Core Points - AEON (Hong Kong) Department Store Limited announced a new 8-year lease agreement for its Tianhe City store, effective from July 1, 2025, to June 30, 2033 [2][3] - The Tianhe City store will undergo renovations starting in July, with a planned reopening in October [2][6] - The leased area has been reduced compared to previous agreements, now covering specific shop numbers B113 and B114, along with storage areas [2][6] Lease and Financial Details - The total rent for the new lease is approximately 102 million yuan, with annual management fees of about 3.02 million yuan, utility costs of 2.71 million yuan, and other expenses of 2.33 million yuan [3][4] - The average annual rent for the new lease is significantly lower at around 12.7 million yuan, compared to the previous annual rent which increased from 37.2 million yuan to 52 million yuan over the last lease period [4] Market Context - AEON has been operating in the Chinese market since 1996, with the Tianhe City store being its first comprehensive department store in mainland China [3] - Despite plans to open 8 new stores in Guangdong this year, AEON's overall performance in the region has been under pressure, with declining revenues in its department and food supermarket segments [7]

Core Viewpoint - AEON (Hong Kong) Department Store Limited has signed a new 8-year lease agreement for its Tianhe City store, which will undergo renovations starting July and is expected to reopen in October [2][3][8]. Group 1: Lease Agreement Details - The new lease period is from July 1, 2025, to June 30, 2033, with a total rent of approximately 102 million RMB, averaging 12.7 million RMB per year [3][6]. - The leased area has been reduced, now covering B113 and B114 on the first basement level, along with storage on the second and third basement levels, rather than the entire first basement [2][9]. - The previous lease saw annual rent increase from 37.2 million RMB in 2010 to 52 million RMB in 2023, with an average annual increase of about 5% [6][7]. Group 2: Renovation Plans - The Tianhe City store will undergo a three-month upgrade focusing on "scene reconstruction, product renewal, and service enhancement," targeting the needs of young middle-class families [8][9]. - The renovation aims to create a "five-sense experience marketplace" and is part of a broader upgrade plan for the Tianhe City shopping center [8][9]. Group 3: Market Context and Future Plans - AEON plans to open 8 new stores in Guangdong this year, increasing its total to 41 stores by year-end, compared to 33 stores in 2019 [10]. - Despite expansion plans, AEON's overall performance in Guangdong has been under pressure, with declining revenue and ongoing operational losses since 2017 [11].