Archive for category: Misc

CapitaLand China Trust (CLCT) has announced that it will be subscribing for 5% of the total number of IPO units in CapitaLand Commercial C-REIT (CLCR) on the Shanghai Stock Exchange (SSE). According to a bourse filing on Sept 8, the final price for each IPO unit has been determined at RMB5.718 ($1.03) following a book-building process. The offer price range for the IPO units was set at RMB4.756 to RMB5.932 per unit.

The offering size for the IPO units is estimated at RMB2,287.2 million, representing a premium of about 7% over the initially estimated RMB2,137.5 million.

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CLCT entered into a strategic investor placement agreement with CLCR’s manager on Aug 28, after receiving approval from the China Securities Regulatory Commission on Aug 27. CLCR will be listed as China’s first international-sponsored retail C-REIT and the eighth listed fund under CapitaLand Investment (CLI).

CLI announced on Aug 27 that CLCR’s initial portfolio will comprise two retail assets: CapitaMall SKY+ in Guangzhou and CapitaMall Yuhuating in Changsha. The total gross floor area of these properties is 168,405 sqm, with an aggregate committed occupancy rate of 97%.

As part of the agreement, CLCT will divest CapitaMall Yuhuating to CLCR while CLI and unlisted CapitaLand Development (CLD) will also divest CapitaMall SKY+. CLI will continue to operate both assets post-listing.

CLCT, CLI, and CLD will be considered strategic investors in CLCR and collectively hold at least a 20% stake in the REIT.

Based on the final IPO unit price, the proposed divestment of CapitaMall Yuhuating to CLCR stands at RMB813.8 million, representing an 8.8% premium over the floor price of RMB748.0 million and a 3.7% increase over the valuation of CapitaMall Yuhuating as of end-2024.

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The expected exit yield for the divestment is 6.2% based on CapitaMall Yuhuating’s actual net property income (NPI) for FY2024, which ended on Dec 31, 2024, at RMB50.7 million.

The gross proceeds from this divestment is estimated to be around RMB813.5 million, after accounting for the proposed subscription and transaction costs. The net proceeds is expected to be around RMB663.4 million.

Approximately $20.6 million of CLCT’s gross proceeds from the divestment will be used for the subscription of 5% of CLCR’s IPO units. On a pro forma basis, assuming the manager repurchases 72,463,768 units under the unit buyback mandate at an average price of 69 cents per unit, the proposed transaction is estimated to be 1.0% accretive to CLCT’s distribution per unit (DPU) as of the end of 2024. The net proceeds from the repurchase of 72,463,768 units will be approximately $50.0 million.

CLCT’s net asset value (NAV) per unit is expected to increase from $1.09 to $1.11 while its aggregate leverage is expected to decrease from 42.6% to 42.3% on a pro forma basis.

After accounting for the subscription and transaction costs, the net proceeds from the proposed divestment is estimated to be around RMB663.4 million. Using these proceeds to pare down debt, the aggregate leverage is expected to decrease from 42.6% as of March 31 to 41.2%.

Gerry Chan, CEO of CLCT’s manager, said that CLCR offers a strategic opportunity for CLCT to enter the expanding C-REIT market, providing a platform to unlock value from mature assets and enhance portfolio quality. He also mentioned that this aligns with the REIT’s growth strategy to diversify and improve its portfolio, while CLCR will focus exclusively on retail assets.

Chan added that with nearly two decades of experience, CLCT is well-placed to leverage this new platform and continue building a balanced portfolio that capitalizes on China’s evolving consumption- and innovation-led economy.