Hong Kong property and real estate developer Sino Land is paying HK$1.99 billion ($252 million) for a 40.33% stake in Hua Qing Holdings (HQH), which owns CapitaLand’s Raffles City Shanghai mixed-used development.
Raffles City Shanghai is owned by Shanghai HQREM, a locally incorporated company that is 95% held by Singapore-based HQH.
Sino Land’s stake in HQH will rise from 23.53% to 63.86% after it acquires a 22.68% stake from Singapore property giant CapitaLand and a 17.65% stake from Singapore sovereign fund GIC.
When the transaction is completed, GIC will exit HQG entirely, while CapitaLand will hold a 36.14% stake.
After completion of the divestment, HQH’s interest in Shanghai HQREM will reduce from 95% to 35%, and thereby would result in Shanghai HQREM ceasing to be a subsidiary of HQH.
In a disclosure to the Hong Kong Exchange, Sino Land said the investment in Shanghai HQREM and related properties through HQH is for long-term holding to generate stable recurring income.
The underlying property includes Raffles City Shanghai, a commercial building comprising a prime office tower and a shopping mall, according to the disclosure.
Sino Land’s announcement is related to CapitaLand’s disclosure early this week that it is selling partial stakes in a group of companies that own six of its Raffles City developments in China to Ping An Insurance for 46.7 billion yuan ($7.2 billion).
The portfolio comprises Raffles City Shanghai, Raffles City Beijing, Raffles City Ningbo, Raffles City Chengdu, Raffles City Changning, and Raffles City Hangzhou, CapitaLand said in a statement.
Targeted for completion in the third quarter of this year, the transaction is expected to provide CapitaLand net proceeds of more than S$2 billion.
CapitaLand owns and manages a global portfolio worth about S$137.7 billion as of March 31, 2021. Its portfolio spans across diversified real estate classes, including commercial, integrated development, urban development, as well as lodging and residential.
Meanwhile, Canada Pension Plan Investment Board (CPP Investments), Canada’s largest pension fund, also announced that it has agreed to sell its stake in six Raffles City developments in China. The sale is part of CapitaLand’s agreement with Ping An Life Insurance.
The divestment will give CPP Investments net proceeds of approximately C$800 million ($645 million). The Canadian pension fund invested in the first Raffles City China development in 2008.