SINGAPORE CapitaLand said it plans to invest 3.37 billion yuan, or $407 million, in 15 malls in China that will be anchored by Wal-Mart Stores

SINGAPORE CapitaLand said it plans to invest 3.37 billion yuan, or $407 million, in 15 malls in China that will be anchored by Wal-Mart Stores, the world's biggest retailer.

Singapore-based CapitaLand, the biggest Southeast Asian developer, said Friday that it will hold a 65 percent interest in the malls, while Shenzhen International Trust & Investment will own the remainder. Shenzhen International, controlled by the Chinese government, is CapitaLand's partner in six other Chinese malls anchored by Wal-Mart.

The purchase will help CapitaLand, which set up two of Singapore's five property trusts, increase its assets as it prepares to sell shares in a fund that owns retail property in China. CapitaLand's investment in malls with Wal- Mart stores may increase its rental income as competition mounts in China's $600 billion retail market.

"CapitaLand is building up its war chest in China," said Chris Reilly, a fund manager at Henderson Global Investors in Singapore. "If you want to package a China fund, you need to bring in some components that the international investing community is familiar with, such as CapitaLand, to take a couple of the risk factors out."

CapitaLand and Shenzhen International's 21 properties in China will be valued at 1.3 billion Singapore dollars, or $764 million, and be spread across the country, CapitaLand said Friday. The malls will be opened by the end of 2006 and are expected to have a yield of 8 percent to 9 percent, the company said. The yield, similar to that of other CapitaLand malls in China, measures the annual rental income as a percentage of asset value.

The malls will form part of a property trust of Chinese assets valued at 500 million to 1 billion Singapore dollars in which CapitaLand is planning to sell shares by 2006, the company's chief executive, Liew Mun Leong, said.

"This is an ideal opportunity for us to create a retail property fund," Liew said in a statement Friday. "We have confidence China's retail market will have astronomical growth."

CapitaLand said the agreement also gives it the right to take part in a commercial project being developed in Shenzhen, China, neighboring Hong Kong, which will house Wal-Mart's Asian head office and a Sam's Club store, a warehouse-style retail chain owned by Wal-Mart.

The Singapore developer will also have the right to invest in 17 other malls anchored by Wal-Mart, as well as other retail projects for the U.S. company that Shenzhen International embarks on until the end of 2010, CapitaLand said.

"With this partnership, CapitaLand has a head start in the fast-growing China retail property market, especially with the unique opportunity to penetrate the relatively untapped provincial cities," Liew said. "These 21 malls are expected to generate attractive returns."

Shenzhen International's chairman, Li Nan Feng, said he expects the joint venture to become China's biggest commercial property developer in three to five years.