CAPITALAND China Trust : AU8U 0% (CLCT) is divesting its entire equity interest in a special purpose vehicle that holds its mall in Beijing, CapitaMall Shuangjing, for 842 million yuan (S$157.8 million).

Based on the asset’s net property income from Jan 1, 2023, to Sep 30, 2023, this price tag represents an exit yield of 2.8 per cent.

The transaction is expected to crystallise higher cash value from the asset, reduce CLCT’s aggregate leverage and enhance returns to unitholders, said the manager on Wednesday (Dec 6).

The sale of CapitaMall Shuangjing is slated to complete in Q1 2024 and is expected to generate net proceeds of about 690.7 million yuan. 

Net proceeds may be used to repay debt, undertake a unit buyback, and finance general corporate and working capital requirements.

Located in Guangqu Road in Beijing’s Chaoyang District, CapitaMall Shuangjing was part of CLCT’s initial asset portfolio during the trust’s initial public offering in 2006.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

It is also the last remaining master-leased mall within CLCT’s retail portfolio.

The property spans four retail levels and has been operating for 19 years. It has a gross floor area of 49,462.65 square metres.

Tan Tze Wooi, chief executive of the manager, said the asset would require “significant capital outlay and planning downtime to repurpose the building and remain competitive” considering how the asset is predominantly master-leased.

“This divestment presents a good opportunity to unlock value and enhance total returns for unitholders. Proceeds from the divestment will strengthen CLCT’s balance sheet and provide greater financial flexibility to pursue capital recycling and portfolio reconstitution initiatives,” he said.

Had the divestment been completed on Jan 1, 2022, CLCT’s distribution per unit for FY2022 would have been S$0.0714 instead of S$0.075.

Pro forma net asset value per unit as at Dec 31, 2022, would have stood at a higher S$1.39 over S$1.38, assuming it was completed on this date.

Units of CLCT closed on Wednesday S$0.01 or 1.2 per cent higher at S$0.835.