CRCT acquires Wuhan shopping mall for S$76m

CapitaRetail China Trust (CRCT) is acquiring New Minzhong Leyuan Mall – a mall in Wuhan’s shopping and entertainment belt – for RMB 395 million (S$76 million) from The Ascott Holdings.

Both CRCT and The Ascott Holdings are units of property developer CapitaLand.

The mall has a net property income (NPI) yield of 8.1 per cent compared to the NPI of 7 per cent for CRCT’s entire portfolio.

CRCT’s entire portfolio is valued at S$1.2 billion.

CRCT said it expects the transaction to be yield-accretive to its unitholders.

New Minzhong Leyuan Mall is almost 15 years-old and it comprises an annexed building and a conserved building.

It has a total of 393 leases and a committed occupancy of 90.6 per cent over its net lettable area of 23,361 square metres.

Major tenants include McDonald’s, KFC, Pizza Hut & cinema operators Studio City, with most other tenants selling fashion items and accessories.

CRCT says independent valuations from CB Richard Ellis and Knight Frank for New Minzhong Leyuan Mall amount to RMB 417 million (S$79 million) and RMB 422 million (S$80 million) respectively.

Retail spending from the mall is expected to reach RMB 35.9 billion (S$6.8 billion) by 2015, 1.5 times compared to RMB 14.4 billion (S$2.74 billion) in 2009.

As 64.2 per cent and 24.8 per cent of the mall’s leases expire in 2011 and 2012 respectively, CRCT said this will mean potential rental increases through rental renewal.

The manager also sees asset enhancement opportunities to lift rental revenues further.

CRCT is confident of Wuhan’s growing consumer spending as an up-and-coming second-tier city in central China.

Source : Channel NewsAsia – 6 May 2011

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