SINGAPORE - CapitaLand announced that it will acquire office development Guozheng Centre in Shanghai for of 2.64 billion yuan (S$535 million).
Based on total gross floor area (GFA) of 80,701 sq m, this translates to an investment of 32,713 yuan (S$6,628) per sq m, the company said in a release on Thursday (June 1).
CapitaLand will also divest Innov Tower, an eight-year-old office building located in Shanghai's Xuhui District, to an unrelated party for 1.56 billion yuan (S$316 million). This works out to be 38,500 yuan (S$7,800) per sq m, based on total GFA of 40,445 sq m.
The divestment is expected to generate net profits of approximately $85 million. Both transactions are expected to be completed in June 2017.
"China continues to be a core market attractive to CapitaLand," said Mr Lim Ming Yan, president and group CEO of CapitaLand Limited. "The divestment of Innov Tower allows us to unlock and realise the value of a stabilised asset at an optimal stage of its life cycle, while the acquisition of Guozheng Centre allows us to immediately redeploy the capital to another quality income-generating asset."
On completion of the transactions, CapitaLand will have a portfolio of commercial assets under management in Shanghai, at over 1.3 million sq m in GFA across 17 properties.
Mr Lucas Loh, CEO of CapitaLand China, said: "Both Guozheng Centre and Innov Tower are located in two different key business districts of Shanghai, which are seeing strong demand from companies keen to locate in Shanghai but away from the increasingly crowded city centre."
Shanghai is part of a city cluster, one of five in China that CapitaLand has identified for growth, namely Beijing/Tianjin, Shanghai/Hangzhou/Suzhou/Ningbo, Guangzhou/Shenzhen, Chengdu/Chongqing/Xi'an, and Wuhan.