KUALA LUMPUR (April 2): Department store operator Parkson Holdings Bhd said on Tuesday its Hong Kong-listed unit Parkson Retail Group Ltd (PRGL) had inked a 15-year agreement to lease 18,004 sq m of commercial space in the city of Guiyang, China.

The space will be used for a shopping centre, service projects, offices, warehouses and other projects under the “Parkson” trademark, the company said in an exchange filing. Under international financial reporting standards, the tenancy agreement will be treated as the acquisition of right-of-use assets, which Parkson booked at about 57.1 million yuan (RM37.1 million), it noted.

The rental payable, including tax, under the tenancy agreement is 3.33 million yuan for the first year, and eight million yuan per year from the second year onwards, Parkson said.

Parkson also said the commercial space comprises five storeys, including one basement floor in the Longgang International Center located at 117 Zhonghua Middle Road in the city of Guiyang, Guizhou province, China.

PGRL’s indirect 60%-owned subsidiary Guizhou Shenqi Parkson Retail Development Co Ltd has been operating Parkson’s department store in China under a previous tenancy agreement of 20 years.

Parkson said the latest tenancy agreement would positively impact its future development.

“Considering the historical business performance, continuous growth potential of the Guiyang city and the property’s surrounding area, and the operating synergies with nearby stores of the group in the Guizhou province, the board believes that the existing department store will continue to play an important role in generating stable revenue and maintaining the group’s market recognition in China,” it added.

At the time of writing on Tuesday, shares in Parkson were unchanged at 24.5 sen each, valuing the company at RM281.48 million.