CapitaLand Development (CLD), the development arm of CapitaLand Group, on January 20 announced the divestment of Capital Place, its international Grade A office building in Hanoi for $550 million to an unrelated third party.
Capital Place is held under the CapitaLand Vietnam Commercial Value-Added Fund (CVCVF). CLD holds a 50-per-cent stake in CVCVF while the remaining share is held by MEA Commercial Holdings Pte. Ltd.
The CVCVF was incepted in 2017 with a fund size of $130 million and is managed by CapitaLand Investment Limited (CLI), the real estate investment management business of CapitaLand Group and a leading global real estate investment manager.
|Capital Place, an international Grade A office building in Hanoi |
Upon completion of the transaction, the fund will be fully divested and closed, providing investors in the fund an internal rate of return of 34 per cent, almost triple the fund’s hurdle rate.
The fund was also able to access regional debt markets to obtain an efficient capital structure which further boosted the fund’s returns. This stellar result will generate carried interests of $17 million to CLI and provides a strong track record for CLI’s future private equity funds.
According to Ronald Tay, CEO of CLD Vietnam, the divestment of Capital Place is part of the CVCVF’s exit strategy and in line with CLD’s on-going capital recycling efforts to unlock the strong underlying value of company’s properties.
“Tapping into the synergies of our ONE CapitaLand ecosystem and working closely with CLI, we have successfully created value for our capital partner through our real estate development and asset management capabilities, divesting the prime asset at a premium to book value. CLD will redeploy the proceeds from this divestment into higher-yielding assets and as seed capital for future funds to be developed together with CLI in Vietnam,” said Tay.
“Our strong fund management performance builds upon CLI’s success last year where it incepted seven private equity funds with more than $1 million raised from external parties,” Tay added.
“With CLI’s growing bench strength in private equity fund management and CLD’s deep experience in Vietnam, we will leverage our synergistic capabilities to launch new private equity funds in Vietnam. CLD firmly believes in Vietnam’s excellent growth prospects, and we are committed to being a long-term partner to the development of Vietnam’s real estate market. We continue to seek attractive investment opportunities in offices, residential, and urban developments, as well as in new economy assets such as logistics facilities, data centres, and business parks,” added Tay.
Capital Place was acquired by the CVCVF in 2018. Opened in 2020, Capital Place is strategically located in the heart of Ba Dinh district. The international Grade A development has 100,000 square metres of lettable area across two 37-storey office towers.
Through CLD’s asset management expertise and network, Capital Place is home to multinational tenants such as HSBC Vietnam, Porsche, Standard Chartered Bank Vietnam, TOTO Vietnam, and many more. Capital Place is the first office development in Hanoi to obtain Leadership in Energy and Environmental Design Gold certification. It was also awarded the Best Office Development in Asia and Vietnam at the 2019 PropertyGuru Property Awards.