CapitaLand Commercial C-Reit’s public offer 535 times subscribed; 2.29 billion yuan raised from its Shanghai IPO

[SINGAPORE] The public tranche of the Shanghai initial public offering (IPO) of CapitaLand Commerical C-Reit (CLCR) closed ahead of schedule and was 535.2 times subscribed, said (CLI) on Friday (Sep 12).

As for the bookbuilding tranche, CLCR achieved a subscription coverage of 254.5 times from offline institutional investors, said CLI, the sponsor and asset manager of CLCR. This marked a record high among retail China real estate investment trusts (C-Reits) in the country, CLI added.

With this, CLCR has raised 2.29 billion yuan (S$409 million) from its IPO, having issued 400 million IPO units at a price of 5.718 yuan apiece.

As joint strategic investors in CLCR, CLI, CapitaLand China Trust (CLCT) and CapitaLand Development will collectively hold 20 per cent of its IPO units. CLCT, a China-focused Singapore Reit (S-Reit), previously said it would subscribe to 5 per cent of the IPO units.

Excluding this collective stake, the majority of the remaining units were snapped up by insurance companies, strategic capital investors and securities firms, said CLI.

It added that cornerstone investors took up 40.11 per cent of the units, while offline institutional investors were allotted 27.92 per cent in the bookbuilding tranche. The remaining 11.97 per cent was subscribed by retail and institutional investors in the public tranche.

CLCR is expected to commence trading on the Shanghai Stock Exchange by end-September, as China’s first international-sponsored retail C-Reit.

Noting that CLCR is its eighth listed fund, CLI said the C-Reit will expand its Reit management platform into the country and strengthen its position as Asia-Pacific’s largest Reit manager by market capitalisation.

CLI also said CLCR will complement CLCT, which is CLI’s Singapore-listed fund for international investors looking to invest in China.

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This dual-platform approach “provides both domestic and international investors with access to quality assets in China”, it added.

“The listing of CLCR is part of CLI’s capital-recycling strategy to enhance its balance sheet and redeploy capital in strategic opportunities across China,” said CLI. “It also aligns with CLI’s domestic fund strategy to tap onshore capital and grow its funds under management and recurring fee income.”

CLCR’s initial portfolio focuses on “high-quality, income-producing retail assets in top-tier cities”. It comprises two malls with a combined value of around 2.6 billion yuan – CapitaMall Sky+ in Guangzhou and CapitaMall Yuhuating in Changsha.

Located in Guangzhou’s Baiyun Central Business District, CapitaMall Sky+ is a lifestyle destination catering to a residential and commercial catchment. It is directly connected to Baiyun Park subway station. 

CapitaMall Yuhuating is an established community mall in Changsha’s Yuhua district. It serves a “high concentration of residential and office buildings”, and is accessible from two adjacent subway stations.

The two properties have a total gross floor area of 168,405 square metres. Their overall occupancy rate stood at 96 per cent as at Mar 31.  

CLI will continue to operate CapitaMall SKY+ and CapitaMall Yuhuating after CLCR’s listing.

A platform to unlock value from mature assets

CLI unveiled its plans to launch its first C-Reit in April.

This would allow CLCT to enter the expanding C-Reit market, Gerry Chan, chief executive of CLCT’s manager, said at the time.

A C-Reit would provide a platform to unlock value from CLCT’s mature assets to improve financial flexibility, allow it to pursue income diversification and enhance its portfolio quality, Chan said.

He also pointed out that China’s domestic capital market and investor base was “largely untapped by global Reit players”.

To the question of whether there would be overlaps between CLCT and CLCR, Chan said the C-Reit would focus on income-producing retail assets. Meanwhile, the China-focused S-Reit would be a diversified asset-class Reit anchored by a broad portfolio with retail, business park and logistic park properties.

Another difference is that CLCT’s investment mandate spans the Greater China region which includes Hong Kong and Macau, while CLCR focuses solely on mainland China, Chan said then.

CLI shares ended on Thursday flat at S$2.77; CLCT units closed on Thursday unchanged at S$0.79.