HNA's Singapore Reit partner 'weighing options for paring ties'

Illustration photo of the HNA Group logo. PHOTO: REUTERS

HNA Group's partner in an overseas property trust is exploring ways to potentially scale back its ties to the embattled Chinese conglomerate, people with knowledge of the matter said.

AEP Investment Management is weighing options for reducing HNA Group's involvement in the planned Singapore initial public offering of HNA Commercial Reit, which was going to be backed by about $1 billion of properties from the two partners, according to the people.

All possibilities are under consideration, including lowering the stake HNA Group would take in the trust and the company that manages it, the people said. AEP has begun reaching out to other potential partners to gauge their interest in taking a role backing the property trust, they added.

The Singapore-based company, which started preparations for the listing last year before bringing in HNA Group, is also considering whether to reduce the trust's reliance on real estate from the Chinese firm, the people said.

HNA Group was slated to initially contribute one property to the Reit, while AEP was going to provide four assets, according to a June exchange filing.

The HNA Commercial Reit offering will be postponed as AEP works out its future relationship with its Chinese partner, according to the people. For now, AEP intends to keep some level of involvement with HNA Group, they said. No final decisions have been made, and it is possible AEP will decide not to make any changes to the deal structure, the people said.

"HNA's cooperation with AEP is normal," the Chinese conglomerate said in an e-mailed statement. "The information in this story isn't in line with the actual situation."

A representative for AEP did not respond to phone calls and an e-mail seeking comment.

The companies are still aiming to complete the offering this year, though it could slip into 2018, the people said.

Several of HNA Group's deals have faced challenges since the Chinese regulators began assessing the risks that the company and other serial dealmakers pose to the nation's financial system.

HNA Group has been fielding additional questions from banks working to finance its proposed US$1 billion (S$1.38 billion) takeover of Singapore logistics operator CWT.

HNA Investment Group, a Shenzhen-listed arm of the Chinese conglomerate, announced in March that it planned to buy at least a 35 per cent stake in a Reit that will list in Singapore, as well as 75 per cent of a trust management company formed with AEP. The IPO was slated to raise more than US$400 million.


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A version of this article appeared in the print edition of The Straits Times on August 08, 2017, with the headline HNA's Singapore Reit partner 'weighing options for paring ties'. Subscribe