Parkson unit signs 20-year lease in China’s Sichuan province

• The space will be used for commercial operations and under International Financial Reporting standards, with the tenancy agreement treated as the acquisition of a right-of-use assets, which Parkson booked at about 14.3 million yuan (RM8.4 million).

KUALA LUMPUR (Aug 20): Parkson Holdings Bhd (KL:PARKSON) said that its 54.97%-owned Hong Kong-listed subsidiary Parkson Retail Group Ltd (PRG) has inked a 20-year agreement to lease 4,801 sq m of commercial space in Mianyang City in China’s Sichuan province.

The space will be used for commercial operations and under International Financial Reporting standards, with the tenancy agreement treated as the acquisition of a right-of-use assets, which Parkson booked at about 14.3 million yuan (RM8.4 million), it said on Wednesday.

The base rental will start at 120,031.25 yuan per month, with a 5% escalation after five years and every three years thereafter.

In addition, the tenant will pay commission-based rental comprising 1% to 3% of net sales (after tax) for non-sublet areas, depending on product category, and 30% of net sub-rental income (after tax) for sublet areas.

The announcement came just two weeks after PRG ended its long-standing retail tenancy at the China National Arts and Crafts Museum, following a lease termination agreement signed to cut losses and reduce financial strain. PRG has been operating its retail business there since 1994.

Shares in Parkson closed 0.5 sen or 2.1% lower at 23 sen on Wednesday, giving the group a market capitalisation of RM264.25 million.

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