Singapore real estate group CapitaLand has announced its decision to divest its share of interest in a group of companies that hold 20 retail assets at an agreed value of 8,365.0 million yuan (S$1,705.9 billion).
Targeted for completion in second quarter of this year, the transaction carried out through CapitaLand Mall Asia is expected to generate net proceeds of about S$660.0 million and a net gain of about S$75.0 million for CapitaLand.
The loss of recurring income will be limited, CapitaLand said, as the 20 malls accounted for approximately 4 per cent and 7 per cent of CapitaLand’s respective total and China shopping mall portfolio valuation as at June 30, 2017.
Mr Lim Ming Yan, president and group CEO of CapitaLand Limited, said in a press release that the group was seizing the window of opportunity to reconstitute their mall portfolio “with a sharper geographical focus that enhances our capacity to capture growth opportunities in China”.
“The rejuvenated portfolio will enable CapitaLand to respond more effectively to the paradigm shifts in Chinese consumer behaviours, and strengthen our position as we continue to tap the growth in China’s rapid urbanisation,” he said.
The group’s COO Mr Jason Leow added that the opening of six strong-yielding malls and acquisition of Rock Square in Guangzhou are expected to lift the company’s China malls’ net property income in 2018, even after taking into account the impact of the divestments.
“Post-divestment, CapitaLand’s mall network in China will be concentrated in 22 cities, compared to 36 before. This will allow us to better optimise our resource allocation to build meaningful scale in core city clusters,” he said.