Singapore-listed CapitaRetail China Trust (CRCT) said on Wednesday it expects to triple assets to $3 billion (US$2.18 billion) by end-2009 as investors remain enthusiastic about China's retail sector.
CRCT, which owns eight China malls worth $1.1 billion, is confident it will be able to raise new equity when required and cap borrowings at 35 per cent of assets, chief executive Lim Beng Chee told Reuters in an interview. 'I'm lucky that China is a huge market... I can see a lot of growth in the market that I have, whereas in Singapore it is not easy to see the growth unless you have the scale,' he said, when asekd about failed equity raising efforts by other real estate investment trusts (reits) because of weak market conditions.
He said that CRCT, which was listed slightly over a year ago, wanted to be more conservative with its borrowing until it was certain of getting an investment-grade rating.
'We will gear up when we have a more solid track record,' he said, adding the rating agencies are not familiar with China's property market and legal system and have to date only assigned an investment-grade rating to one developer there.
Under Singapore law, Reits must cap their debt-to-equity ratio at 35 per cent unless they get a rating from international agencies such as Moody's and Standard & Poor's.
Singapore's once booming Reit sector is expected to consolidate in the coming months as weaker players sell assets or merge with their stronger counterparts.
Several high-profile listings by India-based developers such as Indiabulls and DLF have been postponed or abandoned, while existing trusts such as Allco Commercial and MacarthurCook Industrial have dropped plans to raise funds for new acqusitions via secondary offerings.
CRCT, which is managed and part owned by CapitaLand, Southeast Asia's biggest developer, has first rights of refusal to malls owned by CapitaLand and its various investment funds.
Its pipeline of new properties include 16 existing malls as well as another 49 that will open in the next few years. Its current strategy involves acquiring and managing malls that cater to China's growing middle and upper-middle class consumers. -- REUTERS
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