SINGAPORE - The buyers of CapitaLand's 20 retail malls are China Vanke, Vanke's subsidiary SCPG Commercial Property, and Triwater, an affiliate of a fund, according to disclosures made by Vanke on the Hong Kong stock exchange on Friday (Jan 5).
CapitaLand's management took pains at a Friday briefing to stress that it is by no means looking to reduce its presence in China, but rather refocusing its attention away from tier-three cities to its malls in tier-one and tier-two cities.
Group chief operating officer Jason Leow said: "We have been looking at the portfolio reconstitution for a while already. The final assembled portfolio is one that has gone through many iterations."
The malls it is disposing of are first-generation malls in China purchased more than a decade ago. They are small in size, averaging 40,000 sq m each, and many have long leases locked in with American hypermarket and department store operator, Walmart, which limits CapitaLand's ability to reposition them.
It would also cost too much to rejuvenate the malls, president and group CEO Lim Ming Yan said. At the same time, better-quality malls are also springing up in the vicinity, although he qualified that the CapitaLand malls being disposed of are actually well-located in their respective micromarkets.
"Out of the 20 malls, 14 of them are single malls in single cities, so our presence isn't big enough to be able to enjoy enough market influence."
The disposal thus allows CapitaLand to focus on its core city clusters of Beijing, Shanghai, Guangzhou, Shenzhen, Wuhan, Chongqing and Chengdu.
The management declined to share the exit yields of the properties. Mr Leow said: "The buyers would like us to keep the exit yields confidential, because they are buying at a certain assumed forward yield."
It also declined to share if the management will be paying out these proceeds to shareholders, but said that when the disposal proceeds are repatriated back into the company, it will give the property group some S$3.66 billion to redeploy into investment opportunities.