Hon Kwok Land Sells Hong Kong Bauhinia Hotel

Hong Kong developer Hon Kwok Land is cashing out one of its hotels in the Asian business hub.

The firm is selling the Bauhinia Hotel in the tourist-heavy Tsim Sha Tsui district for HK$338 million ($44.5 million), Mingtiandi reported. The developer sold the hotel to a private firm controlled by Wong Man Li, founder of furniture maker Man Wah Holdings, amid a deepening downturn in the city’s commercial property market.

Spanning 47,000 square feet across 23 stories, the Bauhinia Hotel at 5-9 Observatory Court includes 98 guest rooms and about 14,000 square feet of retail space. Hon Kwok paid HK$55 million ($7.1 million) for the site in 2002. The sale price works out to about HK$3.2 million ($411,734) per key.

Hon Kwok Land has had a bruising year, reporting a HK$675 million ($86.8 million) loss for the 12-month period ending March 31, down from a profit of HK$5 million ($643,327) the year prior. The sale will purportedly help the company pare down its debt in preparation for more expansion.

“The Group aims at rationalizing the property portfolio and resource allocations to prepare for the next phase of growth,” the company said in a statement to the Hong Kong Stock Exchange, per Mingtiandi. “The Disposal will also enable the Group to reduce its bank borrowings, improve its liquidity and strengthen the overall financial position for the Group.”

At the same time, Hon Kwon, led by James Sing Wai Wong, is turning its focus from Hong Kong and mainland China to Japan. In February, before it reported the HK$675 million loss, the company added a ninth hotel in Japan to its portfolio with a ¥1.2 billion ($7.8 million) acquisition in Osaka. That deal involved the 10-story hotel in Osaka’s Tennoji Ward. In addition to that investment, Hon Kwok has four other hotel properties in Osaka.

“We remain strongly positive to the growth in the number of tourists going to Japan, especially key cities like Tokyo and Osaka where we have properties,” the company said.

— Chris Malone Méndez