China Vanke-Led Group to Buy 20 Retail Malls From CapitaLand -- Update

A group led by China Vanke Co. (2202.HK) has agreed to buy 20 shopping malls in China from Singapore's CapitaLand Ltd. (C31.SG) for 8.37 billion yuan (US$1.29 billion), in a deal that includes shareholder loans.

China Vanke Co. and its commercial property unit SCPG Holdings Co. have teamed up with Triwater Asset Management Holdings Ltd. to buy the 20 malls-in 19 Chinese cities including Beijing, Chongqing and Foshan-which have a total gross floor area of 950,000 square meters, SCPG said Friday.

SCPG will take over and operate all 20 malls upon the deal's completion, which is expected in the second quarter pending approvals from Chinese regulators. The purchase will boost SCPG's portfolio to 120 retail properties, or a combined gross floor area of 10 million square meters, across 58 cities in China, with an asset value of CNY80 billion, it added.

China Vanke's latest asset acquisition comes amid China's booming domestic demand and rising property market. Despite concerns about possible implementation of a property tax by Beijing to curb the overheating market, the nation's six major developers logged a 62% on-month growth in contracted sales in December, says broker Bocom International.

The strong market sentiment sent shares of China Vanke in Hong Kong to a fresh record high, closing 6.4% higher to 36.70 Hong Kong dollars. That puts the stock's gain this week to 17.6% after last year's 76% surge.

For the seller, CapitaLand, the deal marks another effort by Singapore's major developer to optimize its investment portfolio by selling non-core assets and deepening its presence in city clusters in China. CapitaLand last month divested CapitaMall Kunshan in the Chinese city of Kunshan, after an acquisition in November of a shopping mall under a joint venture in China's first-tier city of Guangzhou.

China is on the cusp of retail-industry transformation, thanks to a burgeoning middle class and the rising popularity of online shopping amid the nation's e-commerce boom. "The rejuvenated portfolio will enable CapitaLand to respond more effectively to the paradigm shifts in Chinese consumer behaviours, and strengthen our position as we continue to tap the growth in China's rapid urbanisation," said CapitaLand President Lim Ming Yan in a separate statement.

After the latest deal, CapitaLand's shopping mall network in China will comprise 49 malls, of which 45 are located in first- and second-tier cities. The disposal will bring a net gain of about 75 million Singapore dollars (US$56.5 million) to the Singapore developer.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

January 05, 2018 04:27 ET (09:27 GMT)