The manager of CapitaLand Retail China Trust (CRCT) announced that CRCT has entered into an agreement with a subsidiary and associates of sponsor CapitaLand to acquire 100% interests in three companies that hold three multi-tenanted malls in China – CapitaMall Xuefu and CapitaMall Aidemengdun in Harbin and CapitaMall Yuhuating in Changsha.

The acquisition of the three companies is based on an agreed value of RMB2,960m (about S$589.2m, implied FY18 NPI yield of 6.0%) for the three malls held by the companies. Including professional fees, CRCT’s total acquisition outlay is estimated to be S$505.4m, subject to post-completion adjustments.

CRCT intends to finance the proposed acquisition via a combination of debt and equity with an objective to achieve accretion. The financing plan details will be decided at a later date. The malls will increase CRCT's portfolio GFA by 30.7% and currently enjoy an average occupancy of 99.0%.

The transaction is conditional upon unitholders’ approval at an EGM and is expected to be completed in 3Q19. We maintain HOLD on CRCT and keep our fair value of S$1.50 for now.

Source: OCBC Research - 11 Jun 2019