KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
CapitaLand Investment Ltd has announced plans to sell its 50% stake in Singapore’s high-end ION Orchard mall to CapitaLand Integrated Commercial Trust (CICT), a real estate investment trust it backs, as part of an asset-light growth strategy. The sale is valued at approximately S$1.85 billion (US$1.40 billion or RM6.18 billion).
Key Details of the Transaction:
Divestment Strategy:
- CapitaLand Investment, which holds a 24% stake in CICT, aims to reduce assets on its balance sheet by divesting its 50% interest in ION Orchard. The move aligns with its strategy to achieve asset-light growth.
- CICT, Singapore's largest REIT by market capitalization, will acquire the stake for about S$1.1 billion after adjusting for other factors. The REIT plans to finance the acquisition through the net proceeds from an equity fundraising.
Transaction Completion and Impact:
- The transaction requires the approval of CICT’s non-interested unitholders and is expected to be completed by the fourth quarter of this year.
- CapitaLand Investment is set to exceed its annual divestment target of S$3 billion, with this sale putting it on track to recycle S$3.6 billion in assets for the year.
Market Reaction:
- Following the announcement, shares of CapitaLand Investment surged by as much as 4.8%, marking the biggest intraday gain since mid-July and making it the top performer on Singapore’s benchmark equity index. However, the stock has still declined by about 12% this year due to high interest rates and exposure to the Chinese market.
- CICT shares remained halted during the early afternoon trading session.
Broader Portfolio Strategy:
- As part of its ongoing “portfolio optimization strategy,” CICT is also considering selling properties to enhance its financial flexibility. Bloomberg previously reported that CICT had been looking to sell one of its prime office assets but faced pricing pressure from buyers.
Joint Venture Context:
- The ION Orchard mall is located in Singapore's main Orchard Road shopping belt and is held in a joint venture with Hong Kong’s Sun Hung Kai Properties Ltd, which owns the remaining 50% stake.
This strategic move by CapitaLand Investment and CICT highlights their focus on optimizing portfolios and enhancing financial flexibility while navigating challenges in a high-interest rate environment.
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