Singapore developer to spin off mainland retail reit

PUBLISHED : Thursday, 18 May, 2006, 12:00am
UPDATED : Thursday, 18 May, 2006, 12:00am

CapitaLand, the biggest developer in Southeast Asia, plans to spin off a China real estate investment trust comprising more than US$1 billion worth of mainland retail properties by year-end.

The Singapore-listed developer, which has been eager to expand its retail portfolio in China, has more than 21 shopping centres in provincial cities across the mainland.

Most of its retail assets are anchored by US retail giant Wal-Mart and Beijing Hualian, China's largest supermarket and department store operators.

'With our strong continuous pipeline of retail assets in China, we are confident of successfully launching a China retail reit by the end of this year,' said Liew Mun Leong, the president and chief executive of CapitaLand.

'The proposed reit further strengthens our multi-sectoral presence and our diversified earnings base in China.'

CapitaLand continued its shopping spree yesterday, closing a deal to buy 930,000 square feet of Xihuan Plaza Retail Mall in Beijing for 1.32 billion yuan from a subsidiary of state-owned Beijing Finance Street Construction Development.

The first phase of the development, measuring more than 780,000 square feet, has been completed and is expected to be operational by the first quarter of next year. The second phase would be completed by 2008, the company said.

While the shopping centre will be one of the assets included in the proposed reit, the developer provided no details of its other components.

Meanwhile, CapitaLand said it had made its first residential acquisition in Hangzhou - a 59,622 square metre site with an approved potential gross floor area of 129,084 square metres - for 562.01 million yuan or 4,353 yuan per square metre per plot ratio.

The site, adjacent to Zhejiang province's historic Jinghang Grand Canal in Gongshu district, will be turned into a 1,200-flat project.

The company expects to launch the first phase of the project next year and complete it by 2009.

The company said it had spent about S$6 billion ($29.94 billion) developing homes and commercial property in China, its biggest overseas market after Australia.

Hangzhou, the capital of Zhejiang, reported an annual growth rate of 12.5 per cent, according to CapitaLand.