SINGAPORE : CapitaLand is eyeing to spin off logistics properties in Russia into a real estate investment trust.
The property developer signed a memorandum of understanding on Thursday to take a 10 percent stake in Moscow-based Eurasia Logistics for US$100 million.
CapitaLand is seeking to tap fierce infrastructure needs and growth potential in oil-rich countries, as well as to diversify away from Asia.
Under the deal signed on Thursday, CapitaLand has the option to raise its stake in Russian property developer Eurasia Logistics to 25 percent.
The two partners aim to build 14 high-quality logistics developments in key cities across Russia, as well as two developments in Kazakhstan and Ukraine.
These 16 properties will offer 5 million square metres of logistics space, about a tenth of which is expected to be operational by the end of the year.
CapitaLand said there was a huge demand in Russia for warehouses and logistics parks of international standards.
Liew Mun Leong, President and CEO, CapitaLand, said, "There's huge demand. If you look at the demand and supply, there's a big shortage. Vacancy rate for A grade centres is zero. So we can foresee that as we build, it will all be taken up. And we can foresee that these are very high income generating assets."
The two partners plan to set up a joint venture company by the third quarter of this year.
While it is still early days, the partners are already thinking of spinning off their assets into a property trust.
Florova Elena, VP, Eurasia Logistics, said, "By the year 2010, the entire portfolio will be worth somewhere between US$7 (billion) and US$8 billion. And although we are planning to do a listing, we will start with the initial properties and then assess our opportunities to do a REIT. And then that will be listed most likely in Singapore."
Mr Liew said, "Asset-generating...like logistics centres will be very good for us - where we can package them into very high yield, put them into the REITs. So that's the end game. And if that's the end game, we'll end up having a fund management company."
CapitaLand said it could structure a real estate investment trust with about five or six projects, even though the Eurasia deal is slated to be completed in 2010 with 16 properties. And going by its prior experiences with cross-border listings, it said such a REIT could come about in one-and-a-half or two years' time.
The Singapore property developer is also keen to grow other assets in Russia, especially in the residential and office sectors.
The property developer signed a memorandum of understanding on Thursday to take a 10 percent stake in Moscow-based Eurasia Logistics for US$100 million.
CapitaLand is seeking to tap fierce infrastructure needs and growth potential in oil-rich countries, as well as to diversify away from Asia.
Under the deal signed on Thursday, CapitaLand has the option to raise its stake in Russian property developer Eurasia Logistics to 25 percent.
The two partners aim to build 14 high-quality logistics developments in key cities across Russia, as well as two developments in Kazakhstan and Ukraine.
These 16 properties will offer 5 million square metres of logistics space, about a tenth of which is expected to be operational by the end of the year.
CapitaLand said there was a huge demand in Russia for warehouses and logistics parks of international standards.
Liew Mun Leong, President and CEO, CapitaLand, said, "There's huge demand. If you look at the demand and supply, there's a big shortage. Vacancy rate for A grade centres is zero. So we can foresee that as we build, it will all be taken up. And we can foresee that these are very high income generating assets."
The two partners plan to set up a joint venture company by the third quarter of this year.
While it is still early days, the partners are already thinking of spinning off their assets into a property trust.
Florova Elena, VP, Eurasia Logistics, said, "By the year 2010, the entire portfolio will be worth somewhere between US$7 (billion) and US$8 billion. And although we are planning to do a listing, we will start with the initial properties and then assess our opportunities to do a REIT. And then that will be listed most likely in Singapore."
Mr Liew said, "Asset-generating...like logistics centres will be very good for us - where we can package them into very high yield, put them into the REITs. So that's the end game. And if that's the end game, we'll end up having a fund management company."
CapitaLand said it could structure a real estate investment trust with about five or six projects, even though the Eurasia deal is slated to be completed in 2010 with 16 properties. And going by its prior experiences with cross-border listings, it said such a REIT could come about in one-and-a-half or two years' time.
The Singapore property developer is also keen to grow other assets in Russia, especially in the residential and office sectors.
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