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BlackRock sells China retail asset for $230m

The US asset manager has sold a shopping mall in Chengdu to a China retail real estate investment trust owned by CapitaLand.

BlackRock has sold a retail asset in southwestern China to the CapitaLand Retail China Trust (CRCT), the retail real estate investment trust operated by the Singapore-based developer and fund manager CapitaLand, for 1.5 billion yuan ($230 million; 200 million).

According to a filing made by CapitaLand, the manager of CRCT has entered into a sale and purchase agreement to acquire the Galleria shopping mall in Chengdu, the provincial capital of the Sichuan province in China.

The Galleria mall, in operation since 2010, is a fully leased six-storied retail asset with a gross floor area of 577150 square feet. Kardan Land, a Chinese real estate developer developed and managed the property.  

BlackRock reportedly held the asset under the opportunistic real estate fund, the BlackRock Asia Fund III, which is currently in its divestment phase. According to PERE research the vehicle raised $3.39 billion in 2007. A lion's share of the fund was invested in the twin tower Asia Square office developments in Singapore, of which Asia Square Tower 1 was sold to the Qatar Investment Authority in June this year for S$3.4 billion ($2.51 billion; 2.23 billion). 

Following the acquisition, the portfolio size of CRCT would increase to 12.5 billion yuan. The REIT, the first China shopping mall-focused real estate investment trust in Singapore, was listed in 2006 and currently owns 10 shopping centers in six cities across China.

“The mall is one of the most popular malls in Chengdu. Its existing tenant profile comprises a good selection of popular international brands that will serve as a strong base for CRCT to further enhance the overall tenant mix. Notably, leases accounting for about two-thirds of the mall's total rent are up for renewal by 2018, presenting us with an excellent opportunity to uplift the rental income through tenant mix adjustments,” said Tony Tan, the chief executive officer of CapitaLand Retail China Trust Management Limited.