CapitaMall Trust buys Clarke Quay

SINGAPORE’S iconic Clarke Quay nightspot has been sold to real estate investment trust (Reit) CapitaMall Trust (CMT) for $268 million.

CapitaMalls Asia (CMA), owner of the riverfront food and beverage development, announced yesterday that the cash sale to CMT was in line with its strategy of recycling capital to reinvest elsewhere.

CMA chairman Liew Mun Leong said there was a need to revamp the firm’s portfolio to free up capital for new opportunities, such as Asia’s shopping mall sector, which had ‘tremendous growth potential’.

‘The sale further strengthens CMA’s investment strategy of acquiring new malls for higher returns. We continue to focus on expanding our presence in Singapore, China, Malaysia, Japan and India,’ he added.

The price agreed represents a 2.3 per cent premium over the valuation of $262 million made at the end of last year.

CMA chief executive Lim Beng Chee said Clarke Quay’s growth potential was best realised through CMT.

CMT – which is managed by external manager CapitaMall Trust Management Limited (CMTML), a wholly-owned subsidiary of CMA – said yesterday that it had the financial flexibility and capacity to fund the transaction that is targeted for completion by July.

CMTML chairman James Koh said the purchase of Clarke Quay, which sees more than a million local and overseas visitors per month, would allow CMT’s unitholders to capitalise on the growing lifestyle and entertainment demand.

‘Since the completion of its major refurbishment in late 2006, Clarke Quay has been successfully repositioned as one of the top entertainment zones in Singapore,’ he added.

The acquisition will increase CMT’s asset size to $7.6 billion, cementing its lead as Singapore’s largest Reit by asset size and market capitalisation.

CMTML chief executive Simon Ho said the opening of the integrated resorts is expected to boost tourist arrivals, and the improving economy, together with rising consumer confidence, would boost discretionary consumer spending.

‘Clarke Quay increases the number of properties we have catering for discretionary consumer spending, and enables us to ride on the long-term remaking of Singapore as Asia’s leading convention, exhibition, leisure destination and services centre,’ he added.

He noted that some current leaseholders were paying below-market rent and there was potential for rent hikes when leases are due for renewal.

CMA subsidiaries – CapitaMall Trust Management and CapitaLand Retail Management – will continue to act as Clarke Quay asset manager and property manager respectively, with Clarke Quay remaining in CapitaMalls Asia’s portfolio.

Source : Straits Times – 10 Feb 2010