months ago that it had to divest itself of its holding in the New York City building, the report said, citing people familiar with the matter.

CFIUS however did not explain to the aviation-to-financial services conglomerate why it had to sell the property, according to the report.

At the behest of CFIUS, HNA set up a blind trust and transferred its stake in the building to the trust that has its own board of directors, which have a fiduciary duty to the trust, not to HNA, the report said.

HNA is now in talks with potential buyers interested in the building to abide by the CFIUS order, though it was not given a deadline to sell, the report added.

CFIUS is an inter-agency United States government body whose chair is the Secretary of the US Treasury Department.

Asked on Saturday about the Journal report, a Treasury Department spokesman declined to comment, saying the department does not comment on specific CFIUS cases.

An HNA spokesman, asked by Reuters for comment on Saturday, referred to a statement it gave on Thursday, which said that "there is no seizure or forced sale of 850 Third Avenue underway or pending".

"There are unique facts and circumstances regarding the location of this particular property that did not exist at the time of purchase which have raised certain concerns, and HNA Group is taking measured steps to address them," he said.

The group in 2016 acquired a 90 per cent stake in the building, valued at US$463 million (S$636 million), months before President Donald Trump was elected.

The building, located a few blocks from Trump Tower, houses the New York Police Department's 17th precinct, whose duties include security for Trump Tower, said the report.

It is among a handful of investments HNA made on a US$50 billion acquisition spree in recent years. Mr Trump maintains a residence in Trump Tower.


A version of this article appeared in the print edition of The Straits Times on August 13, 2018, with the headline 'US tells HNA to sell NYC building'. Print Edition | Subscribe