On the evening of January 7, HNA Investment Group Co., Ltd. responded to the Shenzhen Stock Exchange’s letter of concern.
Guandian Real Estate New Media learned that the first question in the inquiry letter was that part of the land and properties of Hainan Kangyuan HNA Resort Hotel, Kunming Crowne Plaza Hotel, and Suzhou Hotel were mortgaged, sealed or frozen, and Hangzhou Huating Yunqi Resort Hotel has been mortgaged and is currently suspended. Crowne Plaza Kunming and Suzhou Hotel are both suspended and have not yet opened.
First, regarding the main reasons why the above-mentioned assets are mortgaged, seized or frozen, it involves the specific object of the loan, the amount of the loan, the term of the loan, whether the counterparty has the ability to release the mortgage, freeze or seal, etc., HNA Investment stated that during the court enforcement process, the seized assets were allowed to be used by the company subject to execution within the normal production scope. As an operating lessor, HNA Investment’s mortgage and seizure will not affect subsequent pension renovation and operations.
At the same time, as a leasing operator, HNA Investment has no direct connection with the mortgage status, operating status and suspension of the hotel subject to the lease and subsequent operations, and is confident that it will transform the subject hotel into an excellent senior care institution. The counterparty to the transaction, as the lessor and asset holder, still holds and manages the relevant assets. The above-mentioned seizure is an asset preservation seizure, not a judicial seizure, and does not affect the operation of the relevant assets. At the same time, the lessor has the right to lease the assets. Asset power. The counterparty is also actively communicating with creditors and is advancing matters related to mortgage release and freezing.
In addition, regarding the risks that asset defects may bring to HNA Investment, the company has stipulated in the leasing contract to protect the legitimate rights and interests of listed companies and small and medium-sized shareholders: the leasing contract clearly stipulates that the listed company has The right of first refusal on the target; on the basis of the right of first refusal, a clear breach of contract clause has been agreed through the lease contract. If the operation cannot be resumed in time due to the lessor's fault, we will take action according to the lessor's liability for breach of contract in the lease contract. , actively safeguarding the legitimate rights and interests of listed companies and small and medium-sized shareholders; and in this transaction, in order to ensure the normal performance of the lease agreement by the relevant subject matter, HNA Hotels Holding Group Co., Ltd., as the guarantor, voluntarily paid for all the lessor's payment obligations under the "Lease Contract" Provide joint liability guarantee guarantee.
Secondly, regarding the specific circumstances and reasons why some hotels are suspended or suspended, as well as the conditions and estimated time that need to be met to resume operations or open for business, HNA Investment responded that the subject matter to be leased is in After leasing, we will promote renovation and transformation and transform into a senior care institution. The closure of the leased hotel is a necessary prerequisite for the renovation and renovation. The current renovation progress is conducive to our promotion of renovation and renovation as a subsequent operator. After our company completes the formal lease After that, our company will actively promote renovation and renovation and put the leased project into operation as soon as possible.
The current project suspension status is that the Suzhou Hotel project was suspended at the end of March 2018. The acceptance of the main structure of the project has been completed, but the fine decoration has not yet begun. The reason is that the project has been suspended so far due to the advancement of HNA Group's liquidity crisis resolution work.
Hangzhou Yunqi Hotel plans to promote the renovation and reconstruction plan for the November 2016 project and suspend operations. The renovation will prioritize the construction of landscaping and the internal demolition of Buildings 1, 2, 6, 7, 8, and 9 (the current frame building ) work, the main building and Buildings 3, 4 and 5 remain in their original state. The reason is that the hotel was originally planned to be upgraded and renovated, but was later suspended due to the work to resolve the group's overall liquidity crisis.
Kunming Crowne Plaza has suspended operations since December 2018. The main hotel structure has been capped, and the secondary masonry structure has been completed for 90 years; fine decoration has completed the construction of the model room. The reason is that construction is suspended based on the overall arrangements for resolving the liquidity crisis of HNA Group.
Third, regarding whether Hainan Kangyuan HNA Resort Hotel, Kunming Crowne Plaza Hotel, Suzhou Hotel, and Hangzhou Huating Yunqi Resort Hotel provide guarantees to related parties and have financial transactions with related parties. HNA Investment responded that, except for the guarantees and mortgages we have explained and disclosed, there are no other large guarantees for related parties in the relevant subject matter.
At the same time, the lessor company only has normal business dealings with related parties.
The second question in the inquiry letter is that the announcement shows that Hainan Xinglong Hot Spring’s operating income in the first three quarters of 2020 was 3.9616 million yuan, and the net profit was -12.3261 million yuan. Hangzhou Huating Yunqi's operating income in the first three quarters of 2020 was 667,000 yuan, and its net profit was 2.2585 million yuan. The operating income of Kunming Yangtze River Real Estate and Suzhou Hotel in the first three quarters of 2020 was 0. The evaluation report shows that the rent of the above-mentioned project is expected to be 55.2168 million yuan in 2020, and will increase at a rate of 5 every five years.
First, supplementary disclosure of the main process for arriving at the assessment conclusion, key parameter assumptions and the basis for their judgment, and report the assessment details. HNA Investment responded that the main process for arriving at the conclusion of this evaluation includes appraiser risk assessment, undertaking projects, signing contracts, on-site surveys, market rental price surveys, case selection, evaluation calculations, report writing, internal three-level reviews, and communicating with customers. Through communication and external review, it is believed that the buildings included in the assessment scope can be rented out according to the current situation according to the market rental price in the area, thereby realizing their market rental value. Therefore, it is determined to use the market method to calculate the rental market of the assessed property on the assessment base date. price.
The calculation formula is: real estate rent to be estimated = transaction rent of the reference object × normal leasing situation / leasing situation of the reference object × real estate area factor value to be evaluated / real estate area factor value of the reference object × individual factor value of the real estate to be evaluated /Reference real estate individual factor value.
Secondly, as of October 31, the tax-included annual rental market values ??of Hainan Kangyuan HNA Resort Hotel, Kunming Crowne Plaza Hotel, Suzhou Hotel, and Hangzhou Huating Yunqi Resort Hotel were 6.237 million yuan, respectively. 7.2802 million yuan, 14.9802 million yuan, 26.7194 million yuan, totaling 55.2168 million yuan. Please explain whether this evaluation considers the impact on the valuation of mortgages, freezes or seizures of relevant assets and the suspension of operation or suspension of some hotels, and the basis for this, and combines it with the operating conditions of the relevant hotels in the first three quarters and so far, etc. Further analyze the rationality of this assessment value.
In response, HNA Investment responded that the Kunming Crowne Plaza Hotel is located at the intersection of Huancheng West Road and Xiba Road in Kunming. The construction has not yet been completed, and the construction in progress was completed in December 2018. The main building has a total of 37 floors and is a frame structure. The main structure of the main building, auxiliary building and podium has been capped. The secondary masonry structure and basement putty construction have been completed for 90 days. The main building has a construction area of ??39,109.32 square meters and a land area of ??10,971.10 square meters. m, has obtained a land use right certificate, which states that the right owner is Kunming Yangzijiang Real Estate Co., Ltd., the land use period is 40 years, the land use is commercial and financial land, and the use period is from 2011 to 2051. The hotel is currently suspended.
Kangleyuan Hotel is located in the famous Wanning Xinglong Hot Spring Resort in Hainan Province. In August 2000, it was officially rated as a five-star resort hotel by the National Tourism Administration. Kangleyuan Hotel Phase I to Phase III*** It has 19 buildings with 436 guest rooms, a land area of ??128,300 square meters and a construction area of ??38,800 square meters. The hotel is currently in operation.
Hangzhou Yunqi Hotel is located at No. 1, Meiling South Road, Xihu District, Hangzhou City, Zhejiang Province. It has a total of 10 buildings, a land area of ??96,900 square meters, and a construction area of ??45,800 square meters; a total of 230 There are 8 guest rooms, 8 conference halls, 2 Chinese and Western restaurants, and 11 club rooms. The hotel is currently suspended.
Suzhou Hotel is located at No. 345 Shiquan Street, Suzhou City, with a total of 5 buildings, a land area of ??44,000 square meters, and a building area of ??66,200 square meters. At present, the construction of the main frame structure has been completed and is in a state of suspension as of November 13, 2020, the date of on-site investigation.
Third, explain the main considerations for signing a long-term lease contract with a related party when the transaction target is not operating well and the related assets have obvious flaws. Whether there is a situation of transferring benefits to the related party, and whether It is conducive to safeguarding the legitimate rights and interests of listed companies and small and medium-sized shareholders.
In response, HNA Investment responded that the company’s main considerations in signing long-term lease contracts with related parties were based on the prospects of the medical care industry, HNA Investment’s advantages in medical care and leasing opportunities for high-quality property assets. Among them, Yangzheng Investment is a medical and nursing care investment and operation platform established by HNA Investment in 2013. The first nursing home opened in 2016.
In the third question of the inquiry letter, in this transaction, HNA Hotel Holding Group Co., Ltd., as the guarantor, voluntarily provided joint liability guarantee for all payment obligations of the lessor under the "Lease Contract". The hotel holding group achieved operating income of 1.2 billion yuan and a loss of 1 billion yuan in 2019. Please explain whether the guarantor has sufficient ability and willingness to perform the contract based on the guarantor's operating performance, cash flow situation and asset strength.
HNA Investment Disclosure Information shows that HNA Hotel Holdings Group was established on October 21, 2003, with a registered capital of 10.377 billion yuan. In 2019, the total audited assets were 28.216 billion yuan, the total liabilities were 18.256 billion yuan, and the total owner's equity was 9.959 billion yuan, of which the owner's equity attributable to the parent company was 6.206 billion yuan. The main business income was 1.199 billion yuan, and the net profit was -1.045 billion yuan, of which the net profit attributable to the parent company was -878 million yuan.
Based on the asset status of HNA Hotel Holdings Group and the resolution plan after the lessor defaults, the guarantor has sufficient ability to perform the contract. At the same time, after the operation of the senior care project, according to the project plan, it will bring better rental benefits and potential future property value-added opportunities to the owner, and the owner has a strong willingness to perform the contract. Moreover, after the first batch of pilot transformation projects mature, the project cooperation experience can be replicated and the scale of cooperation can be gradually expanded, which is beneficial to the business development of the other party.
In the fourth question of the inquiry letter, please explain the accounting process of the relevant transactions based on the specific arrangements of this agreement, and estimate the impact on your company's future annual profits and losses.
HNA Investment responded that according to the "Announcement on the Signing of Pension Lease Contracts and Related Transactions by Wholly-Owned Subsidiaries", the overall lease term of the lease contract to be signed is 15 years, with an annual rent of 55.08 million. yuan, a total of 826.2 million yuan. Rent is paid annually. According to the lease agreement, a one-time payment of 55.08 million yuan in rental deposits and a total 21 million yuan in decoration deposits for the four hotels will be required in 2020.
In the fifth question of the inquiry letter, HNA Investment disclosed in December 2020 the "Announcement on Signing Major Contracts for Daily Operations" that Centennial Life plans to acquire the shares held by Tianjin Yicheng Shanshui, your company's wholly-owned subsidiary. The transaction consideration for the remaining office buildings, centralized commerce, shops, serviced apartments and parking spaces of the Yicheng Tangting project was 1.273 billion yuan, accounting for 596.18% of the company's latest audited operating income.
At the same time, the "Announcement on the Capital Increase of Centennial Life Insurance Co., Ltd.'s wholly-owned subsidiary Tianjin Yicheng Shanshui Real Estate Development Co., Ltd." disclosed by the company in January 2017 showed that Centennial Life Insurance plans to invest in Yicheng Shanshui The capital increase is 1.15 billion yuan. After the capital increase, Centennial Life holds 48.94% of the equity of Yicheng Shanshui, and your company holds 51.06% of the equity of Yicheng Shanshui. The investment period of Centenary Life is 5 years, and it receives fixed investment income every year, with a rate of return of 6.95. After the investment expires, your company will unconditionally repurchase all the equity of Yicheng Shanshui held by Centennial Life Insurance. Yicheng Shanshui agrees to provide asset mortgage guarantee for your company to fulfill its repurchase and other related obligations. The collateral is Yicheng Shanshui's project office buildings, Commercial real estate, etc.
First, Yicheng Shanshui is a wholly-owned subsidiary of your company. Except for 13 serviced apartments and 1,149 parking spaces, all other properties have been mortgaged to Centennial Life in the early stage. Please explain the specific reasons and purposes for Yicheng Shanshui to mortgage relevant property assets to Centennial Life, the progress of the previous capital increase of Centennial Life, whether the current equity structure of Yicheng Shanshui is inconsistent with the previous announcement, and whether your company has fulfilled its disclosure obligations in a timely manner. .
In this regard, HNA Investment responded that the current equity structure of Tianjin Yicheng Shanshui is consistent with the previous announcement. Centennial Life holds 48.94 shares of Tianjin Yicheng Shanshui, and the company holds 51.06 shares of Tianjin Yicheng Shanshui.
The "Announcement on Signing Major Contracts for Daily Operations" disclosed by the company on December 5, 2020 stated that Tianjin Yicheng Shanshui is a wholly-owned subsidiary of the company: "Wholly-owned by HNA Investment Group Co., Ltd. There is an error in the subsidiary Tianjin Yicheng Shanshui, which is now corrected to "Tianjin Yicheng Shanshui Real Estate Development Co., Ltd., a subsidiary of HNA Investment Group Co., Ltd."
Second, after the agreement is signed, Centennial Life will start. Regarding the release of the underlying assets. In conjunction with question 1, please explain the specific amount and main content of your company’s transactions with Centennial Life so far, whether your company has to pay 6.95 fixed investment income, and whether the relevant funds obtained from the sale of relevant assets are It is used to offset your company's current debts to Centennial Life.
In this regard, HNA Investment made an investment of 1.15 billion yuan in Tianjin Yicheng Shanshui. In 2018, the company paid Centenary Life to hold Tianjin Yicheng Shanshui. The equity repurchase amount is 42 million yuan. In 2019, the company paid 56 million yuan for the equity repurchase of Tianjin Yicheng Shanshui held by Centennial Life.
As of now, the main content of the company’s transactions with Centennial Life is the payment to Centennial Life. The total paid-in capital contribution of Tianjin Life to the company is 1.052 billion yuan, and the investment income payable to Centennial Life in the first half of 2020 calculated at 6.95 fixed investment income is 38 million yuan, which was obtained from the sale of relevant assets of Tianjin Yicheng Shanshui, a subsidiary of the listed company. Part of the funds has been used by the listed company to repay the current debt to Centennial Life.
Thirdly, the pricing of this transaction is based on the real estate appraisal consulting report issued by the appraisal agency. Please additionally disclose the relevant appraisal report. It also combines Yicheng Shanshui’s assessment assumptions, assessment methods, specific assessment processes, and performance in the past three years to explain the rationality of the valuation and whether the transaction price is fair.
In response, HNA Investment responded that this The commercial part is evaluated and priced using the comparative method and the income method. Since there are few large-scale commercial transactions and the commercial part of the valuation object is suitable for leasing as a whole, only the income method is used in the valuation; the comparative method and the income method are used for the office part;
Part of the serviced apartments can be sold in bulk. The market demand is high and transactions are active. However, the general rate of return is low. If the income method is used for estimation, it cannot truly reflect its actual market value. Therefore, the valuation is in progress. Only the comparative method is used for serviced apartments;
Underground parking spaces are considered to be rental properties that can sustainably generate cash flow, and underground garages supporting commercial and office formats are scarce and are generally not sold to the outside world. Therefore, only the income method is used in this valuation.
Fourth, please explain the specific impact of this transaction on the current and future financial status and operating results of the listed company based on the specific arrangements of this agreement. Whether the timing, accounting treatment and judgment basis for recognizing profits and losses from this transaction comply with the relevant provisions of the Accounting Standards for Business Enterprises
In this regard, HNA Investment said that according to the "Accounting Standards for Business Enterprises No. 14 - Revenue". Article 5 When the contract between the enterprise and the customer meets the following conditions at the same time, the enterprise shall recognize revenue when the customer obtains control of the relevant goods.
At the same time, the signing of this contract will have a positive impact on the company's operating performance this year. The total contract amount is 1.273 billion yuan (tax included). The timing and accounting treatment of profit and loss recognition for this transaction will be confirmed in accordance with accounting standards based on the progress of the "Real Estate Sales Agreement". The judgment is based on the "Enterprises shall recognize revenue when the customer obtains control of the relevant goods" in the "Accounting Standards for Business Enterprises No. 14 - Revenue" as the basis for recognizing profits and losses.
Fifth, the semi-annual report shows that the company’s only remaining real estate projects are the Yicheng Tangting project. Please fully explain the main considerations for this asset sale based on the company's main business development and future development strategies, whether it conflicts with the logic of continuing to purchase or increase real estate business from related parties in the early stage, and whether it is conducive to protecting the listed company and small and medium-sized shareholders. legitimate rights and interests.
In response, HNA Investment responded that the company’s current asset sale does not conflict with the logic of the previous acquisition of Tishman Speyer Phase I and Phase III projects from related parties, and is conducive to safeguarding the interests of listed companies and small and medium-sized shareholders. Legitimate interests.