CapitaLand Development Sells Hanoi Office Bldg For S$751mil
VIETNAM – CapitaLand Group’s development division, CapitaLand Development (CLD), is divesting a Grade A office building in Hanoi, Vietnam to an unrelated-third party for S$751 million (US$550 million), according to a press release published on Thursday morning (20 January, SGT).
The commercial property is held under the CapitaLand Vietnam Commercial Value-Added Fund (CVCVF), where CLD owns a half-stake, while the remaining interest is held by MEA Commercial Holdings. CVCVF was created in 2017 with a fund size of S$177 million (US$130 million). It is overseen by CapitaLand Investment Limited (CLI), CapitaLand Group’s property investment management business.
Previously, Capital Place was purchased by CVCVF in 2018. Situated in the heart of Ba Dinh District, the office building opened in 2020. It comes with 100,000 sq m of net lettable area (NLA) across two 37-storey office towers
Current tenants include Porsche, HSBC, Standard Chartered Bank, and TOTO. The commercial property is also touted as Hanoi’s 1st office project to receive Leadership in Energy and Environmental Design (LEED) Gold certification.
Upon completion of the sale, CVCVF will be fully sold and closed, providing investors in the fund an internal rate of return, net of fees of 34 percent, almost triple the fund’s hurdle rate. The excellent result will generate carried interest of S$23 million (US$17 million) to CLI and provides a strong track record for CLI’s future private equity funds.
“The divestment of Capital Place is part of CVCVF’s exit strategy and in line with CLD’s on-going capital recycling efforts to unlock the strong underlying value of our properties,” said Ronald Tay, CEO of CLD (Vietnam).
“Tapping on 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.”
Furthermore, CLD is strongly bullish on Vietnam’s stellar growth prospects and it is committed to being a long-term partner to the development of Vietnam’s property market
“We continue to seek attractive real estate 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.
Apart from Capital Place, CLD presently owns one office development within its integrated project in Hanoi. The integrated development has a net lettable area of 20,000 sq m and is expected to be ready Q2 2024.