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roperty developer PT Modernland Realty announced on Thursday it had entered an agreement to increase ownership in a joint venture with Singapore'€™s Keppel Land in a deal worth Rp 2.29 trillion.

In a statement submitted to the Indonesia Stock Exchange (IDX) on Thursday, Modernland'€™s president director William Honoris said the company had signed a conditional share sale agreement (CSSA) with subsidiaries of Singapore'€™s Keppel Land Pte Ltd, namely Le-Vision Pte Ltd and Caslehigh Pte Ltd.

Under the agreement, Modernland will increase its stake in the joint venture firms, PT Mitra Sindo Sukses and PT Mitra Sindo Makmur, from 49 percent to 51 percent. The joint venture firms are the developer of a township called Jakarta Garden City.

Modernland head of investor relations Cuncun Wijaya confirmed about the agreement, saying the deal would make the company takeover Keppel'€™s indirect shares in Jakarta Garden City.

'€œFollowing the deal, we will increase our stake in Jakarta Garden City from previously 49 percent to 51 percent. We will consolidate the township project to our finance,'€ Cuncun said over the telephone.

Jakarta Garden City is a township development on 270 hectares land in Cakung area in East Jakarta. The township is designed to host up to 700 units of residence and apartments. Supporting facilities, such as a shopping mall, office spaces, a hospital, a school and a modern market will also be built in the area.

Besides the promising profit from the township, Cuncun said Modernland would also be able to unlock the value of 100 hectares land the company has near Jakarta Garden City.

The Jakarta Garden City township will make Modernland have a total of 1,469 hectares in land bank.

For this purpose, Cuncun said Modernland would use funds that will be raised from selling debt papers amounting to $300 million. The company recently obtained approval from its shareholders about the bond issuances.

However, Modernland has not given the exact time-line for the bond offering. Cuncun also declined to reveal the date of the bond issuance.

In a file recently submitted to the IDX, Modernland said it would use funds that will be raised from selling the bonds to finance acquisition and pay its debt. It also said the debt paper would be tagged with a maximum coupon rate of 10 percent.

If the coupon rate asked by investors stands beyond 10 percent, Modernland will cancel the offering.

Indonesia'€™s bond market has been under pressures following surging inflation while the rupiah was weakened against dollar. The yield of the government'€™s 5.625 percent bonds maturing on 2023 increased by 22 basis points to 7.99 percent, according to prices from the Inter Dealer Market Association as quoted by Bloomberg on Thursday.

Modernland will seek other funding sources, including bank loans, if it is unable to sell bonds with lower than 10 percent in coupon rate, according to Cuncun.

Shares in Modernland, which are traded on IDX under a code MDLN, were closed at Rp 890 apiece on Thursday, a 1.13 percent higher compared to a day earlier.