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CAPITALAND Retail China Trust (CRCT) is acquiring a shopping mall in Chengdu for 1.5 billion yuan (S$303 million).
Galleria is located in the Xinnan Tiandi retail precinct of Gaoxin District in the south of Chengdu, a major shopping belt in the city.
The mall has been valued at 1.52 billion yuan by Savills Valuation & Professional Services as at July 26. Including acquisition-related expenses, the total investment cost for the mall is expected to be about 1.527 billion yuan. CRCT plans to finance the purchase with a mix of existing cash and additional debt.
When the transaction is completed, the acquisition will enlarge CRCT's portfolio size by about 14 per cent to 12.55 billion yuan. The mall has a current net property income yield of about 5.4 per cent and the acquisition is expected to be distribution per unit-accretive for CRCT.
Tony Tan, chief executive of the manager of CRCT, said: "The proposed acquisition will diversify CRCT's income and strengthen the resilience of our portfolio to deliver sustainable growth. With the opportunity to tap on CapitaLand's network of five existing malls in Chengdu, the proposed acquisition is aligned with CRCT's investment strategy to expand our footprint by leveraging on our sponsor's strong presence in key Chinese cities where it has a competitive edge."
Leases accounting for about two-thirds of the mall's total rent are up for renewal by 2018, which will give it an opportunity to boost rental income by adjusting the tenant mix, he added.
The six-storey mall, which opened its doors in 2010, has a gross floor area, excluding car park, of about 53,619 square metres and 900 car park spaces. As at end-May, it was fully occupied.