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Sandy Li

Sogo Hong Kong has dismissed a report the company would sell its commercial-office building in Causeway Bay, despite speculation its Japanese parent will need to dispose of valuable assets to help reduce debt.

Spokesman Charles Lam said Sogo Hong Kong had not received any instructions from its parent company - Osaka-based Sogo - to sell or seek an ownership partner for the East Point Centre.

'We called our headquarters in Japan and confirmed there was no such intention at the moment,' he said.

Mr Lam said Sogo Hong Kong had received purchase offers from investment funds and property consultants in the past two years.

There has been no sudden increase in inquiries or offers although its parent filed with the Tokyo District Court for protection of its assets from creditors last week, he said.

Sogo in Japan failed to secure a bailout plan to waive some of its 1.87 trillion yen (about HK$134.5 billion) in debts.

Mr Lam rejected claims the company would not sell its retail-office property due to the low offers received. It was mainly because Sogo Hong Kong had 'no interest and no intention' to sell its property investment here, he said.

'We want to maintain our retail business in Hong Kong.' Sogo Hong Kong wholly owns 400,000 square feet of retail space, occupied by Jumbo Sogo, at East Point Centre, he said.

About 58 per cent, or 232,000 sq ft, was used by Sogo, while the remaining spaces were leased to 200 to 300 retail shops.

But he said Sogo Hong Kong only held a 70 per cent stake of 200,000 sq ft of office space at the building.

Apart from retail-office space at East Point Centre, he said, the company also had residential investment properties elsewhere in Hong Kong.

However, analysts said it was logical for Sogo to unload assets in Japan and overseas to reduce its debt.

They believed its most valuable asset - the 400,000 sq ft of retail space in Causeway Bay - would be the first target for a sale.

Surveyors estimated Sogo Hong Kong retail space was worth at least HK$2 billion.

SK Pang Surveyor managing director Pang Shiu-kee said street-level spaces would fetch about HK$30,000 per square foot while upper floors offices could be worth between HK$2,500 per square foot to HK$3,000 per square foot.

He said transaction prices for street-level shops in Causeway Bay could achieve HK$50,000 per square foot to HK$80,000 per square foot due to their small unit size of about 100 sq ft to 200 sq ft.

He believed it was difficult for Sogo to achieve such high prices if it would be bulk selling, saying it might not generate interest from investors given it involved a large amount of capital.



Sogo says 'no plan' for asset sale of East Point