CRCT optimises portfolio by unlocking value of CapitaMall Anzhen and restructuring anchor tenant’s lease at CapitaMall Wangjing
Singapore, 27 July 2017 – CapitaLand Retail China Trust Management Limited (CRCTML), the manager of CapitaLand Retail China Trust (CRCT), announced today that CRCT, through its trustee HSBC Institutional Trust Services (Singapore) Limited, has entered into an agreement with Beijing Hualian Anzhen Business Development Company Ltd to sell its entire interest in a company that holds CapitaMall Anzhen in Beijing, China. The mall is currently master leased to BHG (Beijing) Department Ltd.
The transaction price is based on the company’s adjusted net asset value, including but not limited to its interest in CapitaMall Anzhen of RMB1,129.5 million (S$230.0 million1 ), which is 12.9% above valuation2 . Targeted for completion in 4Q this year, the divestment is expected to generate net proceeds of RMB888.5 million (S$180.9 million) and a net gain of RMB154.6 million (S$31.5 million).
In tandem with the divestment, CRCT will recover approximately 4,700 square metres (sq m) of Level 4 space in CapitaMall Wangjing, also located in Beijing, from the mall’s anchor tenant Beijing Hualian Group (BHG). CRCT plans to convert the recovered space to house higher-yielding specialty stores and introduce more experiential retail offerings that will inject greater vibrancy to the mall. The recovered space will undergo reconfiguration works in 4Q 2017, and is expected to progressively contribute income from 2Q 2018. BHG has also committed to refresh the existing department store, which occupies parts of levels one to three, to a higher-end format that will better appeal to the mall’s target demographics of middle- to high-income families.
Mr Tan Tze Wooi, CEO of CRCTML, said: “As part of our proactive asset management strategy, we are always on the lookout for opportunities that will optimise CRCT’s portfolio and strengthen our malls’ market position. Our win-win arrangement with BHG allows us to concurrently unlock the value of a mature master leased mall and uplift the growth potential of our second largest multi-tenanted mall.”
“CapitaMall Anzhen is master leased till 2025 with limited upside and increasing capital expenditure commitments. By unlocking the value of CapitaMall Anzhen at this stage, it will realise optimal value for our unitholders. The sale proceeds will also increase our financial flexibility to seize new growth opportunities.”
“After recovering the Level 4 space from BHG, CapitaMall Wangjing will boost its proportion of non-anchor net lettable area to about 60%, from the current approximate 50%. At the same time, BHG’s remaining lease terms at the mall will be favourably restructured to capture its performance upside. Coupled with the upgrading of the department store concept, the revamped CapitaMall Wangjing will be in an even stronger position to achieve sustainable growth over the long term.”
Upon completion of the divestment, CRCT will own a portfolio of 10 operational shopping malls in China.
: The Renminbi amounts in this release have been translated into Singapore dollars based on an assumed exchange rate of RMB1 to S$0.2036.
: Valuation as at 30 June 2017.