CapitaLand Investment (CLI) plans to list the CapitaLand Commercial C-REIT (CLCR) on the Shanghai Stock Exchange.
According to an April 17 announcement, the listing would mark the first international-sponsored retail C-REIT and the first such C-REIT by a Singapore-based company once approved.
This would increase funds under management of CLI’s listed funds platform, strengthening its leading position as Asia Pacific’s largest REIT sponsor-manager by market capitalisation.
CLI says CLCR will invest in operating retail assets in China, benefiting from the Chinese government’s policies to stimulate domestic consumption.
For a start, CLCR will have two mature assets, CapitaMall SKY+ in Guangzhou and CapitaMall Yuhuating in Changsha, with a combined value of some RMB2.8 billion and a total gross floor area of 168,405 square metres (sqm) with an aggregate committed occupancy of 97%.
CapitaMall SKY+ is currently jointly owned by CLI and CapitaLand Development (CLD) while CapitaMall Yuhuating is under CapitaLand China Trust (CLCT).
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As strategic investors, CLI, CLCT and CLD will collectively hold at least a 20% interest in CLCR.
As the sponsor as well as the asset manager of CLCR, CLI will continue to operate CapitaMall SKY+ and CapitaMall Yuhuating post-launch.
CLI will support the growth of CLCR and CLCT through a pipeline of potential assets with its 43 operational retail properties under management across 18 cities with total retail assets under management of approximately $18 billion in China.
Puah Tze Shyang, CEO of CLI China says the proposed listing of CLCR is in line with CLI’s strategy to pursue asset-light growth and expand in China by tapping domestic capital.
"It will further strengthen CLI’s listed funds platform, broaden our access to perpetual domestic capital, and enable us to grow our assets under management and recurring fee income.
Puah says this move also complements CLCT, the Singapore-listed fund for international investors looking to invest in China, allowing CLI to attract diverse capital sources that meet various investor requirements.
Both CLCT and CLCR will be well-positioned to seize opportunities in this dynamic market and provide unitholders with sustainable returns, he adds.
Gerry Chan, CEO of CLCT's manager says that listing CLCR is an opportunity for CLCT to enter the expanding C-REIT market.
"It provides a platform to unlock value from our mature assets, bolstering our financial flexibility to pursue income diversification and enhance portfolio quality.
"This aligns with our growth strategy as a diversified, multi-asset class REIT, anchored by a broad portfolio of retail properties, business parks, and logistics parks, while CLCR will focus on retail assets," he adds.
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Chan points out that CLCT’s investment mandate covers the Greater China region, including Hong Kong and Macau, whereas CLCR will concentrate exclusively on Mainland China.
Ben Lee, CEO of CLD China says CLCR will create a complete cycle that covers investment, development, and management in China’s commercial real estate market, thereby improving the liquidity of commercial assets.
"It provides a capitalisation channel for CLD's mature and high-quality stable assets in China, revitalising funds effectively. This affirms CLD's long-term commitment to sustainable development in China," says Lee.
CLI say the proposed listing of CLCR is conditional upon the approval of CLCT’s independent unitholders at an extraordinary general meeting to be convened at a later date as well as regulatory approvals from CSRC and SSE.
Vijay Natarajan, vice-president, real estate and REITs, RHB, says the move is positive for CLI on multiple fronts.
"Firstly the move will help in boosting recurring fee income and FUM (funds under management) via another listed platform and lighten its balance sheet which could boost ROE.
"Secondly, it could also pave the way for a dual listing or a reverse merger of Singapore-listed CLCT should it continue to trade at a deep discount compared to onshore listing which have generally traded at a premium.
"Thirdly, the move is likely to help remove some of the China market assets related discount which currently account for 26% of CLI's $117 billion FUM."
CLI shares closed at $2.54 on April 16, up 2.01%.
