Esprit sells Hong Kong offices to free cash
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Embattled apparel retailer Esprit has sold its Hong Kong office block on a leaseback arrangement to free capital for its continuing reform plan.
The transaction will deliver Esprit an estimated one-off net gain of HK$725 million.
The company said in a statement the proceeds will be used by the group as general working capital, including funding any future investment opportunities that may arise.
“The lease of the Hong Kong offices will better reflect the cost of the local operation, and hence help management efforts to streamline the actual current cost structure.”
The property has been sold to Phoenix Property Investors for $918 million.
The offices comprise five floors and 16 car park spaces at 39 Wang Chiu Rd in Kowloon, with settlement scheduled for March 21 next year.
Four of the floors will be leased back and 13 of the car park spaces for six years initially, representing a 20 per cent contraction of the group’s office space requirement.
In the year to June 30, Esprit reported a net loss of $3.7 billion, largely due to impairments.
Questions & Answers
Q.What is the primary reason Esprit sold its Hong Kong offices?
What is the primary reason Esprit sold its Hong Kong offices?
Esprit sold its Hong Kong office block as part of a leaseback arrangement. This was done to free up capital to fund its ongoing reform plan and provide general working capital for the group.
Q.How much capital will Esprit gain from this transaction?
How much capital will Esprit gain from this transaction?
The transaction is estimated to deliver Esprit a one-off net gain of HK$725 million. The property was sold for $918 million to Phoenix Property Investors.
Q.What will happen to Esprit's office space after the sale?
What will happen to Esprit's office space after the sale?
Esprit will lease back four of the five floors and 13 of the 16 car park spaces for an initial six-year period. This arrangement reduces their office space requirement by 20 per cent.
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