HNA Creditors Sell Seized Luxury Home on Hong Kong’s Peak for $50M

Four months after HNA chairman Chen Feng was detained by the Hainan police, creditors of his bankrupt empire have sold off a Hong Kong luxury home used by the jailed billionaire at a markdown of HK$116 million ($14.9 million) from what his group had paid for the bungalow on Victoria Peak, according to local media accounts.

PriceWaterhouseCoopers, acting as receivers for creditors of HNA, last week sold House 6 at the Twelve Peaks project at 12 Mount Kellett Road to an undisclosed buyer for a reported HK$390 million ($50 million), after seizing the 4,241 square foot (394 square metre) home from a company controlled by directors of HNA, including a nephew of Chen Feng, during October of last year – one month after HNA’s chairman was taken away by authorities.

With the home and its private swimming pool selling for around HK$91,959 per square foot, HNA’s creditors are taking in 22.9 percent less than the troubled conglomerate paid to acquire the property in 2015. That purchase more than six years ago was part of a Hong Kong acquisition spree which has led to a series of distressed sales after the Hainan-based group racked up debts of over $100 billion globally.

The Peak sale marked HNA’s second distressed-asset disposal in Hong Kong within the past three months, following a reported HK$312 million sale of Feng’s luxury duplex at 39 Conduit Road in the Mid-levels. That October disposal, which was also reportedly managed by receivers from PriceWaterhouseCoopers, happened in the same month that the Twelve Peaks bungalow was seized around 3 kilometres (1.9 miles) further uphill.

Parting Ways With Peak Mansion

HNA’s erstwhile Peak pad is one of a set of 12 superluxury detached houses completed by developer Sun Hung Kai Properties in 2012, with the mainland company having acquired the home for HK$506 million in 2015, according to transaction records posted by the developer.

After paying the equivalent of HK$119,323 per square foot, HNA’s top brass were able, for a few years, to enjoy the three-storey bungalow’s four bedrooms and 2,542 square foot garden, in addition to its swimming pool. However, the company had been forced to remortgage the Twelve Peaks home three times over the past several years, according to Hong Kong’s Singtao Daily.

With luxury home prices currently on the rise in Hong Kong, HNA’s creditors are parting with the bungalow at a steep discount from going rates, with selling prices for homes on the Peak currently averaging from HK$100,000 to HK$130,000 per square foot, according to Tom Ko, executive director and head of capital markets at Cushman & Wakefield Hong Kong. Ko attributed the cut-rate price to the distressed nature of the sale.

Offloading Amid Downfall

HNA’s creditors were given the green light to sell off the group’s assets in November of last year, following the approval of a multi-billion dollar restructuring plan by Hainan’s high court, according to the South China Morning Post. This disposal plan included the sell off of 321 companies from among HNA’s more than $40 billion in corporate assets, including aircraft, airports and real estate, such as its house at Twelve Peaks.

Once known as the most aggressive buyer of property assets in Hong Kong, HNA in the second half of the last decade had assembled a portfolio of residential sites, luxury homes and commercial assets in the world’s most expensive real estate market by being willing to pay double market rates to secure deals.

Since that time the group built around air travel has suffered a series of crash landings and emergency exits, including selling a pair of historical mansions on Victoria Peak during 2019 at more than a 22 percent mark-down from what it had paid to acquire the project just one year earlier.

Two months before the sale of that Peak prize, HNA sold off the last of four sites which it had acquired on the former landing strip at Kai Tak to Wheelock & Company at a HK$740 million loss.

While HNA’s creditors last year had hopes of selling the group’s luxury condo at 39 Conduit Road at a mark-up from its 2016 acquisition price of HK$433 million, the asset eventually was sold at around 28 percent less than that earlier figure.