HNA Sells Hong Kong Properties at 30% Discount

Distressed mainland conglomerate HNA Group has reportedly taken a big loss on properties it owned in Hong Kong’s Causeway Bay district, selling them off this past week for HK$70 million less than what it paid for them just last year.

HNA Group, the parent of Hainan Airlines, whose debt was estimated earlier this year at about RMB 600 billion, sold a luxury duplex house, a residential flat and five parking spaces for HK$260 million ($33 million), after discounting the price by HK$90 million. The buyer has not been disclosed.

The airline took a 21 percent loss of HK$70 million on its cut-rate sale of the homes at the Yoo Residence project, after paying HK$330 million for the package last December. The 5,193 square foot (482 square metre) duplex had set the record for priciest home in Causeway Bay at the time, when HNA purchased it for an average price of HK$63,000 per square foot.

Causeway Dismay

The Causeway Bay haircut follows just one month after HNA sold two retail spaces in the same at a HK$33.5 million loss, taking its total losses to over HK$100 million on the combined properties, or the equivalent of about 30 percent of its original investment.

The Yoo Residence, a luxury residential tower jointly developed by Couture Homes and ITC Properties Group, is located at 33 Tung Lo Wan Road, a nine-minute walk from the Causeway Bay MTR Station. The current average home price of HK$61,000 per square foot at the estate (before HNA’s giveaway) is nearly four times the average home price of HK$15,954 per square foot in the Causeway Bay area.

HNA in Downward Investment Spiral

Since the beginning of this year, HNA Group has sold two plots of land and several properties in Hong Kong estimated to be worth around HK$22.7 billion in total.

In February, it sold two of its four Kai Tak land plots to Hong Kong real estate giant Henderson Land for HK$15.9 billion. One month later, it sold another plot to Wheelock and Co for HK$6.35 billion. It also sold an office property in Hong Kong’s Admiralty district for HK$40 million in March.

The news of HNA’s Hong Kong most recent fire sale followed a recent report that it was seeking to unload 10 assets in mainland China worth RMB 7.6 billion ($1.1 billion).