CapitaLand announced on August 27th that the company is selling its 70 percent stake in the Westgate shopping centre in Singapore to its CapitaLand Mall Trust (CMT) affiliate for S$789.6 million ($578.6 million). The transaction, which is expected to be completed by the end of the year, will bring CapitaLand S$397.6 million in proceeds and a net gain of S$99.2 million according to the announcement.
Westgate is a 593,923 square foot (55,177 square metres) shopping center in Singapore’s Jurong Lake Area, a former industrial district that has been redeveloped by the city government into a new commercial hub, which the Urban Redevelopment Authority says will be the focus for more 100,000 new jobs in western Singapore.
The seven-storey mall was jointly developed by CapitaLand and CMT as the retail component of a combined shopping and office project which connects directly to the Jurong East MRT station and Jurong East Bus Interchange, with the mall having opened in 2013.
The coming acquisition will bring the city-state’s biggest real estate developer cash flow for investing and developing new projects in Singapore and other Asian countries after CapitaLand acquired three new projects in its home city and mainland China over the past three months.
Westgate Enriches CMT Portfolio
Westgate mall, which welcomed a record 49.4 million shoppers in 2017, was built to be the major lifestyle mall in western Singapore, according to CapitaLand. By the end of June, the mall marked an occupancy of 98 percent and its top tenants in terms of rental income included Isetan, BreadTalk, Samsung, Fitness First and Euro Group.
CMT currently owns a 30 percent stake in Infinity Mall Trust, which holds Westgate, and upon the successful completion of the agreement announced this week, will own 100 percent of the five-year-old property.
For CapitaLand, the company’s business will continue to benefit from Westgate’s growth through CapitaLand’s 28.16 percent ownership in CMT, and with the company’s wholly-owned retail operating platform CapitaLand Retail retained as the external manager of Westgate, the company can still control the management of the mall, as pointed out by the Ronald Tay, CapitaLand’s CEO for Singapore, Malaysia and Indonesia.
CapitaLand Mall Trust, which is managed by CapitaLand’s wholly owned subsidiary CapitaLand Mall Trust Management Limited, already owns stakes in 16 shopping malls in downtown and suburban areas of Singapore with all of the shopping centres in the trust’s portfolio also listed as CapitaLand projects on the developer’s website.
As of the end of 2017, CMT had in place about 2,900 lease contracts with local and international retailers, which helped it to achieve an average occupancy rate reached 99.2 percent over its properties, and to earn distributable income of S$395.8 million for 2017.
CapitaLand is Looking for New High Yield Opportunities
According to CapitaLand officials, the sale of its stake in Westgate to CMT is mainly to enhance the company’s financial flexibility and to free up cash for higher yielding investments. “This is another of CapitaLand’s capital recycling actions which enables us to maintain a robust balance sheet while growing our assets under management,” said Lim Ming Yan, President & Group CEO of CapitaLand Group. “Having achieved our annual capital recycling goal of S$3 billion in 1H 2018, we continue to actively seek opportunities to reconstitute our portfolio.”
The Singaporean developer has reported three land acquisitions in Singapore and China within the last three months, including just one week ago teaming up with local rival CDL to purchase a 3.7-hectare mixed-use site in northeastern Singapore for S$777.78 million.
Prior to this latest Singapore acquisition, on June 27th, CapitaLand bought a RMB 5.7 billion mixed-use site in the western China municipality of Chongqing, and on August 17th, the developer continued to add to its China pipeline by purchasing a pair of two residential sites in Guangzhou’s Zengcheng District for RMB 2.05 billion.