HNA Group is said to have sold a site with two historical homes in Hong Kong’s prestigious Victoria Peak area for HK$550 million ($70 million), suffering a more than 22 percent loss on the property just over one year after purchasing it, the Hong Kong Economic Times reported.
The beleaguered mainland conglomerate is selling 27 Lugard Road for the equivalent of HK$68,000 per square foot after having purchased the 24,919 square foot (2,315 square meter) site and its accompanying colonial era properties from Hong Kong developer Crown Empire for HK$710 million at the end of 2017.
Last August, HNA Group, which has been struggling to liquidate assets in a slow market, tried unsuccessfully to sell the property at HK$780 million, according to the local media. Its final transaction price at HK$550 million is HK$230 million, or 29 percent less than the group’s asking price last year.
Heritage Property Proves Hard to Replace
HNA’s most recently departed trophy rests some 400 meters above sea level with an expansive view of the Victoria Harbor, and is located next to a hiking trail popular with locals and site-seers.
The plot is occupied by a pair of neo-classical homes constructed in 1916 and which are now classified as Grade I historic buildings in Hong Kong. The mansions, which are the oldest properties on the exclusive lane, were designed by Lennox Bird, a senior partner of prominent architectural firm Palmer and Turner, for his brother Herbert Bird.
The property later was sold to Taikoo Dockyard and Engineering Company (later Butterfield and Swire) and became a residence for the company’s staff and their families. Since then the buildings have had their shares of ups and downs as they survived through two world wars and more than 100 years, according to a South China Morning Post archive.
Ownership changed a few times before the parent company of Hong Kong’s Butterfly Hotels bought it for HK$384 million in September 2012. The developer later proposed to turn the legendary structure into a boutique hotel, which sparked massive controversy, causing some 140,000 people in Hong Kong to sign a petition against the redevelopment. The proposal was eventually dropped by the company.
The Butterfly Group had also applied to the city’s Town Planning Board to increase the plot ratio from 0.5 to 0.68. The buildings currently have a total gross floor area of 8,095 square feet, only about half of its approved size. The new buyer could build the site out to 16,000 square feet, equivalent to HK$44,000 per square foot of its purchased price.
HNA Sell-Off Continues
HNA’s purchase of 27 Lugard Road came at a time when HNA splurged on everything from over-the-top parties in French museums to some of the most expensive homes in Manhattan until it was caught up by its mounting debt. The group has now sold more than $20 billion in assets since the beginning of 2018, according to Bloomberg.
In February, HNA Group sold off its last piece of land in Hong Kong’s Kai Tak area at a HK$740 million ($94 million) loss. In the same month, the company was said to be selling the Reuters building in London for £135 million ($176 million) or 60 percent less than it had paid to acquire the asset in 2015.
In March, funds managed by Blackstone agreed to purchase a controlling stake in Hong Kong International Construction Investment Management Group (HKICIM), the listed property subsidiary of HNA Group, for HK$7.02 billion ($894.8 million). The deal was announced just one week after the group had transferred control of the CentreHollywood in Hong Kong’s Sheung Wan are to HKICIM.