CapitaLand China Trust (CLCT) will be divesting CapitaMall Yuhuating to its new China-listed REIT (C-REIT), CapitaLand Commercial C-REIT (CLCR), for at least RMB748 million ($134.9 million), says CLCT’s manager in a June 12 statement.
The amount will be finalised after the initial public offering (IPO) units are priced and subjected to prevailing market conditions and investor sentiments. As such, CapitaMall Yuhuating may be sold to CLCR at a price higher than the floor price, the manager adds.
As at March 31, CapitaMall Yuhuating is valued at RMB748 million by Colliers and RMB780 million by CBRE.
According to CLCT, about $20.7 million of the gross proceeds will be used by the REIT to subscribe for 5% of CLCR’s IPO units. The net proceeds will also be used to lower CLCT’s debt at an aggregate interest rate of around 4.8%.
On a pro forma basis, if the divestment had been completed on Jan 1, 2024, and assuming the net proceeds were used to pare down debt, CLCT’s distribution per unit (DPU) would have been lowered to 5.57 cents from 5.65 cents originally.
CLCT’s distributable income would have been lowered to $95.6 million, down from $96.8 million.
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Should CLCT use the net proceeds to conduct unit buy-backs and to pare down debt in addition to the divestment, CLCT’s DPU would have been at 5.67 cents instead of 5.65 cents. Its distributable income would have still been lowered to $93.2 million. The unit buy-backs assumes 72.5 million units are repurchased by CLCT’s manager under the unit buy-back mandate at an average price of 69 cents per unit.
On a pro forma basis, if the transactions were conducted by Dec 31, 2024, CLCT’s net asset value (NAV) would have been unchanged at $1.09 assuming net proceeds were used to pare down debt. Including the unit buy-backs, CLCT’s NAV would have been at $1.10 from $1.09 originally.
CLCT’s aggregate leverage on a pro forma basis, if the transactions had been completed by March 31, would have been at 41.4% without the unit buy-backs and unchanged at 42.6% including the buy-backs. As at March 31, CLCT’s aggregate leverage stood at 42.6%.
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On April 17, CapitaLand Investment (CLI) announced that it has applied for the registration and listing of its first C-REIT. The C-REIT will be listed on the Shanghai Stock Exchange and will have an initial portfolio comprising two properties: CapitaMall Yuhuating in Changsha and CapitaMall SKY+ in Guangzhou.
Under the C-REIT regime, CLCR is required to own the properties through an infrastructure asset-backed securities (ABS) plan to be established and managed by CITIC Securities Company Limited.
CLCR will be sponsored by CapitaLand Mall Asia (CMA), a wholly-owned subsidiary of CLI.
As at 12.29pm, shares in CLI are trading 1 cent lower or 0.38% down at $2.60 while units in CLCT are trading 0.5 cents lower or 0.72% down at 69 cents.
