Speculation that department store operator Lifestyle International Holdings wants to buy Lane Crawford House in Central has analysts worried the move will drain its war chest, initially cut earnings and increase investor uncertainty.
The owner of Sogo department store is said to have expressed keen interest in bidding for the 24-storey office-retail building in Queen's Road Central that is expected to fetch more than $2 billion.
It is believed the tender, closing on Monday, has attracted 13 bidders from Hong Kong and overseas.
Lifestyle reportedly told analysts in a conference call last week that it planned to open a four-floor Sogo store in Lane Crawford House if it won the tender. It would also devote three floors above the store to its Sogo spa and beauty club.
The remaining office floors would be kept for leasing, according to a source.
GK Goh analyst Keith Li said most of Lifestyle's $2.6 billion war chest would be used if it bought the property.
Last week, Lifestyle topped up its cash reserves by raising $1.25 billion from the sale of new shares to finance expansion.