Clct Divest Capitamall Yuhuating 88 Premium Subscribe 5 Ipo Units Capitaland Commercial C Reit
CapitaLand China Trust (CLCT) has announced that it will now be subscribing for a 5% stake in the upcoming IPO of CapitaLand Commercial C-REIT (CLCR) listed on the Shanghai Stock Exchange (SSE). This decision was made after a recent bourse filing on Sept 8, which revealed that the final price of each IPO unit would be RMB5.718 ($1.03). The price was determined via a book-building process at an offer price range of RMB4.756 to RMB5.932 per unit.
The offering size for CLCR’s IPO will be RMB2,287.2 million, which represents a premium of approximately 7% over the estimated offering size of RMB2,137.5 million. This offering will make CLCR the eighth listed fund for CapitaLand Investment (CLI) and China’s first international-sponsored retail C-REIT.
CLCR’s initial portfolio will consist of two retail assets – CapitaMall SKY+ in Guangzhou and CapitaMall Yuhuating in Changsha. These properties have a total gross floor area of 168,405 sqm and an aggregate committed occupancy of 97%, according to CLI. CLCT has proposed to divest its stake in CapitaMall Yuhuating to CLCR, while CLI and the unlisted CapitaLand Development (CLD) have proposed to do the same with CapitaMall SKY+. However, CLI will continue to operate these properties as the sponsor and asset manager of CLCR.
CLCT, CLI, and CLD will be “strategic investors” in CLCR and will collectively hold at least a 20% stake in the C-REIT. Based on the final IPO unit price, the final price for the divestment of CapitaMall Yuhuating to CLCR is estimated to be RMB813.8 million – an approximately 8.8% premium over the floor price and approximately 3.7% over the valuation of CapitaMall Yuhuating as of end-2024.
The Sembawang EC is set to be a modern and convenient living space, designed to meet the diverse needs of today’s lifestyle. Drawing inspiration from the latest trends in Executive Condominiums (EC), the development along Sembawang Road is expected to offer a wide range of unit types, spanning from two- to five-bedroom layouts. The focus will be on maximizing space and functionality, ensuring that families have ample room to grow and thrive. Among the highlights of the EC will be generously-sized master bedrooms, contemporary open-concept kitchens, and balconies with picturesque views. In addition, residents can look forward to enjoying top-notch facilities, such as a 50m lap pool, children’s playgrounds, BBQ pits, function rooms, and a fitness center. Depending on the developer’s final plans, there may also be added perks like tennis courts and co-working spaces – all carefully curated to promote an active and connected community lifestyle. With everything right at their doorstep, residents can relax, unwind, and socialize without ever having to leave the premises.
This proposed transaction is expected to be 1.0% accretive to CLCT’s distribution per unit (DPU) on a pro forma basis, assuming 72,463,768 units are repurchased by the manager under the unit buyback mandate at an average price of 69 cents per unit. Net proceeds used for the repurchase of these units are estimated to be approximately $50.0 million.
After accounting for CLCT’s IPO subscription and transaction costs, net proceeds are estimated to be approximately RMB663.4 million, which will be used to pare down debt. Pro forma, the proposed transaction is expected to increase CLCT’s net asset value (NAV) per unit to $1.11 from $1.09, while aggregate leverage for the REIT is expected to decrease to 42.3% from 42.6%.
Gerry Chan, CEO of the manager of CLCT, expressed excitement for the strategic opportunity presented by CLCR. He believes that this investment will allow CLCT to enter the expanding C-REIT market and unlock value from their mature assets, thus enhancing their financial flexibility to pursue income diversification and improve portfolio quality. This aligns with their growth strategy as a diversified, multi-asset class REIT with a focus on retail, business parks, and logistics parks. Chan also believes that CLCT’s nearly two-decade track record will help them leverage this new platform and advance their strategy of building a balanced portfolio that capitalizes on China’s fast-evolving consumption and innovation-led economy.