REITs – BT

CapitaLand plans spin-offs to create two China-listed Reits: CEO

CapitaLand Ltd, South-east Asia’s largest property developer, plans to spin off its developed Chinese projects into two mainland-listed real estate investment trusts (Reits) when China approves listing of Reits, its CEO said yesterday.

Many developers are waiting for China to frame guidelines for the listing of Reits, which is seen as the next stage of development of China’s real estate market.

‘Within the next three to five years, for sure,’ Liew Mun Leong, CapitaLand president and CEO told Reuters in an interview. ‘It’s part of the process of the real estate industry maturing.’

Last month, CapitaLand chief operating officer Lim Ming Yan was quoted as saying the firm is considering spinning off US$5.3 billion of its projects in China into a Reit.

Mr Liew clarified that the divestment plan would involve the China assets held both by CapitaMalls Asia and by CapitaLand. It would see those companies create two Reits listed on the mainland, one focused purely on shopping centres in China and one on mixed-use projects such as its Raffles City developments in Chengdu and Shenzhen.

‘You can have two Reits,’ Mr Liew explained. ‘One is just purely for malls, and then it is very clear where the income stream, and one that is mixed development, with office and retail and residential and malls.’

CapitaLand, which is 41 per cent owned by Singapore investment company Temasek Holdings, is targeting the main ‘gateway cities’ in China: Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu and Chongqing.

CapitaLand will invest at least S$2 billion per year in the mainland, helping the company to increase the portion of its portfolio there to 45 per cent from 36 per cent now, Mr Liew said. ‘I can’t see any market in the world that is better than China for me,’ he said. ‘Our target is 45 per cent maximum of assets in China. I think in five years, we’ll get there.’

As China’s real estate market slows, CapitaLand is eyeing the acquisition of Chinese developers, including H-share and A-share companies listed in Hong Kong. The executive said there will be more opportunity in this downturn because the mainland government will not bail out the real estate industry.

‘Frankly the last global recession, the last financial crisis was too short,’ Mr Liew said. ‘It sounds brutal, but we will have more opportunity if it is not recovering so fast.’

‘There will be a lot of companies that run into difficulties,’ he added. ‘If you have a good candidate, we will look at it quickly.’

The company’s shopping mall arm, CapitaMalls Asia, will sustain its current pace of investment, at S$2 billion over the next 18 months, with 80 per cent of that going to the mainland, Mr Liew said. It will have 100 malls in China within three to five years, he said, up from 56 now.

CapitaLand and CapitaMalls Asia are part of a consortium including a unit of Temasek that will spend 21.1 billion yuan (S$4.2 billion) to develop a mammoth eight-tower riverfront site in Chongqing. — Reuters