CapitaLand to grow China new economy assets to $5b

CapitaLand has targeted to grow its exposure of business park, industrial and logistics assets in China to $5 billion over the next few years, from $1.5 billion. This will be done by redeploying part of the capital from asset recycling to these assets, said the property giant yesterday.

CapitaLand said tenants from these sectors typically enjoy "robust fundamentals and a supportive regulatory environment".

As part of CapitaLand's active recycling, CapitaLand Retail China Trust (CRCT) has been designated the group's real estate investment trust (Reit) platform for non-lodging assets in China, with access to CapitaLand's pipeline in the country.

CRCT will also continue to explore opportunities from third parties and acquire from the market, CapitaLand said. Over time, CRCT plans to have a target portfolio mix of 40 per cent in integrated developments, 30 per cent in retail and 30 per cent in new economy.

In line with these targets, CapitaLand has entered into agreements to divest its share of interest in the companies that hold five business park properties and the Rock Square mall in China to CRCT, it announced earlier this month.

The five business park properties are located in Suzhou, Xian and Hangzhou, while Rock Square is located in Guangzhou. This makes the proposed acquisition CRCT's largest to date. Total acquisition cost has been estimated at $822.4 million, the Reit said this month.

Upon completion of the proposed deal, CapitaLand plans to enter into a joint venture with CRCT on the Ascendas Xinsu portfolio in Suzhou, with a view to extracting value from this mature asset through redevelopment, it said.

CRCT also proposed earlier this month to acquire an 80 per cent interest in Singapore-Hangzhou Science & Technology Park Phase I and an 80 per cent interest in Phase II.

CapitaLand added that this expansion target is in tandem with the group's strategy to ride on China's economic transformation focusing on technology, services and domestic consumption.

DBS Group Research in October said CRCT was a "China behemoth in the making", noting that it had an addressable pipeline of more than $33 billion from its sponsor CapitaLand as at last month.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on November 17, 2020, with the headline 'CapitaLand to grow China new economy assets to $5b'. Print Edition | Subscribe