Reporter | Zhang Ziyi
After the completion of CapitaLand's business restructuring, the new investment direction in China has become clearer: diluting commercial real estate investment and accelerating its layout in the new economy.
On 12 October, CapitaLand China Trust ("CLCT"), a subsidiary of CapitaLand Investments, announced its intention to acquire a logistics asset package from an unaffiliated third party for RMB1,683.4 million, including four logistics assets in Shanghai, Kunshan, Wuhan and Chengdu.
The above four projects are located in major logistics hub cities in China, close to transportation nodes such as ports, airports and railways, and have a domestic tenant base. The gross GFA is approximately 265,000 square meters, with a occupancy rate of 96.3% as of August 31, 2021 and a weighted average lease term of 2.1 years. Three of the projects were completed between 2016 and 2018 and another in 2010. The transaction is expected to close by the end of 2021.
This is CapitaLand's first acquisition of a logistics asset package, which also means that it has officially entered the Chinese logistics real estate market.
The slightly unfamiliar CapitaLand Investment is actually a platform for CapitaLand after restructuring its business this year.
On 22 March this year, CapitaLand announced its business restructuring plans with Kaiten Holdings, a wholly owned subsidiary of Temasek Group, to integrate its investment management platform and travel and accommodation business into CapitaLand Investment Management (CLIM), which was listed on the Singapore Stock Exchange on 20 September.
The property development business of CapitaLand group has been privatized, and this part of the business and assets is estimated to have a net asset value of about S$6.1 billion, which is fully controlled by Kaiten Holdings, a company not directly owned by Temasek, and is now the largest shareholder of CapitaLand, holding 52% of the shares.
As a result of the restructuring, CapitaLand formed two entities, CapitaLand (listed real estate investment management business) and CapitaLand (privatized development business).
CapitaLand China Trust is a wholly owned subsidiary of CapitaLand Investments and one of six listed real estate investment trusts (REITs) under CapitaLand Investments, which mainly acquires mature projects with stable returns. Since September 2020, CapitaLand China Trust has embarked on a diversified asset path, expanding its asset class from pure shopping malls to retail, office and industrial assets, and shifting its investment focus to the new economy.
CapitaLand China Trust's chief executive, Mr. Chen Ziwei, said that CapitaLand China Trust will further expand its investment in new economy assets in the future, including industrial parks, logistics real estate, data centers, etc., and plans to account for 30% of the value of new economy assets in the trust's asset portfolio by 2026.
It is worth noting that CapitaLand has changed a lot this year, whether it is the restructuring and adjustment of the organizational structure or the shift in investment business.
CapitaLand reduced its investment in commercial management and generated revenue from the sale of a portion of its stake in the commercial real estate business.
On 28 June, CapitaLand signed a partnership agreement with Ping An Life Insurance Company of China to sell a portion of its Raffles City portfolio in China. The partnership involved projects including Raffles City Shanghai, Raffles City Beijing, Raffles City Ningbo, Raffles City Chengdu, Raffles City Changning and Raffles City Hangzhou, with a total asset value of RMB46.7 billion in the portfolio, of which Ping An acquired a portion of the equity.
After a series of transactions, CapitaLand's shareholding in each project was changed from 30.7% to 55% held through private equity funds before the transaction to 12.6% to 30%, and it continued to be responsible for the operation and asset management of the project. The transaction is expected to close in the third quarter of 2021.
In addition, CapitaLand has expanded its investment scope beyond the commercial sector.
On 28 April, CapitaLand acquired a hyperscale data centre campus in Shanghai's Minhang District for RMB3.66 billion, CapitaLand's first data centre project in China. The park is now operational and serves its main customers, including two of China's largest telecommunications operators.
On 26 May, CapitaLand acquired a 50% stake in Ascendas Development Co., Ltd. of Dalian Software Park for RMB501 million. According to the announcement, the target company is mainly engaged in property investment and holds investment properties located in Dalian, China with a total planned construction area of about 443,700 square meters.
Pan Zixiang, Chief Executive Officer of CapitaLand (China) Investment & Portfolio Management, said: "We were previously a developer with asset management capabilities, and in the future we will transform into an asset manager with development capabilities. In the future, the proportion of business may drop, but the entire asset scale will be larger, and each sector is growing to reduce the proportion of commercial offices a little, investing in industrial parks, data centers, logistics projects, and our AUM is increasing. ”