PT Karya Sentra Sejahtera (PT KSS), an indirect wholly-owned subsidiary of SGX-listed First REIT, has entered into a master lease agreement with PT Lippo Karawaci Tbk on Dec 22, where the lease with Imperial Aryaduta Hotel & Country Club is renewed.
The rent payable for the term is fixed at IDR20.24 billion ($1.76 million). The amount will be paid in rupiah and quarterly in advance.
The aggregate value of the renewed agreement is $1.8 million which is approximately 0.3% of the net tangible asset (NTA) and net asset value (NAV) of the NTA and NAV of First REIT as at Dec 31, 2021.
According to the independent valuation report conducted by Colliers International Consultancy & Valuation (Singapore) Pte Ltd, in collaboration with KJPP Rinaldi Alberth Baroto & Partners and commissioned by First REIT’s manager and trustee, the rental rate is “reasonable” and “in line” with the market rate.
Under the renewed lease, PT Lippo Karawaci Tbk is required to pay to and maintain with PT KSS a security deposit equivalent to three months’ worth of the monthly rent.
The new lease term will begin on Jan 1, 2023, and end on Dec 31, 2023.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
Imperial Aryaduta Hotel & Country Club is an upscale resort located just outside Jakarta, Indonesia.
Under the renewed lease agreement, PT KSS has the right to terminate the lease for any reason with a written notice of at least six months.
Should PT Lippo Karawaci Tbk need to extend its lease and term expiry date, it just has to give a written notice to PT KSS 14 weeks before the term’s expiry date or before.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
According to First REIT’s manager, the Imperial Aryaduta Hotel & Country Club was identified as a “non-core asset”. The manager had previously appointed PT Rantaka Haburi Radika and PT Colliers International Indonesia to procure a suitable purchaser for the resort since May 2021. There are no suitable prospects so far as at Dec 22.
According to the manager, it intends to continue to market the resort for divestment. It believes that it is “prudent to continue to have in place a short-term lease in line with market terms while this process remains ongoing”.
“The renewed lease provides some revenue stability from Imperial Aryaduta Hotel & Country Club while still allowing the manager strategic flexibility to divest Imperial Aryaduta Hotel & Country Club should the opportunity arise,” reads the statement released by the manager.
Due to the relationship between First REIT and PT Lippo Karawaci Tbk and due to the value of the transaction, the renewal constitutes as an interested person transaction (IPT) under SGX’s listing rules.
Units in First REIT closed 0.5 cent higher or 1.92% up at 26.5 cents on Dec 22.
