CapitaMalls Asia Says Good-Bye: What Would Investors Be Missing?

Earlier this April, CapitaLand (SGX: C31) had launched a takeover bid for its majority-owned subsidiary CapitaMalls Asia (SGX: JS8). Yesterday, CapitaLand announced that it has achieved effective control of more than 90% of CapitaMalls Asia.

That’s an important control-threshold as CapitaMalls Asia’s shares would cease to be traded on the Mainboard exchange under stock exchange operator Singapore Exchange’s listing rules. As it stands, trading of CapitaMalls Asia’s shares would be suspended after the market closes on 9 June 2014 (though the date is subject to an extension by CapitaLand if it so wishes) and the company would eventually be delisted.

What would investors miss with CapitaMalls Asia?

With its unique structure, CapitaMalls Asia represents the only way investors in Singapore’s share market can get access to a pure-play retail mall developer, owner, and real estate investment trust manager. The company in effect, gives investors an all-in-one exposure to the entire value chain in the retail mall business.

Besides owning operational and developmental interests in 105 retail malls across Singapore, China, Malaysia, Japan, and India, the company’s also the manager and major unitholder of a number of REITs, namely CapitaMall Trust (SGX: C38U), CapitaRetail China Trust (SGX: AU8U), and CapitaMalls Malaysia Trust.

Replicating CapitaMalls Asia’s uniqueness

Given its impending delisting, how can investor replicate the kind of exposure that CapitaMalls Asia provides?

In terms of the company’s retail mall development business, that’s hard to find a substitute for. The REIT management aspect of CapitaMalls Asia however, could be found in fellow REIT manager ARA Asset Management (SGX: D1R). As a retail mall owner, that’s a trait of CapitaMalls Asia that investors can easily replace, especially with REITs. Examples of REITs in Singapore that are focused on retail malls include Fraser Centrepoint Trust, Lippo Malls Indonesia Retail Trust, Fortune REIT, and Suntec REIT.

While some of the shares listed above do have similar business models with certain aspects of CapitaMalls Asia, it should be noted that the nature and quality of the individual assets found in those shares can be different – sometimes very different – from that found in CapitaMalls Asia. As such, it’s not easy to truly recreate the kind of exposure that CapitaMalls Asia provides.

As an investor in Singapore’s share market, it’s a shame that such a unique all-in-one retail mall company would be taken private.

Foolish Summary

With CapitaLand soon to complete the transaction, previous investors in CapitaMalls Asia might even want to invest in the company as a proxy for CapitaMalls Asia. However, investors should also note that CapitaLand is a very different company compared to CapitaMalls Asia.

For instance, CapitaLand has a big exposure to the residential property development sector, especially in its two largest markets, China and Singapore. Furthermore, it also has big interests in the hospitality real estate market. With such prominent differences, it would pay for investors to think hard about CapitaLand before investing in it purely as a proxy for CapitaMalls Asia.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.