CLI to divest Penang’s Queensbay Mall to CapitaLand Malaysia Trust for RM990.5 million

CAPITALAND Investment (CLI) : 9CI 0% is selling its 91.8 per cent stake by total strata floor area of retail space in Penang’s Queensbay Mall for RM990.5 million (S$295.5 million) to CapitaLand Malaysia Trust (CLMT), CLI announced in a bourse filing on Wednesday (Nov 9) night.

The price represents a premium of 3.8 per cent to CLI’s valuation of the mall in December 2021. 

Upon completion, CLI is expected to receive proceeds of about RM987 million and realise an estimated gain of RM59.3 million.

CLMT’s acquisition will be financed by the issuance of new CLMT units to raise gross proceeds of up to 50 per cent of the total purchase consideration. The issue price of this proposed private placement will be determined later via a bookbuilding process.

CLI, as CLMT’s sponsor, intends to take up its pro-rata entitlement in the private placement. As at Nov 3, 2022, CLI had a deemed interest of approximately 39.3 per cent in CLMT.

The acquisition, which is conditional upon the approval of CLMT’s non-interested unitholders at an extraordinary general meeting to be convened at a later date, is expected to be completed by the first quarter of 2023.

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One of the largest malls in Penang, Queensbay Mall is a free-standing eight-storey shopping centre with a lower ground floor and a lower ground mezzanine comprising five floors of retail space and car parks.

It is located at Bayan Lepas along the south-eastern shorefront of Penang island with transport links and proximity to the Penang Bridge and the Bayan Lepas industrial hub in Penang’s Free Trade Zone.

The mall has a net lettable area of 883,111 square feet (sq ft) and a committed occupancy of 95 per cent as at Oct 7, 2022. Its tenants include those in entertainment, lifestyle, fashion and dining.

Jonathan Yap, chief executive of listed funds at CLI, said Queensbay Mall “is a high-quality asset that will add meaningful scale to CLMT as it seeks to diversify its income streams and grow its asset base”.

He added that post-divestment, CLI will continue to benefit from the mall’s stable yield and participate in its organic growth through its stake in CLMT.

Yap said the proposed divestment is a continuation of CLI’s strategy to unlock value by converting balance sheet assets into funds under management (FUM) that generate recurring fee-related earnings (FRE).

Including this transaction, CLI has announced gross divestments of about S$2.7 billion year-to-date. “About 87 per cent of this value is acquired by CLI’s listed and private fund vehicles, boosting CLI’s FUM and fund management FRE,” said Yap. “Amid the global uncertainty, we are on track to meet CLI’s annual divestment target of S$3 billion.”

Lui Chong Chee, chairman of CLMT’s manager, CapitaLand Malaysia Reit Management (CMRM), said the proposed acquisition of Queensbay Mall will deepen CLMT’s presence in Penang, and strengthen its foothold in the northern region of Malaysia, where it already owns Gurney Plaza and is targeting to complete the acquisition of its first logistics property.

The acquisition will enlarge CLMT’s portfolio to seven properties.

The remaining 8.2 per cent strata ownership of the mall not involved in the proposed acquisition are held by private owners.

CLI shares closed flat at S$3.35 before the announcement.