CapitaLand China is about to sell 20 malls across China, following a year of record openings for the Singapore group.
Through its wholly owned subsidiary CapitaLand Mall Asia, CapitaLand has signed agreements with unrelated parties to divest its share of interest in a group of companies that hold 20 retail assets with an agreed value of RMB8.3 billion (S$1.7 billion/US$1.2 billion).
Each mall has an average gross floor area (GFA), excluding car park, of about 40,000sqm. They are spread across 19 cities, of which 14 are non-core cities in which CapitaLand has a single mall.
Set for completion in the second quarter of this year, the transaction is expected to generate net proceeds of about S$660 million and a net gain of about $75 million for CapitaLand. The resultant loss of recurring income will be limited as the 20 malls account for about 4 and 7 per cent of CapitaLand’s respective total and China shopping mall portfolio valuation.
The move follows CapitaLand’s divestment of CapitaMall Kunshan last month, and the formation of a JV between CapitaLand and CapitaLand Retail China Trust in November to acquire Rock Square, a 84,000sqm mall in Guangzhou.
‘Cusp of change’
“China is sitting on the cusp of transformative changes to its retail industry, characterised by a burgeoning middle class and the rising popularity of omni-channel retailing,” says CapitaLand president/group CEO Lim Ming Yan. “CapitaLand is seizing this window of opportunity to reconstitute its mall portfolio with a sharper geographical focus.”
He says that unlocking the value of mature assets for reinvestment into new growth opportunities is a hallmark of CapitaLand’s capital recycling strategy. “We will continue to invest in dominant assets in core Chinese city clusters, where we already enjoy a competitive advantage.”
Lim sees China as an important core market for CapitaLand, with its competitive advantage in integrated developments acting as a key differentiator.
CapitaLand last year opened a record 1 million square metres of retail space across eight developments in Singapore, China and Malaysia – its largest retail space offering in a single year. Of these, six are retail components of large-scale integrated developments in China, averaging about 130,000sqm. They are in fast-growing Chinese cities such as Hangzhou, Shanghai, Shenzhen, Suzhou and Wuhan.
Post-divestment, CapitaLand’s mall network in China will be concentrated in 22 cities, compared to 36 before. It will comprise 491 malls, 45 of them in first- and second-tier cities. More than half are the retail component of integrated developments.
CapitaLand’s largest retail presence is in Beijing and Shanghai, where it owns/manages eight malls each, followed by Chengdu with six and Wuhan with four. Following the acquisition of Rock Square, CapitaLand will have two malls in Guangzhou.
The five core city clusters under CapitaLand’s China strategy are Beijing/Tianjin, Shanghai/Hangzhou/Ningbo/Suzhou, Guangzhou/Shenzhen, Chengdu/Chongqing/Xi’an, and Wuhan.