CapitaMalls Asia has up to $3b to develop, buy malls

It is setting its sights on growth markets of Singapore, China and Malaysia: CEO

CAPITAMALLS Asia (CMA) has a potential war chest of some $2.5-3 billion for developing and buying malls, and it will be targeting its firepower at Singapore, China and Malaysia.

The retail property group's shares may have been hovering below the initial public offering price, but they should perform better in the longer term.

CMA chief executive Lim Beng Chee shared these views in an interview with the press yesterday. The group is sitting on around $1 billion of cash, which includes proceeds from the listing of CapitaMalls Malaysia Trust (CMMT) and the sale of Clarke Quay to CapitaMall Trust.

With that, the group can borrow another $1.5-2 billion for investments. This situation presents a 'very good opportunity' for acquisitions, he said.

In Singapore, the market has improved from a year ago, Mr Lim said. The economy has picked up, retail sales have grown, and tourist arrivals have increased.

CMA is eyeing state land for mall developments, and it is particularly keen on areas where it already has a presence. These would include the Jurong district, where IMM and the upcoming JCube are.

The group had bid for a mixed-use site in the Jurong Lake district in June, but lost out to Australian developer Lend Lease. 'It's ok, there are always sites two and three' in that area, Mr Lim said.

Another plot of interest is the one at Stamford Road/North Bridge Road, where Capitol Theatre is. The tender for the site will close next month and the winning developer can build an underground link to City Hall MRT station. Raffles City Singapore, which CMA has a stake in, is right next to the station.

Asked if CMA will be bidding for that land parcel, Mr Lim said: 'We'll consider any site.'

There have been concerns about an oversupply of retail space in Singapore but Mr Lim believes in just the opposite. 'My problem is, I've got no space.'

According to him, many global retail brands such as Abercrombie & Fitch are not here because they have a problem finding space for large flagship stores.

Besides Singapore, China remains a key growth market for CMA. The Chinese government is trying to boost domestic consumption for economic growth and CMA can benefit from that trend, Mr Lim said.

In Malaysia, CMA is also looking to acquire or develop malls. It is setting up a RM1 billion (S$428 million) fund for this.

Despite the many growth plans, investors appear unexcited. CMA's shares have been trading below their listing price of $2.12 in the last one month. The counter closed unchanged at $2.05 yesterday.

'I think a lot of shareholders don't understand this business,' Mr Lim said, explaining that CMA runs longer term operations of building and managing malls.

On the gap between the share price and the listing price he said: 'My sense is, we can actually overcome this very easily.

'It's a question of us making a few acquisitions over time that could actually correct the share price... I have no doubt that over time it will correct.'

Source: Business Times, 29 Jul 2010