CapitaLand aggressively expanding its Chinese portfolio

It spent a total of $613.8m to buy three new properties.

Amidst the announcement of divesting Innov Tower for S$316m, CapitaLand recently revealed that it will acquire two serviced residences assets in Chongqing and Chengdu, China at an agreed aggregate value of US$56.9m (S$78.8m). In Shanghai, the group also reported that it has agreed to buy Guozheng Center, a newly completed office development for RMB2.64b (S$535m).

Meanwhile, OCBC Investment Research forecasts a respectable gain for CapitaLand as it scales up its serviced residences business segment.

Here’s more from OCBC:

We like that the group continues to scale up its serviced residences business segment while actively reconstituting its portfolio. In 2017, we expect about 2.6k serviced residences units to be opened and note that CAPL secured new management contracts to manage six properties in China over 1Q17, which added over 1.2k units to its serviced residences portfolio. The group also divested serviced residences properties in Germany to Ascott REIT which was approved earlier this year.

The Innov Tower sale is expected to result in net profits of S$85m. The group will realize value from Innov Tower, a relatively stabilized asset, at RMB38.5k psm which will result in a respectable gain while recycling the capital into the newer Guozheng Tower.

Guozheng Tower was completed in 4Q16 and it is located in the strategic Wujiachang district in the northern part of Shanghai, at an attractive valuation of RMB32.7k psm.