IN A big, bold and innovative move, CapitaLand, South-east Asia’s largest property developer is cashing in on its malls by listing its wholly-owned subsidiary, CapitaLand Retail, on the Singapore bourse.
CapitaLand Retail will be renamed CapitaMalls Asia (CMA) and will be one of Asia’s largest “pure play” shopping mall business with a geographic span hardly matched by any other developer.
The move will not only be good for CapitaLand shareholders who are being told that any excess cash from the public offering could be returned to them via a special dividend, but also to the potential investors of CMA.
These investors will be able to participate in an entity that will have an interest in, as well as manage a Pan-Asian portfolio of shopping malls with a total value of $20.3 billion, comprising 86 retail properties across 48 cities in five Asian countries.
While details are lacking as to the size of the initial public offering, based on its net total assets of $6.3 billion, CapitaLand will raise between $1.26 billion and nearly $2 billion, going by its chief financial officer Mr Olivier Lim’s estimate of listing 20 to 30 per cent of the company.
At the upper estimate, it will be one the largest public offering ever on the Singapore Exchange, and once again displays the shrewd vision of CapitaLand’s chief executive Liew Mun Leong.
Yesterday’s announcement follows the recent asset swap arrangement between CapitaLand’s two sponsored funds – CapitaRetail China Development Fund and CapitaRetail China Development Fund II – and China’s SZITIC Commercial Property (SCP), which gave the two funds full control over 22 retail malls in China. But few appear to have anticipated that this was all part of CapitaLand’s grand plan to spin off the malls via a public offer.
With one fell swoop, Mr Liew not only unlocks value for CapitaLand’s shareholders (of which I’m one) but also reduces the debt burden on the company’s books.
And as he pointed out, the value of CMA’s properties in Singapore on a per square foot basis is five times that of its properties in China and more than six times of those in India.
Currently, Singapore properties account for 56 per cent of the value of CMA but only 15 of its gross floor area of 23 million sq ft. But Chinese properties make up almost 64 per cent of CMA’s GFA.
Not only will investors be able to benefit from a rise in the value of the Chinese and Indian properties, there is also great potential for CMA to grow its malls in these two countries as only 20 per cent of Chinese shop through “organised retail” (as mall shopping is called) while only 4 per cent of Indians shop in malls.
This compares with 65 per cent in Singapore and 85 per cent in the US.
CapitaLand says it’s in no hurry to list CMA, but Mr Liew did say that “things ought to remain good” till at least year’s end. The company has a substantial war chest, strengthened by a cash call of $1.84 billion in February.
It is also reassuring to shareholders that CapitaLand intends to remain in the driver’s seat by retaining between 60 and 70 per cent of CMA.
If the mood at yesterday’s briefing to analysts and the media was anything to go by, CapitaLand has pulled another rabbit out of the hat.
Source : Today – 6 Oct 2009
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