HNA Seeks to Sell Hilton Stake Amid Global Property Selloff

(Bloomberg) -- HNA Group Co. is seeking to sell some or all of its $6.5 billion stake in Hilton Worldwide Holdings Inc., part of a global asset purge by the the debt-laden Chinese conglomerate.

HNA disclosed its intention to sell the hotel company shares in a regulatory filing Thursday. The firm owns 26 percent of Hilton’s stock, or 82.5 million shares. It has already disposed of its stakes in two Hilton spinoffs. Hilton shares were up 0.9 percent to $78.75 at 11:24 a.m. in New York.

“The fact that we’re not seeing a significant pullback with this announcement suggests that investors not only anticipated it, but are supportive of the overhang being removed, much like ripping a band-aid off quickly,” said J.T. Deignan, head of real estate equity capital markets at Mizuho Securities USA LLC.

Hilton spokeswoman Meg Ryan declined to comment because the filing was from HNA, not the hotel group.

HNA has been under pressure to reverse a multibillion-dollar buying spree since the Chinese government last year started to crack down on overseas dealmaking. The firm has since reduced its stake in Deutsche Bank AG and sold properties in New York, London, Sydney and Hong Kong. HNA owns about $14.6 billion of real estate globally, according to a estimate by Real Capital Analytics Inc.

HNA paid $6.5 billion in 2017 to acquire from Blackstone Group LP shares of Hilton Worldwide, which had recently spun off two of its businesses. Last month, HNA sold its 25 percent interest in those two groups, Hilton Grand Vacations Inc. and Park Hotels & Resorts Inc., for a combined $2.34 billion. If it’s able to sell its Hilton Worldwide stake at current prices, the conglomerate stands to make a paper profit that’s just shy of $2.35 billion.

With the two Hilton spinoffs, HNA found a way to amend restrictions that kept the stock tied up until next year, leading to speculation that a similar allowance could be made for HNA’s stake in Hilton Worldwide.

Hilton executives have repeatedly said in interviews and in calls with investors that its agreement with HNA contains protections for shareholders.

Hilton’s “independent board directors need to agree that HNA can get out of the lockup early,” said Amanda Sweitzer, an analyst with Robert W. Baird & Co.

--With assistance from Sarah Mulholland

To contact the reporters on this story: David M. Levitt in New York at dlevitt@bloomberg.net, Gillian Tan in New York at gtan129@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Heather Perlberg, Christine Maurus

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