CAPITALAND on Monday announced plans to spin off its $20.3 billion retail portfolio into a separate listed entity. While the move by itself just realigns ownership, some key benefits will be derived for CapitaLand.
However, concerns have since been raised about the impact of the move on CapitaLand’s two listed retail property trusts – CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT). Both trusts might lose out if investor interest switches to the new CapitaMalls Asia (CMA).
CapitaLand, on the other hand, will benefit as it boosts its balance sheet.
CMA’s stakes in the malls under its umbrella have a total net asset value of $5.3 billion. Assuming that CapitaLand chooses to float 20-40 per cent of CMA, conservatively about $1.1 billion to $2.1 billion would be raised. This will increase CapitaLand’s cash position, lower its gearing and allow it to invest and grow its other core business.
‘We view the transaction positively and agree with CapitaLand that the capital raising will enable the group to foster growth in all its businesses – enabling its retail mall division’s growth to be accelerated while simultaneously maintaining relative balanced growth with its other business units,’ said Nomura analyst Tony Darwell.
But is the deal to the disadvantage of CMT’s and CRCT’s minority shareholders and retail investors? Continue reading
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