HSBC Institutional Trust Services, in its capacity as trustee of CapitaLand Retail China Trust (CRCT), has entered into a conditional equity interests transfer agreement to divest its entire equity interest in Wuhan New Min Zhong Le Yuan Co to an unrelated third party for a consideration of RMB258.0 million ($52.6 million).
The agreement was signed on Jan 11 by HSBC Institutional Trust Services’ wholly-owned subsidiary Somerset (Wuhan) Investments.
Wuhan New Min Zhong Le Yuan Co holds CapitaMall Minzhongleyuan and three sets of premises located at Sanyang Complex in Jiangan District, in Wuhan.
Together, the properties have a total gross floor area of 274.13 sqm.
The purchaser is not an “interested person” of CRCT, according to a statement posted via SGX.
CapitaMall Minzhongleyuan is a heritage building that was constructed in 1919. It is located in the Jianghanlu business district at No. 704 Zhongshan Avenue, a short walk from Wuhan’s renowned Jianghanlu pedestrian street.
It has a gross floor area of 41,717 sqm and a net lettable area (NLA) of about 22,121 sqm.
It also consists of an annexed building with a total of seven floors across a gross floor area of 31,331.02 sqm and a conserved building with seven storeys over a gross floor area of 10,386.14 sqm.
Wuhan New Min Zhong Le Yuan Co holds the land use rights and ownership of the annexed building.
SEE: CapitaLand Retail China Trust opens CapitaMall Nuohemule in Inner Mongolia with 100% occupancy
Wuhan New Min Zhong Le Yuan Co has also entered into a lease agreement with Wuhan Min Zhong Le Yuan, a subsidiary of the Wuhan Culture Bureau, to lease the conserved building.
The lease term of the agreement is from July 1, 2004 to June 30, 2024. Wuhan New Min Zhong Le Yuan Co has the right to renew the tenancy agreement for another 20 years.
The sale consideration of RMB258.0 million was based on the net asset value (NAV) of Wuhan New Min Zhong Le Yuan Co as at Dec 31, 2020, after taking into account the agreed price of the divestment interest of RMB458.0 million.
The purchaser has also agreed to provide RMB200.0 million to Wuhan New Min Zhong Le Yuan Co to repay the outstanding shareholder loan owed to the vendor of about RMB29.4 million and the entrustment loans owed by Wuhan New Min Zhong Le Yuan Co to wholly-owned subsidiaries of CRCT.
The divestment is expected to be completed in 2Q2021.
Wuhan New Min Zhong Le Yuan Co will then cease to be a subsidiary of CRCT.
The net proceeds of the divestment may be used to repay debt, finance any capital expenditure and asset enhancement works, capital distribution, fund new acquisitions, and, or to finance general corporate and working capital requirements.
Units in CRCT closed 2 cents lower or 1.4% down at $1.43 on Jan 11.
