With this transaction, Clas will no longer be a subsidiary of CLI, and will instead be accounted as an associate

PROPERTY investment manager CapitaLand Investment : A17U -1.18% (CLI), through its subsidiary The Ascott Ltd, has sold its stapled securities in CapitaLand Ascott Trust : HMN -0.57% (Clas) for S$162 million, said the company in a bourse filing on Thursday (Dec 19).

 

More than 185 million stapled securities &ndash which represent about 4.9 per cent of Clas &ndash were sold to an unrelated party, which agreed to buy them based on their Dec 18 closing price.

 

Stapled securities are financial instruments where two or more different securities are listed and traded as one unit. In the case of Clas, its stapled securities consist of units from CapitaLand Ascott Real Estate Investment Trust (Reit) and CapitaLand Ascott Business Trust.

 

With the transaction, CLI&rsquo s holdings in Clas decreased to 24.04 per cent from 28.92 per cent.

 

Clas will no longer be a subsidiary of CLI, and will instead be accounted as an associate of its parent company.

 

A company is called a subsidiary when its parent owns a controlling share in it, while an associate is one in which the parent company owns a minority stake.

 

CLI said that this sale is part of the group&rsquo s asset-light growth strategy. The decrease in holdings of Clas is consistent with CLI&rsquo s strategic objective to deliver sustainable growth by optimising capital-efficiency and driving high returns on equity, read the filing.

 

Nonetheless, CLI noted that it remains committed to aligning its interests with Clas&rsquo stapled securityholders over the long term, despite the drop in holdings.

 

As Clas will be accounted as an associate with the completion of this transaction, CLI expects to record a loss of approximately S$141 million. Based on current accounting standards, only a share of profits or losses of associates are included in the financial statements of their parent company, though they are not fully consolidated. However, a subsidiary&rsquo s revenue is fully consolidated with its parent company.

 

Of this amount, about S$103 million is non-cash in nature, and includes the realisation of foreign currency translation losses and re-measurement of the retained stake, as required under accounting standards.   

 

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CapitaLand Investment Limited (CLI) is further stepping up its presence in Australia with the A$200 million ($173 million) acquisition of the property and corporate credit investment management business of Wingate Group Holdings plus an earn-out. 

 

Upon completion of this acquisition, the A$2.5 billion in funds under management now under Wingate will help increase CLI' s total FUM in Australia by 30% to $8.3 billion, or around 7% of its total of $115 billion.

 

CLI has a 2028 ambition to reach $200 billion in FUM.

 

As part of this target, CLI has committed to investing up to A$1 billion to grow its FUM Down Under - a recent focus that comes a decade after the previous board and management divested its key assets in Australia to focus on what was then faster-growing China and other overseas markets.

 

The acquisition announced before market on Dec 16 confirms earlier reports by the Australian media last month.

 

Wingate is described as one of the leading and largest private credit investment managers in Australia, with a track record of completing more than 350 transactions worth than A$20 billion.

 

CLI is no stranger to Wingate. In September 2024, it announced the close of its A$265 million Australia Credit Program (ACP) which was created in partnership with Wingate.

 

According to CLI, Wingate can help enlarge CLI&rsquo s extensive proprietary deal origination networks, enhance its access to more institutional and private high networth investors and increase its geographical exposure to Australia. 

 

Paul Tham, CLI' s group CFO says besides Australia, there are scalable private credit opportunities in other Asia Pacific markets, most notably in South Korea, India and Japan.

 

&ldquo As we accelerate our geographical diversification efforts, Australia is one of CLI&rsquo s focus markets where we see significant potential for growth," he adds.

 

According to CLI, in April, the Australian private capital market grew 33% over the past 18 months with assets under management reaching A$139 billion. A forecasted A$146 billion commercial mortgage funding gap is expected by 2028.

 

With Wingate, CLI will further diversify its portfolio which comprises logistics, business parks, office and lodging assets across nine cities in Australia. 

 

As at Sept 30, CLI manages 34 logistics properties and business parks and four Grade A office buildings in Australia. It also

 

has over 13,500 lodging units across more than 150 properties under its wholly owned lodging business unit, The Ascott.

They are part of a strategic alliance with Ambiti

CAPITALAND Investment (CLI) has acquired four Osaka self-storage facilities from Japanese indoor self-storage manager Ambitious through Extra Space Asia (ESA), a self-storage platform it manages, and plans to acquire another two Tokyo facilities by early 2025. 

 

The Osaka acquisitions are part of a strategic alliance with Ambitious to expand ESA&rsquo s portfolio in CLI&rsquo s focus market of Japan, said the real asset manager on Thursday (Dec 5).

 

They bring ESA&rsquo s total self-storage assets in Japan to 14 and more than 60,000 square feet of gross floor area.

 

Under the partnership, ESA will source, develop and manage self-storage facilities in Osaka and Tokyo, as these two regions hold Japan&rsquo s largest self-storage markets and are where Syuno-Pit, the self-storage business of Ambitious, has the largest presence. Syuno-Pit operates 681 self-storage facilities across 126 cities and districts in Japan. 

 

This is ESA&rsquo s second partnership with a Japanese self-storage manager, its first was with Keiyo Logistics, which operates under the &ldquo privatebox by Extra Space&rdquo brand. 

 

ESA plans to tap its two partnerships with established self-storage managers to triple its self-storage portfolio in Japan to more than 12 billion Japanese yen (S$107.3 million) in the near term. 

 

It will do so by continuing to acquire &ldquo high quality self-storage assets located near densely populated residential areas in gateway cities in Japan,&rdquo said CLI.

 

ESA has a first right of refusal to acquire future assets to be developed by Ambitious. 

 

The property will be fully leased at a fixed term of 10 years, and at a monthly rent of RM1 million

 

CAPITALAND Malaysia Trust (CLMT), a subsidiary of CapitaLand Investment : 9CI +0.73%, has entered into a sale-and-purchase agreement to acquire a freehold automated logistics property in Selangor, Malaysia, for RM180 million (S$54.2 million), the trust&rsquo s manager said on Monday (Dec 2).

 

The property, Elmina Logistics Hub, is a 40-metre-high, single-storey automated warehouse with a total built-up area of 14,866.67 square metres. 

 

It features an automated storage-and-retrieval system (ASRS) that employs cranes and robotics to automate the placement and retrieval of goods, the manager added.

 

&ldquo By streamlining logistics operations, ASRS enables optimisation of warehouse space, enhances speed and accuracy, and reduces labour costs and human error,&rdquo it said.

 

Elmina Logistics Hub features 19 loading bays equipped with hydraulic dock levellers and is capable of handling more than 30,000 pallets. 

 

Upon the completion of the acquisition, CLMT will enter a lease agreement with Projek Tetap Teguh, an indirect wholly-owned subsidiary of Malaysia-based construction company PTT Synergy Group.

 

The property will be fully let out for office and industrial purposes, with a fixed term of 10 years and an option to renew the lease for another two terms of five years each. 

 

The monthly rent has been fixed at about RM1 million, subject to agreed incremental adjustments throughout the term of the lease. 

 

In a separate bourse filing, the board of directors at CapitaLand Malaysia Reit Management (CMRM), the manager of CLMT, said the acquisition is in line with the trust&rsquo s investment objective of delivering long-term and sustainable distribution of income to unitholders by acquiring &ldquo quality real estate&rdquo with stable recurring income. 

 

The acquisition will therefore be accretive to CLMT&rsquo s distribution per unit, upon the commencement of the lease agreement, it said. 

 

Some 10 per cent of the purchase consideration has been paid, with the balance to be paid upon the completion of the property&rsquo s construction &ndash scheduled for the first half of 2025 &ndash and approval from regulatory authorities. 

 

This will be financed through existing debt facilities, it said. 

 

Following the transaction, which is expected to complete in the fourth quarter of 2025, CLMT&rsquo s pro forma gearing will rise to 44.1 per cent, from 42.1 per cent. The regulatory pro forma gearing limit is 50 per cent. 

 

With Elmina Logistics Hub, CLMT will have 11 properties in its portfolio, doubling the proportion of its new-economy assets to 6 per cent of its total portfolio by assets under management.

 

Tan Choon Siang, chief executive of CMRM, noted that this is the group&rsquo s first acquisition of a modern automated logistics property. 

 

It will enable the trust to capitalise on growing demand for such assets, helping customers to enhance operational efficiency, maximise space utilisation and reduce reliance on manual labour, said Tan. 

 

&ldquo CLMT&rsquo s strategic move addresses the current market gap in automated warehouses, providing us with the opportunity to scale in this specialised segment,&rdquo he added.

 

&ldquo With a long-term lease arrangement, the acquisition strengthens our industrial and logistics tenant base and improves the overall resilience of CLMT&rsquo s portfolio.&rdquo

The group will optimise China portfolio as it diversifies

 

CAPITALAND Investment : 9CI +0.36% (CLI) will rebalance its portfolio to grow its India and South-east Asia business and optimise its China holdings, as it seeks further &ldquo geographical diversification&rdquo for growth.

 

The group also plans to &ldquo leverage M& A (mergers and acquisitions) to grow in our focus markets of Japan, Korea and Australia, and look to ex-Asia developed markets such as the US and Europe next&rdquo , CLI said on Nov 22.

 

The asset management group aims to double funds under management from S$102 billion as at the third quarter of 2023, to S$200 billion in FY2028.

 

It expects China&rsquo s contribution to CLI&rsquo s funds under management (FUM) to moderate, it told investors.

 

As CLI ramps up in other markets, China contributions will be reduced to 10 to 20 per cent by the financial year 2028. This is down from 27 per cent of CLI&rsquo s FUM as at Nov 21, 2024.

 

Growth in China will be driven by CLI&rsquo s renminbi funds, lodging and living businesses, as well as investment opportunities arising from special situations, said the group.

 

Lee Chee Koon, group chief executive officer at CLI, said: &ldquo As we pivot to become an asset-light global real asset manager, we are actively managing our balance sheet and have made creditable progress in our capital recycling efforts.&rdquo

 

He noted that since 2021, the group has recycled S$24 billion, out of which about S$11 billion came from China. The group&rsquo s China business has also raised nearly 50 billion yuan (S$9.2 billion) in domestic capital since 2021, said Lee.

 

But he cautioned that CLI is likely to &ldquo face challenges as we reconstitute our portfolio in China in the short term&rdquo .

 

While CLI&rsquo s real estate investment business (REIB) continues to contribute to its bottom line, the group said that earnings are &ldquo impacted by non-operating movements&rdquo .

 

It warned of potential fair value or divestment losses, such as from China, which could impact non-operating earnings in the near to medium term.

 

In 2023, CLI China&rsquo s return on equity stood at negative 8 per cent, and this metric will continue to be under pressure, said the group.

 

For the nine months ended September, CLI&rsquo s REIB generated revenue of S$1.42 billion, down 2 per cent from S$1.44 billion in the previous corresponding period.

 

The decline was mainly due to divestments in India, Australia and France, which led to lower REIB revenue in their respective geographic segments.

 

The group expects REIB income to contribute 30 to 40 per cent of its earnings. This will be led by higher earnings from private funds and warehousing of products such as credit that generate double-digit returns, said CLI.

 

Total revenue for the nine-month period amounted to S$2.1 billion, representing a slight improvement from S$2.09 billion in the prior year. This comes as contributions from fee income-related business grew 6 per cent on the year to S$845 million.

 

This segment is also expected to contribute 60 to 70 per cent and improve overall quality of CLI earnings in the future, said the group.