Real estate group intends to pivot away from ageing retail and office holdings to its interests in high-growth new economy assets
(AF) Singapore’s real estate group CapitaLand has agreed to sell part of its stake in a portfolio of six integrated shopping and office properties across China to Ping An Life Insurance, as the real estate developer seeks to invest in high-growth new economy assets.
The portfolio, comprising Raffles City projects in Shanghai, Beijing, Ningbo, Chengdu and Hangzhou, is valued at 46.7 billion yuan ($7.2 billion), CapitaLand said in a statement.
Meanwhile, Ping An said in a filing with the Insurance Association of China on Monday that it would not invest more than 33 billion yuan ($5.1 billion) for 60-70% stakes in each of the six projects. Ping An will become the projects’ largest shareholder after the deal.
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“We will build on the traction to further diversify CapitaLand’s investor base while continuing to maximise the property value and investment returns for our investors,” said Puah Tze Shyang, CEO for investment and portfolio management at CapitaLand China, in a statement.
CapitaLand said its stake in each project will be reduced from 30.7-55% to 12.6-30% after the sale, according to a company filing with the Singapore Exchange.
The transaction – expected to be completed in the third quarter of this year – will generate net proceeds of S$2 billion ($1.5 billion) for CapitaLand.
TRIPLING HOLDINGS
The sale is part of an ongoing portfolio reconstitution that involves a pivot away from some of CapitaLand’s ageing retail and office holdings and towards new-economy asset classes, with the company having declared last November that it would more than triple its holdings in these areas to over $1.1 billion during the next few years.
In line with this investment strategy, CapitaLand invested 3.66 billion yuan ($560 million) in April in a four-building data centre campus in Shanghai’s Minhang district.
For now, CapitaLand is maintaining its level of shareholding in the remaining three Raffles City projects in China, namely Raffles City Shenzhen, Raffles City Chongqing and Raffles City The Bund in Shanghai. The retail component of Raffles City The Bund is slated to begin operations next month.
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