CapitaLand’s China REIT disposes mall at 20% premium

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CapitaLand Retail China Trust (CRCT) is divesting its interests in CapitaMall Erqi for RMB850.9 million (SGD165 million).

The divestment will be done by transferring interests in a special purpose vehicle that holds the property.

The disposal was unveiled as the REIT published its FY2019 results, which have since been updated into the Singapore REITs table.

Its distribution per unit (DPU) rose 2.0% year-on-year.

However, the retail REIT’s total portfolio occupancy fell from 97.1% to 96.7%.

CapitaMall Erqi features seven retail levels, with a gross floor area of 92,355.85 square metres.

And its sale consideration is about 20% above independent valuations.

“As the building has already been in operation for more than 15 years, CRCT as the landlord will face increasing capital expenditure commitments in holding on to the property”, said the REIT.

As such, The divestment would allow the REIT to unlock the property’s cash value.

Master lease agreements on the property are also about to terminate, the REIT added.

After deducting fees, the REIT is expected to receive about SGD153 million from the divestment.

CRCT intends to redeploy capital from the divestment to fund new acquisitions, or pare down debt.

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