CRCT buys Beijing mall’s basement extension

Source : Business Times - 30 Sep 2008

CAPITARETAIL China Trust (CRCT) has entered into a conditional agreement to acquire Xizhimen Mall Basement 1 Extension (Phase 2) for 163.5 million yuan (S$32.7 million).

CRCT said yesterday it will acquire the property from Beijing Finance Street Construction Development Co for a total consideration - including the purchase price, capital expenditure and related costs - of about 195 million yuan.

In February, CRCT acquired Xizhimen Mall for $336 million. This involved an agreement for it to purchase, when completed, the planned Phase 2 from the vendor, subject to conditions.

CRCT said the acquisition will be fully funded through external debt and internal cash reserves.

Following the acquisition, CRCT’s gearing is expected to be 32.3 per cent.

Wee Hui Kan, deputy CEO and CEO designate of CRCT manager CapitaRetail China Trust Management, said Xizhimen Mall’s total gross rentable area will increase to 83,074 sq m. The mall is expected to benefit from, ‘higher shopper traffic and enhanced rental income growth over time’, he said.

Assuming 100 per cent occupancy and current average rental rates commanded by Basement 1 of Xizhimen Mall, Phase 2 is expected to achieve a net property income yield of 9.1 per cent. Phase 2 will add 9,217 sq m of gross rentable area to the existing Basement 1.

The acquisition is expected to be yield-accretive to CRCT unitholders compared with CRCT’s implied net property income yield of about 8.8 per cent, based on the trust’s closing unit price of $0.725 on Sept 26.

Xizhimen Mall is part of Xihuan Plaza, a mixed-use development that comprises three office towers, a small commercial block and a seven-level retail podium.