CapitaLand Moves in the Shanghai Commercial Property Market

CapitaLand said the company, through its wholly owned business unit CapitaLand China, entered into agreements with unrelated parties to acquire a newly completed office development in Yangpu District, Shanghai, China, at an agreed property value of RMB2.64 billion. Based on total gross floor area (GFA) of 80,701 square metres, this translates to an investment of RMB32,713 per square meter.

In the meantime, CapitaLand is divesting Innov Tower, an eight-year-old office building located in Shanghai’s Xuhui District, to a party unrelated to CapitaLand at an agreed property value of RMB1.56 billion. This works out to be RMB38,500 per sq m, based on total GFA of 40,445 sq m. The divestment is expected to generate net profits of approximately SGD85 million. Both transactions are expected to be completed in June 2017.

Lim Ming Yan, President and Group CEO of CapitaLand Limited, said: “China continues to be a core market attractive to CapitaLand. The divestment of Innov Tower allows us to unlock and realize the value of a stabilized asset at an optimal stage of its life cycle, while the acquisition of Guozheng Center allows us to immediately redeploy the capital to another quality income-generating asset.

“In addition, to efficiently deploy our RMB reserves accumulated from consecutive quarters of strong residential sales into an operational office asset at an attractive entry yield will improve CapitaLand’s capital structure and our return on equity,” said Lim.

-- APMR News