“We have asked for our unitholders’ approval to approve a floor price of RMB748 million, which is the lower of two independent valuations. The regulations required in an interested party transaction (IPT) are such that we should not sell below the lower of the two valuations,” says Gerry Chan, CEO of CLCT’s manager, in a recent interview.
News of the listing of the CapitaLand Group’s C-REIT has already caused a narrowing of the discount between CapitaLand China Trust (CLCT) and its net asset value. On July 11, CLCT announced an EGM to be held on July 29, for independent unitholders to approve the divestment of CapitaMall Yuhuating, Changsha, to be divested to CapitaLand Commercial C-REIT (CLCR). The floor price, based on the lower of the two valuations, is RMB748 million ($133 million). The higher valuation is RMB780 million. As of end-December 2024, Yuhuating’s valuation was RMB785 million.
According to a circular issued on July 11, the floor price represents 0.3% gross premium over CLCT’s original purchase price of RMB746 million in 2019. After taking into account the estimated total transaction cost, the estimated net loss on the proposed divestment is $0.5 million. However, the net returns to CLCT from Yuhuating up to Dec 31, 2024, are likely to be a net gain of $22.3 million based on the floor price.
