(THE BUSINESS TIMES) – CapitaLand has divested three malls in Japan and an office building in Korea for a total of $448.7 million, as part of its ongoing portfolio reconstitution strategy, it said Tuesday morning (Dec 1) in an exchange filing.
It also announced that it has made its first foray into Japan’s logistics sector, entering into a joint venture with Mitsui & Co Real Estate, with CapitaLand as the majority partner, to develop and operate a logistics project in Greater Tokyo.
The divested properties in Japan are La Park Mizue and Vivit Minami-Funabashi in Greater Tokyo, as well as CO-OP Kobe Nishinomiya Higashi in Greater Osaka, which were sold for a total of 21.99 billion yen ($283.6 million).
It also divested ICON Yeoksam in Seoul for 142.2 billion won ($165.1 million) in August this year. The office building was held through a private fund, Ascendas Korea Office Private Real Estate Investment Trust (REIT) 5. CapitaLand remains the asset manager of ICON Yeoksam and will continue to receive fee income.
CapitaLand said the divestments were done above valuation, and the buyers are unrelated third parties. Post divestment, CapitaLand will retain $3.8 billion of assets under management (AUM) in Japan and $2 billion of AUM in Korea.
With the divestments, the total gross value of divestments by CapitaLand and its real estate investment trusts (Reits) would be $3.02 billion, crossing its annual target of recycling $3 billion of capital.
CapitaLand and its Reits have invested more than $3.3 billion into new assets as at end-November.
“The divestment of these mature malls and office asset is part of CapitaLand’s capital recycling strategy to unlock value by reinvesting the capital into new growth opportunities such as the logistics sector in Japan,” said Jason Leow, president, Singapore & International, CapitaLand Group.
“By paring down our exposure in Japan’s retail sector and leveraging our logistics experience in markets such as Singapore, Australia and the United Kingdom to expand into the new economy sector in Japan, we are responding swiftly to shifting market trends and consumer behaviours, positioning CapitaLand for future growth,” he added.
CapitaLand’s new logistics venture in Japan is close to Central Tokyo, and is expected to be completed in Q4 2022. The four-storey logistics facility will have a gross floor area of about 24,000 square metres.
Gerald Yong, chief executive officer, CapitaLand International, said the logistics sector in Japan presents “significant opportunities” for CapitaLand.
“The global pandemic has accelerated the growth of e-commerce and the logistics sector has been a prime beneficiary of this trend,” Mr Yong said. “We aim to achieve meaningful scale over time by leveraging Mitsui & Co Real Estate Ltd’s local knowledge and access to business opportunities to grow our logistics portfolio in Japan.”
CapitaLand shares closed at $3.13 on Monday, down one cent or 0.3 per cent.