Peak house sold at loss as owner raises fast cash
Sale of 4,650 sq ft home bought at record price in 2010 results in HK$36m setback for owner
Hong Kong-listed electronic component maker Sino-Tech International Holdings, which bought a detached house on the Peak for a record price in 2010, has ended up incurring a loss on the deal despite the city's soaring property prices.
Land Registry data showed China LWM Property, a wholly owned subsidiary of Sino-Tech, sold the 4,650 square foot house at 8 Severn Road for HK$61,290 per square foot, or HK$285 million, to Ever Mark, in which both Sammy Sean Lee and Lui Ngok-che are directors.
Both Lee and Lui resigned as executive directors at another Hong Kong-listed company, Sun's Group, in August 2009, three months after the firm was renamed as Loudong General Nice Resources (China).
In 2010, Sino-Tech stunned the market when it paid HK$60,215 per square foot, or HK$280 million, for the house, making it the most expensive home in Asia in terms of price per square foot.
The firm announced the disposal last month and said it had made an estimated loss of about HK$36 million from the disposal, after taking related commissions and the relevant legal fees into account, according to a company statement filed to the stock exchange.
Based on the valuation report prepared by an independent professional valuer, it said the carrying value of the property was HK$315 million, or HK$67,741 per square foot as at June.
However, the company said "the group may face cash-flow constraints" if the disposal could not be accomplished in the near future.
"The house has been offered on the market for nearly a year. That the company agreed to sell even though it could not break even indicates it needed to raise cash badly," a property agent said.
Sino-Tech said the net proceeds from the sale of the house would be about HK$279 million, of which HK$146 million would be used to repay bank borrowings secured by the property. The remainder of HK$133 million would be used as general working capital.
In 2010, Sino-Tech bought the pricey property despite the company suffering a net loss of HK$532.18 million that year. The loss widened to HK$936.81 million last year. In the first half of this year, the firm reported a net loss of HK$72.92 million. Shares of the company last traded at 7 HK cents. The stock has been suspended from trading since March 14.