SINGAPORE: CapitaLand China Trust (CLCT) is divesting its entire equity interest in a special-purpose vehicle, CapitaMall Shuangjing, that holds its mall in Beijing, for 842 million yuan.
Based on the asset’s net property income from Jan 1–Sept 30, 2023, the price tag represents an exit yield of 2.8%.
The transaction is expected to realise higher cash value from the asset, reduce CLCT’s aggregate leverage and enhance returns to unit holders, said the manager on Dec 6. The sale of CapitaMall Shuangjing is slated to be completed in the first quarter of 2024 and is expected to generate net proceeds of about 690.7 million yuan.
Net proceeds may be used to repay debt, undertake a unit buyback, and finance corporate and working capital requirements.
Located in Beijing’s Chaoyang District, CapitaMall Shuangjing was part of CLCT’s initial asset portfolio during the trust’s initial public offering in 2006.
It is also the last remaining master-leased mall within CLCT’s retail portfolio.
The property spans four retail levels and has been operating for 19 years. It has a gross floor area of 532,411 sq ft.
Tan Tze Wooi, chief executive of the manager, said the asset would require “significant capital outlay and planning downtime to repurpose the building and remain competitive” considering how the asset is predominantly master-leased.
“This divestment presents a good opportunity to unlock value and enhance total returns for unit holders. Proceeds from the divestment will strengthen CLCT’s balance sheet and provide greater financial flexibility to pursue capital recycling and portfolio reconstitution initiatives,” he said.
Had the divestment been completed on Jan 1, 2022, CLCT’s distribution per unit for financial year 2022 would have been 7.14 Singapore cents instead of 7.5 Singapore cents. Pro forma net asset value per unit as at Dec 31, 2022, would have stood at a higher S$1.39 over S$1.38, assuming it was completed on Dec 31, 2022.
Units of CLCT were up 0.5 Singapore cent, or 0.6%, at 84 Singapore cents as of yesterday morning. — The Straits Times/ANN