Singapore’s CapitaLand to divest interest in three China malls for $427m

People pass a Capitaland logo outside an office building in the central business district in Singapore. Photo: Reuters

Singapore’s largest real estate developer CapitaLand announced that it will be divesting its interests in three Chinese malls to CapitaLand Retail China Trust (CRCT) for Rmb2.96 billion ($427 million) as part of the firm’s asset recycling strategy.

CapitaLand said its subsidiary and associated companies have entered into an agreement with CRCT to divest their interest in three companies that own CapitaMall Xuefu, CapitaMall Aidemengdun in Harbin, and CapitaMall Yuhuating in Changsha.

The transaction, whose value was negotiated on a willing-buyer and willing-seller basis, is expected to be completed in the third quarter of this year.

“Asset recycling is a key part of CapitaLand’s strategy to enhance returns and rejuvenate our portfolio. The sale of [the three malls] to CRCT allows us to realise their property investment value and unlock capital for reinvestment,” said CapitaLand Group China president and CEO Lucas Loh.

The malls will continue to be managed by CapitaLand, Loh added.

CRCT, the first and largest China shopping mall real estate investment trust in Singapore, said the acquisition will diversify its footprint in China from eight cities to 10. It also allows the firm to gain exposure to two rising provincial capital cities – Harbin and Changsha.

The firm intends to finance the proposed acquisition via a combination of debt and equity with an objective to achieve accretion. The financial plan details will be decided at a later date, CRCT said.

The three malls have a total gross floor area of 248,282 square meters with established anchor tenants and specialty retail mix. The properties will expand CRCT’s portfolio gross floor area by 30.7 per cent.

“This is a strategic acquisition that will position CRCT for growth,” CRCTML Chairman Soh Kim Son said.

CapitaMall Xuefu, which commenced operations in 2012, is a multi-tenanted mall with a gross rentable area of 104,294 square meters, comprising five above-ground levels and one basement level of retail space and one basement level for car park use.

CapitaMall Aidemengdun, which opened in 2010, has a gross rentable area of 43,394 square meters comprising four above-ground levels of retail space and one basement level for retail and car park use.

The third mall, CapitaMall Yuhuating, has a gross rentable area of 62,080 square meters comprising four above-ground levels of retail space and one basement level for retail and car park use.

“Post divestment, we will continue to benefit from the malls’ strong and steady yields and participate in their future growth through CapitaLand’s stake in CRCT,” Loh said.

CapitaLand owns approximately 38.04 per cent of CRCT’s units, including its indirect interests in CapitaLand Mall Trust, which owns about 12.29 per cent in CRCT.

In April, CapitaLand and CRCT divested their combined 100 per cent stake in a company that owns CapitaMall Wuhu to an unrelated third party.

The deal was based on the company’s adjusted net asset value, including but not limited to its interest in CapitaMall Wuhu of Rmb210 million ($31.3 million). The divestment of CapitaMall Wuhu is expected to optimise CRCT’s portfolio and enhance returns.