The Acquisition of
850 Third Avenue
As part of our ongoing research into Chinese investments in the US, Datenna decided to highlight and research remarkable cases. This case considers the acquisition of 850 Third Avenue.
Short read
- 850 Third Avenue skyscraper acquired by China’s HNA Group in 2016.
- Amid growing regulatory pressure from both the US and Chinese government, HNA sold the building again just three years later.
- This is just one of the many cases of real estate investments that peaked in 2016, but swiftly dropped after the Chinese government changed policies in 2017.
The rise and fall of Chinese investments in American real estate
Up until 2017, real estate was the second largest sector in our dataset on Chinese FDI to the US, with 54 investments. In 2016 alone, Chinese companies completed more than 20 major acquisitions in the sector.
However, things changed rapidly when the Chinese government issued new guidelines to restrict capital outflows in several sectors, including real estate and hospitality. According to the Chinese State Council, investments in these sectors are unnecessarily risky and do not contribute to China’s domestic technological upgrading. The impact of these new policies on Chinese acquisitions in US real estate is very clear. Since 2018, there have only been 2 new investments in the sector, and 13 divestments.
The acquisition
850 Third Avenue
850 Third Avenue is a 617,000-square-foot office building in the New York City Borough of Manhattan. It was first constructed in 1960, and it now includes 21 stores. The skyscraper hosts tenants like Chase Bank and Ann Taylor Retail.
HNA Group
In 2016, HNA Group Co., Ltd. joined hands with MHP Real Estate Services to purchase the building for an estimated 416 million USD from previous owner Shorenstein Properties. At the time of the acquisition, HNA Group ranked as a Fortune 500 Company with a revenue of $53.335 billion and more than 410,000 employees. The conglomerate was involved in a wide range of sectors, including aviation, real estate, and tourism. In 2021, HNA Group declared bankruptcy.
Just three years after the acquisition, HNA Group sold 850 Avenue to ATCO Properties & Management. HNA itself was among the companies explicitly targeted by the Chinese central government’s policy change in 2017. The Chinese government first led the rise of Chinese acquisitions in the American real estate sector, and then its demise since 2017. When untangling the trends in China-US economic relations, Chinese policymaking on outbound FDI is just as important as US rules inbound FDI screening.
