CAPITARETAIL China Trust (CRCT) - the first pure-play China retail real estate investment trust (Reit) in Singapore - has entered into a deal to buy a mall in Beijing for $336 million from CapitaRetail China Incubator Fund (CRCIF).
Xizhimen Mall: The Beijing mall has a gross rentable area of 73,857 sq metres. This is CRCT's first acquisition since its listing on the Singapore Exchange in December 2006Related Link - http://tinyurl.com/2uwmvs
CapitaRetail China Trust's news release
Located in Xizhimen in Xicheng district, Beijing, Xizhimen Mall is part of Xihuan Plaza, and has a gross rentable area of 73,857 sq metres. This is CRCT's first acquisition since its listing on the Singapore Exchange in December 2006.
CRCIF is a US$450 million private equity fund sponsored by CapitaLand Limited to buy completed malls in China. CapitaLand holds a 30 per cent stake in the fund, while the remaining equity is held by pension funds, insurance companies and corporations. CRCT enjoys the first right of refusal to purchase malls held by CRCIF.
Commenting on the purchase, Lim Beng Chee, CEO of CapitaRetail China Trust Management (CRCTM), said: 'Sitting atop one of Beijing's only two key transportation hubs with an average commuter flow of 300,000 on weekdays and 600,000 on weekends, Xizhimen Mall is well-positioned to capture the tremendous daily pedestrian traffic to the mall.'
He added that Xizhimen Mall along with the trust's other retail malls will position CRCT favourably to capture the city's strong retail growth opportunity which has averaged about 12 per cent annually in the last decade. CRCTM is the manager of CRCT.
Post-acquisition, CRCT's portfolio asset size will grow from its current portfolio of seven properties valued at $763.7 million to $1.16 billion.
The other properties are Wangjing Mall, Jiulong Mall and Anzhen Mall in Beijing, Qibao Mall in Shanghai, Zhengzhou Mall in Zhengzhou, Jinyu Mall in Huhehaote, and Xinwu Mall in Wuhu.
Xizhimen Mall was valued at $338.4 million and $340 million respectively by two independent property valuers, Colliers International (Hong Kong) Limited and Knight Frank Petty Limited.
Hsuan Owyang, chairman of CRCTM, said the trust is on track to achieve its target portfolio size of $3 billion by 2009.
Xizhimen Mall is expected to achieve a net property income yield (NPI yield) of 5.7 per cent next year, based on an average mall occupancy rate of 88.7 per cent, and an NPI yield of 6.4 per cent in 2009, assuming 100 per cent committed occupancy rate.
The proposed acquisition, which is subject to conditions including unitholders' approval, includes a conditional agreement for CRCT to buy the planned extension of the current Basement 1 of the mall from the original developer of Xihuan Plaza - Beijing Finance Street Construction Development.
The extension would increase the GRA of Xizhimen Mall by 15.6 per cent and would provide direct pedestrian connectivity to the underground Mass Rapid Transit station. The extension is expected to increase overall shopper traffic and enhance shopper flow within the mall.
To help fund the purchase, the trust said it is looking to raise about $280 million from an equity fund raising. It expects to fund the remaining purchase consideration through borrowings.
CapitaRetail China Trust, a shopping mall trust managed by Singapore developer CapitaLand
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