CapitaLand to gain $313m from China assets

August 23, 2008
CapitaLand to gain $313m from China assets
It is injecting four assets into its 50% owned Raffles City China Fund
By KALPANA RASHIWALA

PROPERTY giant CapitaLand said yesterday that it will realise a total
portfolio gain of $313 million from injecting four Raffles City
assets in China as seed assets into its 50 per cent owned Raffles
City China Fund.

The gain will comprise a $183 million net gain from the dilution of
CapitaLand's interest in the four Raffles City assets as well as $130
million fair value gain for Raffles City Shanghai.

The US$1 billion (about S$1.4 billion) real estate private equity
fund - the group's largest to date - will buy CapitaLand's effective
55.9 per cent stake in Raffles City Shanghai, and 100 per cent of the
Raffles City projects under development in Beijing, Chengdu and
Hangzhou.

The property group is expected to receive a total consideration of
about US$841 million (about S$1.15 billion) which takes into account
the agreed value of Raffles City Shanghai at 4.51 billion yuan (S$889
million) and the agreed land values of the other three Raffles City
projects.

Net of its 50 per cent stake in the fund, CapitaLand will obtain an
eventual net cash flow of about US$420 milllion (S$574 million).

Besides originating and retaining a sponsor stake in the fund,
CapitaLand is also managing the fund and its properties.

'CapitaLand, through its 50 per cent stake in the fund, will continue
to enjoy sustained rental income as well as appreciation in capital
value of the prime assets,' the group said in a release yesterday
evening.

CapitaLand Group president and CEO Liew Mun Leong said that the total
transaction proceeds of $1.15 billion will strengthen the group's
balance sheet and boost its ability to seize new opportunities in
China.

On the stockmarket yesterday, CapitaLand ended three cents lower at
$4.45. Morgan Stanley last week downgraded the stock to Underweight
from Equal-Weight and revised downwards its price target for the
share to $4.16 (from $5.94), pegged at a 15 per cent discount to its
end-2009 estimated net asset value per share of $4.89 (from a $5.94
estimated NAV per share for end-2008 previously).