CapitaLand sells 20 China malls to Vanke unit for $1.29b

CapitaMall, Chengnanyuan, China. Source: CapitaLand

CapitaLand, one of Asia’s largest real estate companies, is selling its interest in 20 retail shopping malls in China for a combined consideration of Rmb8.37 billion ($1.29 billion), it announced on Friday.

In a separate statement, China Vanke’s commercial property unit SCP Group on Friday said it was purchasing the 20 shopping malls from CapitaLand. China Vanke and Triwater Asset Management Holdings will also jointly invest for an undisclosed stake, it added.

The divestment, which will be carried out by its wholly owned shopping mall business CapitaLand Mall Asia, is expected to give CapitaLand net proceeds of about S$660 million and a net gain of about S$75 million.

CapitaLand said the malls, spread across 19 cities, have an average gross floor area, excluding car park, of about 40,000 square meters. Fourteen of the malls are located in non-core cities. As these 20 malls accounted for a mere 4 per cent and 7 per cent of CapitaLand’s respective total and China shopping mall portfolio valuation, the loss of recurring income arising from the stake sale will be limited, CapitaLand said.

After the divestment, CapitaLand’s shopping mall network in China will comprise 49 malls, of which 45 are located in first- and second-tier cities.

CapitaLand Ltd President and Group CEO Lim Ming Yan said China is now “sitting on the cusp of transformative changes to its retail industry”, characterised by a burgeoning middle class and the rising popularity of omni-channel retailing.

“CapitaLand is seizing this window of opportunity to reconstitute our mall portfolio with a sharper geographical focus that enhances our capacity to capture growth opportunities in China,” Lim said.

He added that the post-divestment portfolio will enable the company to strengthen its position in China. The transaction is targeted for completion in the second quarter of this year.

“We will continue to invest in dominant assets in core Chinese city clusters, where we already enjoy a competitive advantage,” Lim said

Among the Chinese cities, CapitaLand has the largest retail presence in Beijing and Shanghai, where it owns or manages eight malls each, followed by Chengdu with six and Wuhan with four.

The “mall portfolio reconstitution” follows the divestment of CapitaMall Kunshan in the Chinese city of Kunshan in December, and the formation of a joint venture between CapitaLand and CapitaLand Retail China Trust last November to acquire Rock Square, an 84,000 square metre shopping mall in the first-tier city of Guangzhou.

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