CapitaLand buys Guangzhou shopping mall owner for $688.9m

It will jointly acquire the firm with CapitaLand Retail China Trust.

CapitaLand Limited (CapitaLand) entered an agreement to buy 49% of shopping mall owner Gold Yield Pte. Ltd. (Gold Yield) for $688.9m.

According to an announcement, Gold Yield owns the property Rock Square in Guangzhou, China. CapitaLand will handle the acquisition jointly with its subsidiary CapitaLand Retail China Trust (CRCT). CRCT will acquire the remaining 51%.

CapitaLand and CRCT have entered into the conditional put and call option agreement through their respective wholly owned subsidiaries, Gold Ruby Pte. Ltd. (Gold Ruby) and Gold Rock Investment Pte. Ltd. (Gold Rock).

Gold Ruby and Gold Rock have also entered into a joint venture (JV) agreement to regulate their relationship in relation to the management of Gold Yield and GZ Starshine.

"The Joint Acquisition is in line with CapitaLand’s strategy of investing in core cities and dominant assets in China and allows CapitaLand to increase its exposure in Guangzhou, a first-tier city in China," CapitaLand said.

Upon completion, CapitaLand will have an aggregate interest of approximately 69% in each of Gold Yield and GZ Starshine. Thus, Gold Yield and GZ Starshine will become subsidiaries of CapitaLand upon completion.

Meanwhile, CRCT raised gross proceeds of $103.8m from a private placement to fund the acquisition.

According to a separate announcement, 51,514,000 new units in CRCT were launched for an issue price of between $1.553 and $1.612 per unit. The private placement has been oversubscribed.

After an exercise option, a total of 64,392,000 new units will be issued.

The trading of the new units on the SGX-ST is currently expected to commence at 9 a.m. on 7 December 2017.

About $101.7m will be used to fund the acquisition, whilst $2.1m will be used to pay expenses of the private placement.