Courts Asia said on Tuesday that its wholly owned subsidiary PT Courts Retail Indonesia (PTCRI) entered a deal to acquire the KHI Building in West Java, Jakarta, Indonesia for 97.56 billion rupiah, or around S$9.36 million.
At the same time, PTCRI has agreed to with the building’s seller, PT Garwita Sentra Utama, to terminate two existing leases: One for the KHI Building, where the Courts KHI Megastore is located, and the other for a building in Tangerang, Indonesia, where the Courts Bumi Serpong Damai (BSD) City Megastore is located.
Courts Asia said the acquisition and lease terminations were part of an ongoing review of its store network and an effort to restructure its store format in Indonesia, where Megastores have proved unprofitable.
“The termination of the existing leases will help to reduce recurring rental and operating costs,” Courts Asia said in the statement. “The group decided to close the Courts BSD Megastore as it is historically not profitable and the group does not want to incur the high rental costs over the remaining lease term.”
For the KHI Megastore, the acquisition will allow the company more flexibility in restructuring, which could include “right-sizing” the store and re-purposing the rest of the premises for other commercial uses, it said.
The KHI Building lease had around 24 years remaining, while the BSD lease had around 27 years remaining, it said in a filing to SGX before the market open on Tuesday.
For the lease terminations, PTCRI will pay a penalty of 38.70 billion rupiah, or around S$3.71 million, to the seller and forfeit a security deposit of 14.38 billion rupiah, or around S$1.38 million under the BSD lease, the filing said.
PT Garwita Sentra Utama is a subsidiary of Singapore-listed real-estate developer Sinarmas Land, it said.