CapitaLand To Gain $313m From China Assets

Source : The Business Times, August 23, 2008

It is injecting four assets into its 50% owned Raffles City China Fund

PROPERTY giant CapitaLand said yesterday that it will realise a total portfolio gain of $313 million from injecting four Raffles City assets in China as seed assets into its 50 per cent owned Raffles City China Fund.

Shanghai skyscraper: The gain will comprise a $183 million net gain from the dilution of CapitaLand's interest in the four Raffles City assets as well as $130 million fair value gain for Raffles City Shanghai

The gain will comprise a $183 million net gain from the dilution of CapitaLand's interest in the four Raffles City assets as well as $130 million fair value gain for Raffles City Shanghai.

The US$1 billion (about S$1.4 billion) real estate private equity fund - the group's largest to date - will buy CapitaLand's effective 55.9 per cent stake in Raffles City Shanghai, and 100 per cent of the Raffles City projects under development in Beijing, Chengdu and Hangzhou.

The property group is expected to receive a total consideration of about US$841 million (about S$1.15 billion) which takes into account the agreed value of Raffles City Shanghai at 4.51 billion yuan (S$889 million) and the agreed land values of the other three Raffles City projects.

Net of its 50 per cent stake in the fund, CapitaLand will obtain an eventual net cash flow of about US$420 milllion (S$574 million).

Besides originating and retaining a sponsor stake in the fund, CapitaLand is also managing the fund and its properties.

'CapitaLand, through its 50 per cent stake in the fund, will continue to enjoy sustained rental income as well as appreciation in capital value of the prime assets,' the group said in a release yesterday evening.

CapitaLand Group president and CEO Liew Mun Leong said that the total transaction proceeds of $1.15 billion will strengthen the group's balance sheet and boost its ability to seize new opportunities in China.

On the stockmarket yesterday, CapitaLand ended three cents lower at $4.45. Morgan Stanley last week downgraded the stock to Underweight from Equal-Weight and revised downwards its price target for the share to $4.16 (from $5.94), pegged at a 15 per cent discount to its end-2009 estimated net asset value per share of $4.89 (from a $5.94 estimated NAV per share for end-2008 previously).