Tag Archives: Singapore REITS

WE refer to the Hock Lock Siew commentary, ‘Spinoff by CapitaLand: Will Reit units lose out?’ (BT, Oct 8).

We would like to assure investors that the business model and financial performance of CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT) will not be affected by the listing of CapitaMalls Asia (CMA).

Being real estate investment trusts (Reits), CMT and CRCT offer stable and sustainable distributions, primarily from the rental income derived from their portfolio of properties.

Further, they will continue to enjoy the right of first refusal for CMA’s completed and stabilised shopping mall pipeline in Singapore and China respectively.

CMA, on the other hand, will primarily focus on the development or redevelopment of shopping malls (including greenfield malls) and the management of retail property funds. Its focus will be more on growth and less on dividend payout – similar to other real estate development companies. Continue reading →

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 →