CapitaLand Development (CLD) has agreed to sell Capital Place, a Grade A office building in Hanoi, Vietnam, for S$751 million (US$550 million) to an unrelated third party.
Capital Place is held under the CapitaLand Vietnam Commercial Value-Added Fund (CVCVF) whic is managed by CapitaLand Investment Limited (CLI), the real estate investment management business of CapitaLand Group.
CLD holds a 50% stake in CVCVF while the remaining interest is held by MEA Commercial Holdings Pte. Ltd. CVCVF was incepted in 2017 with a fund size of S$177 million (US$130 million).
Upon completion of the transaction, CVCVF will be fully divested and closed, providing investors in the fund an internal rate of return, net of fees of 34%, almost triple the fund’s hurdle rate, said CLD in a press release. ”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 interest of S$23 million (US$17 million) to CLI and provides a strong track record for CLI’s future private equity funds.”
Capital Place was acquired by 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 (sqm) of net lettable area across two 37-storey office towers.
Capital Place is home to multinational tenants such as HSBC Vietnam, Porsche, Standard Chartered Bank Vietnam, TOTO Vietnam and more. Capital Place is the first office development in Hanoi to obtain Leadership in Energy and Environmental Design (LEED) Gold certification. It was also awarded the ‘Best Office Development’ in Asia and Vietnam at the 2019 PropertyGuru Property Awards.
Ronald Tay, CEO of CLD (Vietnam) added: “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. 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.”