CapitaLand Development sells Hanoi office building for S$751m

CAPITALAND Development (CLD) is divesting its Grade A office building in Hanoi, Vietnam, for S$751 million to an unrelated third party.

Named Capital Place, the building is held under the CapitaLand Vietnam Commercial Value-Added Fund (CVCVF) which is managed by CapitaLand Investment Limited (CLI).

CLD holds a 50 per cent stake in the fund. The remainder is held by MEA Commercial Holdings.

In a press statement on Thursday (Jan 20), CLD said CVCVF will become fully divested and closed upon completion of Capital Place's divestment. Fund investors will receive a 34 per cent internal rate of return, net of fees, almost triple CVCVF's hurdle rate.

According to CLD, the fund was able to access regional debt markets to obtain an efficient capital structure. This further boosted the fund's returns to a "stellar result" that will generate carried interest of S$23 million to CLI.

It will also provide a strong track record for CLI's future private equity funds, said CLD.

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Ronald Tay, CEO of CLD in Vietnam, said the divestment was made at a premium to book value and comes as part of the fund's exit strategy.

CLD intends to redeploy proceeds from the divestment into higher-yielding assets, and as seed capital for future funds to be developed together with CLI in Vietnam.

"With CLI's growing bench strength in private equity fund management and CLD's deep experience in Vietnam, we will leverage our synergistic capabilities to launch new real assets private equity funds in Vietnam in the near future," commented Tay.

"We continue to seek attractive real estate investment opportunities in offices, residential and urban developments, as well as in new economy assets such as logistics facilities, data centres and business parks."

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