The U.S. government has questioned Chinese conglomerate HNA Group about its stake in 850 Third Avenue.
The Committee on Foreign Investors in the United States, or CFIUS, had concerns about “unique facts and circumstances” regarding the location of the building, Bloomberg reported. HNA said it’s taking steps to address the concerns, the report said. The company didn’t provide details.
The move comes after Congress approved expanded authority of CFIUS in August. The expansion gives more power over foreign real estate assets.
In a separate report, the New York Post reported the government may seize HNA’s stake in the building — placing it in a trust and could eventually be sold. HNA denied the report.
The government seizure of a property can be a long process, as was seen with 650 Fifth Avenue. Majority owner Alavi Foundation was forced to surrender its stake in the property to the government after being found guilty of violating U.S. sanctions against Iran. The government first filed its complaint against Alavi in 2008, and the case made its way through an appeals court before finally being decided in 2017, according to the New York Times.
As for 850 Third Avenue, the Bloomberg report also noted MHP Real Estate Services, which owns a minority stake, could exercise rights to find another partner before a government-appointed trustee takes over. A source close to MHP said CFIUS has not contacted the company and the situation is solely an HNA issue.
The scrutiny comes as tensions have risen between the U.S. and China. The Chinese government is said to have decided to help cash-strapped HNA pull itself out of recent liquidity challenges, Bloomberg reported.
Last month, HNA scored a financing lifeline at 850 Third Avenue. In partnership with MHP Real Estate Services and ATCO Properties & Management, it secured $342 million from French bank Natixis, real estate investment trust Paramount Group and Virginia-based investment Harbor Group International. [Bloomberg] — Meenal Vamburkar