CapitaLand Development divests Vietnam-based Capital Place for $751m

It will redeploy the proceeds from this divestment into higher-yielding assets.

Capital Place, a Grade A office building in Hanoi, Vietnam, is being divested for $751m, according to CapitaLand Development (CLD), the development arm of CapitaLand Group. 

The property is currently held under the CapitaLand Vietnam Commercial Value-Added Fund (CVCVF), with CLD holding a 50% stake. The remaining interest, meanwhile, is held by MEA Commercial Holdings Pte. Ltd. 

Upon completion of the transaction, CVCVCF will be fully divested and closed, providing investors in the fund with an internal rate of return net of fees of 34%, or almost triple the fund’s hurdle rate. A carried interest of $23m to CLI would also be generated as a result. 

“The divestment of Capital Place is part of CVCVF’s exit strategy and in line with CLD’s ongoing capital recycling efforts to unlock the strong underlying value of our properties. Tapping on the synergies of our ONE CapitaLand ecosystem and working closely with CLI, we have successfully created value for our capital partner through our real estate development and asset management capabilities, divesting the prime asset at a premium to book value. CLD will redeploy the proceeds from this divestment into higher-yielding assets and as seed capital for future funds to be developed together with CLI in Vietnam," said Ronald Tay, CEO, CLD Vietnam. 

Capital Place was originally acquired by CVCVF in 2018, with the property opening fin 2020. 100,000 sqm of net lettable area are available across two 37-storey office towers. Notable tenants include HSBC Vietnam, Porsche, Standard Chartered Bank Vietnam and TOTO Vietnam, with the office being the first to achieve Leadership in Energy and Environmental Design Gold Certification.