Mergers & Acquisitions

China Vanke-led consortium buys 20 malls from Singapore’s CapitaLand for US$1.29 billion

The malls, with a combined area of 950,000 square metres, are located in 19 cities including Beijing

PUBLISHED : Friday, 05 January, 2018, 1:59pm
UPDATED : Friday, 05 January, 2018, 10:45pm

China Vanke, one of China’s largest developers, its commercial property unit SCPG Commercial Real Estate and private equity company Hopu Investment Management have teamed up to acquire 20 shopping malls across China from Singapore’s CapitaLand.

The deal for the malls is worth 8.36 billion yuan (US$1.29 billion), the buyers said on Friday, pending approval from Chinese regulators. The malls, with a combined area of 950,000 square metres, are located in 19 tier one, two and three cities including Beijing, Chengdu, Dongguan, Foshan and Yangzhou, according to SCPG.

“We are bullish about China’s existing commercial property sector, as China’s urbanisation process gathers momentum and people’s demand for a better life rises. The acquisition of CapitaLand’s mature properties aligns well with SCPG’s growth strategy,” said Ding Liye, the company’s president.

Alvin Yip, managing director and co-head of investment and advisory services at Cushman & Wakefield China, said the acquisition has quickly boosted the company’s portfolio.

“These community malls will generate higher yield and appreciate significantly if managed properly or withdrawn from the market,” said Yip.

“The rising purchasing power, mature consumption culture and commercial atmosphere in China has created a fertile ground for shopping and leisure hubs not only in tier 1 cities, but also nationwide.”

The acquisition will expand SCPG’s portfolio to 120 projects with an area of 10 million square metres in 58 Chinese cities, and more than 80 billion yuan in assets under management, the company said. SCPG told the South China Morning Post its cooperation with CapitaLand dates back to 2004 and that it knows the properties it is going to acquire.

CapitaLand said the transaction will generate net gains of about US$56.5 million for it. It said the loss of recurring income arising from this transaction will be limited, as these malls accounted for about 7 per cent of its China shopping centre portfolio valuation, as of June 30.

CapitaLand’s president and chief executive, Lim Ming Yan, said the company had seized a window of opportunity offered by transformative changes to China’s retail industry to reconstitute its mall portfolio.

China Vanke bought SCPG in November 2016 from The Blackstone Group for 12.9 billion yuan with the aim of boosting its commercial property development and management capabilities.

The third partner in the transaction, Triwater Asset Management Holdings, is a subsidiary of Hopu. Vanke also partnered with Hopu for last year’s purchase of Singapore logistics giant GLP.