Plagued by difficulty in securing commitments from anchor tenants, PT Alam Sutera Realty said on Monday that it would hold off until next year on the development of its Rp 500 billion ($49.5 million) mall, the linchpin of an integrated town and community centre in Tangerang.
“Due to the global economic crisis, many potential anchor tenants are delaying their decisions to commit to our mall,” said Joseph Tjong, Alam Sutera’s finance director. “Therefore, we have decided to postpone the start of construction.”
The company expects to spend about Rp 750 billion over the next five years to build the community’s town centre, which is also expected to include a university.
Some 64 percent of the mall project is to be financed using the net proceeds of the company’s 2007 initial public offering of about Rp 320 billion.
“So far, we have spent Rp 19 billion on land preparation and mall design,” said Hendra Kurniawan, the company’s corporate secretary.
“We want to reduce our dependence on land and home sales,” Joseph said. “And by having a mall, we’ll have more stable revenue from the rentals.”
“We hope that the nearby university will help generate crowds in the mall during weekdays, since malls are usually only crowded during the weekends and rather empty during the week.”
Alam Sutera has said that it was expecting a flat top and bottom line this year, in light of slow first-quarter sales.
The company announced that it would allocate 20 percent of its 2008 net profit for a cash dividend amounting to Rp 67 per share of its Rp 59 billion in net income in 2008.
Alam Sutera shares closed down 7.8 percent to Rp 117 on Monday.