SINGAPORE (EDGEPROP) – CapitaLand Investment Limited (CLI) is divesting its entire interest in Queensbay Mall, located in Penang, Malaysia to CapitaLand Malaysia Trust (CLMT), its sponsored REIT listed on Bursa Malaysia, for RM990.5 million ($300.3 million). CLI holds 91.8% of the total strata floor area of retail parcels in the mall.

The agreed value for the transaction represents a premium of 3.8% to CLI’s valuation of the mall in December 2021. The proposed divestment is conditional on the approval of CLMT’s non-interested unitholders and is targeted to be completed by 1Q2023.

Upon completion, CLI is expected to receive proceeds of about RM987.0 million (about $299.2 million) and realise an estimated gain of RM59.3 million (about $18.0 million). CLI states it intends to take up its pro-rata entitlement for the proposed private placement included as part of the funding for CLMT to acquire Queensbay Mall. As at Nov 3, CLI had a deemed interest of approximately 39.3% in CLMT.

Queensbay Mall is a free-standing 8-storey shopping centre with a lower ground floor and a lower ground mezzanine comprising five floors of retail space and car parks. It is one of Penang’s largest malls, with a net lettable area of 883,111 sq ft. As of Oct 7, the mall has a committed occupancy of 95%.

Jonathan Yap, CEO, listed funds at CLI, says that Queensbay Mall will add meaningful scale to CLMT as it seeks to diversify its income streams and grow its asset base. “Post-divestment, CLI will continue to benefit from Queensbay Mall’s stable yield and participate in its organic growth through our stake in CLMT,” he adds.

The proposed divestment is part of CLI’s ongoing 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 $2.7 billion year-to-date.

“About 87% of this value is acquired by CLI’s listed and private fund vehicles, boosting CLI’s FUM and fund management FRE. Amid the global uncertainty, we are on track to meet CLI’s annual divestment target of $3 billion,” Yap shares.

Source: EdgeProp Singapore, 9 November 2022.