As income grows, CRCTML lets go mall in Beijing

As well as announcing higher income for its second quarter, CapitaLand Retail China Trust Management (CRCTML) has revealed it is divesting CapitaMall Anzhen in Beijing.

CRCTML says CapitaLand Retail China Trust (CRCT), which it manages, has entered into an agreement through its trustee with Beijing Hualian Anzhen Business Development Company to sell its entire interest in a company that holds CapitaMall Anzhen.

The transaction price is based on the company’s adjusted net asset value of RMB1.1 billion (US$163.5 million), which is 12.9 per cent above valuation. Targeted for completion in the final quarter this year, the divestment is expected to generate net proceeds of RMB888.5 million and a net gain of RMB154.6 million.

In tandem with the divestment, CRCT will recover about 4700 sqm of level-four space in CapitaMall Wangjing, also in Beijing, from the mall’s anchor tenant, Beijing Hualian Group (BHG).

CRCT plans to convert the recovered space to house higher-yielding specialty stores as well as more experiential retail offerings. Reconfiguration works will start before the end of this year with the space expected to progressively contribute income from the second quarter of next year. BHG has also committed to refresh the department store occupying parts of levels one to three to a higher-end format.

Income up 16 per cent

Meanwhile, CRCTML has achieved net property income (NPI) of RMB197.7 million for its second quarter, a 16.3 per cent increase from the RMB169.9 million for the corresponding period last year.

It says the increase was mainly from the contribution by CapitaMall Xinnan, acquired at the end of September last year, partially offset by an extra tax provision for Beijing malls because of a change from cost to revenue basis from July last.

capitamall-xinnan

Distributable income for the second quarter was S$23.3 million (US$ 17.1 million), up 4.3 per cent from a year earlier.

For the first half, distributable income was S$47.7 million, up 4.7 per cent. D

“In light of the steady progress in its economy underpinned by strengthening domestic consumption, we remain optimistic about China’s long-term retail growth prospects,” says CRCTML chairman Soh Kim Soon.

CEO Tan Tze Wooi says that during the second quarter the group continued to identify ways to refresh its mall offerings to attract shoppers.

Following UrWork’s launch at CapitaMall Minzhongleyuan, the coworking space company opened a presence at CapitaMall Wangjing with a promising take-up rate of about 90 per cent.

At CapitaMall Minzhongleyuan, anchor tenant UA Cinemas reopened after a major revamp with more screens and an upgraded viewing experience, while CapitaMall Xinnan has signed four dining concepts after reconfiguring two former units on level four, boosting the rental income for the space by more than 40 per cent.

Overall, 7.1 per cent in rental reversions were registered at the group’s malls for the second quarter, while portfolio occupancy at the end of June was 96.2 per cent.

Of the CapitaMall Anzhen divestment, Tan says it will boost the group’s financial flexibility to seize growth opportunities.

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