Son of Chong Hing Bank Director Makes 30% Profit in 3 Months Thanks to HNA Fire Sale

Hong Kong investor Jeffrey Liu Wai-lun has sold an office unit in Admiralty for HK$52.01 million ($6.63 million) – 30 percent more than the price he paid to snap up the strata-titled asset from struggling Chinese conglomerate HNA Group just three months earlier.

The sale by the member of the city’s prominent Liu family comes as the son of Chong Hing Bank director Liu Lit Ching has been cashing in on Hong Kong’s buoyant commercial property values in recent months.

The younger Liu, whose earlier career included accidental transactions between his Mercedes Benz and a taxi cab, has recently turned his focus to more productive pursuits by bagging a combined HK$169.21 million (about $21.57 million) from the sale of three strata-titled office properties during the past quarter, according to news reports.

In addition to the lower-floor office unit in Admiralty’s Lippo Centre, Liu has sold assets in Sheung Wan’s China Merchants Tower and Wan Chai’s Morrison Plaza, which he had purchased last September and November, respectively. Liu flipped the respective properties for HK$68.96 million and HK$48.24 million, marking an appreciation of around 30 percent and 32 percent.

Trio of Strata Deals Brings in $21.6M

Liu bought the Admiralty asset, Room 9 on the 11th floor of Lippo Centre Tower Two, from affiliates of HNA Group in March for HK$40 million ($5.1 million), a price 20 percent below market values at the time, according to a report by Mingpao.

The investor then sold the 1,324 square foot unit in June for HK$52.01 million — the equivalent of HK$39,000 per square foot — thereby gaining HK$12.01 million, according to an account in the Hong Kong Economic Times that cites agency data. Tower Two, a 42-storey office building, forms part of the twin-tower Lippo Centre complex at 89 Queensway, in the Admiralty business hub just east of Central.

In addition, Liu revealed to the newspaper Oriental Daily that he has recently sold off the entire 33rd floor of Morrison Plaza, a 34-storey office building at 9 Morrison Hill Road, Wan Chai, for about HK$48.24 million – appreciating 30 percent over the price he paid for the asset last November, according to a report last week. The investor sold the 3,496 square foot floor to Hong Kong’s Employees Compensation Assistance Fund Board, at a price equating to HK$13,800 per square foot.

Liu also told the newspaper that he had sold a unit in China Merchants Tower, one of the two 38-storey office towers in Sheung Wan’s Shun Tak Centre, for a total of HK$68.96 million. The sale was transacted at HK$38,465 per square foot, up 32 percent over the price Liu paid for the unit last September. The unit, Room 10 on the 31st floor of the tower at 168-200 Connaught Road, totals 1,793 square feet.

Liu, who studied economics at Syracuse University in New York, is vice-chairman of real estate leasing and investment firm Gale Well Group Ltd and chairman of the Liu Wai Lun Jeffrey Charitable Foundation Ltd.

Hong Kong Investor Profits From HNA Distress

HNA’s fire sale of the Admiralty property to Liu in March came amid a flurry of big-ticket disposals by the cash-strapped Chinese firm as it attempted to pare down debt. In the same month, HNA dumped its third land plot in Hong Kong’s Kai Tak area to Wheelock and Company for HK$6.36 billion ($811 million), shortly after selling a pair of plots in the former airport site for HK$16 billion ($2 billion) to Henderson Land Development.

HNA, parent conglomerate of Chinese carrier Hainan Airlines, offloaded the latest Kai Tak parcel for about 15 percent more than it paid for the site in January 2017, thanks to the rapid escalation of Hong Kong’s land prices.

Around the same time, Hainan-based HNA sold off eight mainland properties worth a total of $1.1 billion to developers Guangzhou R&F and Sunac China, with plans to further downsize its real estate portfolio in the country. HNA is also unwinding its overseas holdings, disclosing the sale of its stakes in Hilton spin-offs Hilton Grande Vacations and Park Hotels & Resorts in rapid succession for a combined total of over $2.5 billion earlier this year.

Late last month, it was reported that HNA was looking to shed nearly half its office space in Hong Kong’s Three Exchange Square as the sprawling conglomerate slims down its operations in the city. In the same week, the firm chaired by billionaire Chen Feng was said to be selling off a controlling stake in its Manhattan office tower at 245 Park Avenue, which it bought last year for over $2 billion.

All told, the company has offloaded more than $14.5 billion in assets in 2018 to date as it seeks to slash a debt burden that ballooned to about $94 billion last year.