CAPITALAND Investment : 9CI -1.06%&rsquo s (CLI) revenue from its fee income-related businesses in lodging, property and fund management fell 3 per cent year on year to S$255 million for Q1 2023, from S$262 million.

 

This was despite an improvement in its lodging management segment for Q1 2023, as its fee income-related business revenue for Q1 2022 included performance fees of S$31 million from a Singapore and Vietnam fund.

 

Excluding the S$31 million performance fees received in Q1 2022, revenue from its fee income-related businesses for Q1 2023 would have increased by 10 per cent, CLI noted in a business update on Thursday (May 11).

 

The ratio of its Q1 fund management fee-related earnings to funds under management was 45 basis points for the quarter, compared with 49 basis points for FY2022. The decrease in fund management fee-related earnings was attributed to the absence of event-driven performance fees from the exits of two private funds in Q1 2022.

 

Its lodging management business posted a 42 per cent rise in revenue per available unit (RevPAU) for the quarter on the sustained recovery of tourism. Excluding China, Q1 2023 RevPAU for all regions performed close to or above its pre-pandemic Q1 2019 level.

 

Meanwhile, revenue from its real estate investment business rose 11 per cent to S$447 million for Q1 2023, from S$403 million the previous year.

 

In its core markets, Singapore saw positive rental reversions and improved year-on-year occupancy across all asset classes, fuelled by back-to-work trends, resilient demand for real estate and the resumption of global travel. India&rsquo s committed occupancy remained robust, while China was en route to gradual recovery with improved shopper traffic and tenant sales.

 

As China&rsquo s reopening supports growth across the country, CLI said it will continue to focus on launching new renminbi and US dollar funds.

 

Lodging management is expected to continue growing, driven by the continued recovery of the global travel and hospitality industry.

 

UOB Kay Hian (UOBKH) has chosen CapitaLand Investment : 9CI -4.64% (CLI) as its top pick for the property sector, after stocks took a hit from hikes to Additional Buyer&rsquo s Stamp Duty (ABSD) rates for residential properties that went into effect on Thursday (Apr 27).

 

Under the revised rates, entities and trustees will have to pay 65 per cent ABSD, up from 35 per cent previously. 

 

&ldquo Sentiment towards the property sector will inevitably be bearish after these cooling measures,&rdquo said analyst Adrian Loh on Friday.

 

Still, he noted that CLI remains a top pick as the company does not have residential exposure in Singapore. 

 

The brokerage has maintained its &ldquo buy&rdquo call for CLI with a target price of S$4.28, as it believes the company&rsquo s current price-to-book valuation of 1.1 times for 2023 is inexpensive compared with its 2022 price-to-book value of 1.4 times. 

 

&ldquo The company will be in a much stronger shape in 2023 as we expect China&rsquo s recovery path to be sustained given a post-Covid-19 normalisation of the economy,&rdquo said Loh. 

Furthermore, he is optimistic about CLI closing and deploying more funds over the next six months.

 

CLI announced two niche renminbi funds in the past week. Loh expects the company to have more such funds that are built on its proprietary niches this year. 

 

As at the end of 2022, CLI had embedded funds under management of S$8 billion. 

 

Apart from CLI, UOBKH cited City Developments Limited : C09 +0.72% (CDL) and PropNex : OYY -40.3%as property counters that would be affected by the increase in ABSD rates.

 

The brokerage kept its &ldquo buy&rdquo recommendation for CDL, but lowered its target price to S$8, from S$9.87. As for PropNex, UOBKH maintained a &ldquo buy&rdquo call at a target price of S$2.14. 

 

With CDL set to launch projects such as The Myst over the next two quarters, Loh said this would be an &ldquo interesting test of the market&rsquo s demand appetite&rdquo .

 

He added that in the near term, property agencies such as PropNex might &ldquo face negative sentiment&rdquo due to the cooling measures. 

 

However, UOBKH noted that share prices of CDL and PropNex had recovered quickly when cooling measures were announced in December 2021 and September 2022. 

 

CDL&rsquo s share price regained initial losses within one to six weeks, while the PropNex counter recovered within four to six weeks. 

 

Shares of CLI were trading down S$0.18 or 4.6 per cent at S$3.70 as at 1.03 pm on Friday. CDL was up S$0.04 or 0.6 per cent at S$6.95, and PropNex tumbled S$0.82 or 40.8 per cent to S$1.19. 

CapitaLand Investment&rsquo s (CLI) wholly-owned subsidiary CLI Treasury Limited has priced the offering of $425 million senior notes due 2030.

 

The interest rate of the notes is fixed at 4.2% per annum.

 

The notes will be issued under the $6 billion Euro Medium Term Note Programme established by the Issuer on Nov 9, 2021.

 

The payment obligations of the Issuer under the notes will be unconditionally and irrevocably guaranteed by CLI.

 

The issue date of the notes is currently expected to be April 12 this year.

 

The net proceeds arising from the issue of the notes will be used for refinancing existing borrowings, financing the investments and general corporate purposes of CLI and the issuer.

CapitaLand Investment (CLI) 9CI 0.00% , on April 3, announced that it has entered into a forward purchase agreement to acquire six multifamily &ndash or rental housing &ndash assets in central Osaka in Japan for $141.4 million.

 

The agreement, which was entered into with an &ldquo established Osaka-based residential developer&rdquo , was for CLI&rsquo s flagship regional core-plus fund, CapitaLand Open End Real Estate Fund (COREF).

 

The off-market deal marks COREF&rsquo s foray into the multifamily sector and brings the group&rsquo s total investment in Japan to about $1.1 billion across 60 properties.

 

&ldquo Including the six newly acquired multifamily properties by COREF and another three multifamily properties acquired by CLI&rsquo s lodging trust CapitaLand Ascott Trust which will be completed between 2QFY2023 and FY2024, CLI vehicles will hold a total of 30 multifamily properties across eight cities in Japan,&rdquo says Tan Lai Seng, managing director for Japan, CLI.

 

&ldquo The multifamily sector in key Japanese cities, in particular Osaka and Tokyo, have demonstrated resilience over the past decade, driven by robust demand supported by urban migration to the cities. The Osaka multifamily sector performed well even during the Covid-19 pandemic, demonstrated by growth in rents and strong occupancy rates of above 95%,&rdquo he adds.

 

The six assets are located close to the commercial districts of Umeda and Namba and are within walking distance of their respective subway stations.

 

The portfolio comprises 428 premium one-bedroom apartments that are targeted at corporate tenants and middle-income couples.

 

The properties will be completed in phases from May 2023 to June 2024. They are also said to benefit from Osaka City&rsquo s growth potential. The city is undergoing a revitalisation process in the run-up to World Expo 2025, which it is hosting.

 

Osaka is also a major contender for Japan&rsquo s first integrated resort, which is projected to open in 2030.

 

&ldquo We continue to build on our private fund management&rsquo s achievements with the acquisition of a high-quality portfolio of multifamily assets in Osaka for COREF. Japan&rsquo s urban multifamily sector is one of the bright spots in the Asia Pacific real estate market that has been growing steadily and demonstrated resilience through economic cycles,&rdquo says Simon Treacy, CEO, private equity real estate, real assets, CLI.

 

&ldquo Since its inception in September 2021, COREF has invested selectively in Japan, Singapore and Australia to achieve geographical diversification. Since 2022, CLI has launched 11 new private vehicles and added 17 new investors to our global network of capital partners amidst volatile market conditions, bringing equity raised to date to over $4 billion. Building on this momentum, we will continue to leverage our ground expertise and deep experience in the countries we operate in. We remain focused on seeking attractive opportunities to deliver quality returns to our fund investors as we grow the business,&rdquo he adds.

 

CGS-CIMB on Thursday (Mar 16) reiterated its &ldquo overweight&rdquo view on Singapore&rsquo s property sector, eyeing opportunities amid trading discounts in counters such as CapitaLand Investment, City Developments Limited (CDL) and UOL Group.

 

The brokerage still considers the developers&rsquo valuations &ldquo inexpensive&rdquo , given that they were trading at a 47 per cent discount to revalued net asset value &ndash close to one standard deviation below the long-term mean discount.

 

This comes as the analysts noted a rebound in home sales in February, where 470 units were transacted.

 

Excluding executive condominiums, private home sales stood at 432 units, the highest in terms of volume since property cooling measures were announced last September.

 

However, CGS-CIMB also cautioned that price growth among private homes is likely to moderate in 2023, based on historical data in January and February this year. The research house expects prices to rise by a moderated zero to 3 per cent this year.

 

Despite this, investors can still seek out opportunities in developers with visible residential pipelines and strong balance sheets that would enable them to tap any opportunity during this slower cycle, said CGS-CIMB.

 

Top picks listed by the brokerage include CapitaLand Investment, with a target price of S$4.50 CDL, with a target price of S$8.97 and UOL Group, with a target of S$8. All three were given an &ldquo add&rdquo recommendation.

 

CDL, the analysts noted, has a potential launch pipeline of about 2,000 units. Share price catalyst for the group &ndash which currently trades at a 57 per cent discount &ndash could come from the recovery of the global hospitality industry.

 

However, demand for housing could be dampened by faster-than-expected interest rate hikes, slower economic outlook and property cooling measures, said CGS-CIMB.

 

CAPITALAND Investment : 9CI -1.56% (CLI) on Thursday (Feb 23) posted a 33.8 per cent drop in net profit to S$428 million for the six months ended Dec 31, 2022, compared with S$647 million the year before.

 

The real estate investment manager reported lower gains from the revaluation of investment properties and asset recycling, it said.

 

The results translate to earnings per share of S$0.083, against S$0.153 the year before.

 

Revenue was up 22.3 per cent to S$1.5 billion, from S$1.2 billion a year earlier, on strong operating performance from CLI&rsquo s lodging properties as international travel recovers.

 

There were also contributions from a newly acquired data centre in China, student accommodation and rental housing properties in the US and Japan, as well as higher fee revenue from the group&rsquo s lodging management business.

 

The gains were partially offset by the absence of contributions from properties divested in Japan in 2021 and Singapore in the first half of 2022.

 

The Singapore and China markets accounted for 33 per cent of the group&rsquo s total revenue, compared with 43 per cent in the same period a year ago. CLI noted that there was an increase in revenue contribution from other developed markets during the second half period, which represented 56 per cent of total revenue.

 

For the full year ended Dec 31, CLI&rsquo s board proposed a core dividend of S$0.12 per share and a special dividend-in-specie of 0.057 CapitaLand Ascott Trust units per share &ndash valued at S$0.059 apiece. This brings the total dividend for the year to S$0.179, with a total payout of about S$918 million.

 

&ldquo CLAS (CapitaLand Ascott Trust) has a healthy portfolio of lodging assets, and the proposed dividend-in-specie will enable shareholders to participate in and benefit from the recovery of the lodging and hospitality industry as international travel grows,&rdquo said CLI chairman Miguel Ko.

 

For FY2022, net profit was down 36.2 per cent to S$861 million, compared with S$1.3 billion in the previous year, translating to an EPS of S$0.168 from S$0.383.

 

Revenue was up 25.4 per cent to S$2.9 billion from S$2.3 billion, buoyed by higher contributions from the group&rsquo s fee income-related businesses and real estate investment business.

 

Fee income-related businesses revenue grew 6 per cent year on year to S$955 million, due to higher fee-related earnings from private funds and lodging management.

 

Real estate investment business revenue was up 40 per cent on year to S$2.1 billion, as occupancy and room rates for lodging properties improved.

 

CLI group chief executive Lee Chee Koon said the FY2022 results were impacted by rising interest rates and China&rsquo s zero-Covid approach. This led to lower capital recycling activities and higher rental rebate to support China tenants.

 

&ldquo With the return of our ability to recycle capital in China as the country overcomes the worst of its Covid-19 situation, our underlying business is showing encouraging signs of recovery, and we stand ready to act on the right opportunities as we pursue long-term growth sustainably,&rdquo he said.

 

CLI&rsquo s funds under management stood at S$88 billion as at end-2022, supported by acquisition-led growth of the group&rsquo s listed funds and the launch of eight new private funds.

 

Separately, the group said it has committed S$1.1 billion in equity for a new programme to invest in &ldquo special situation opportunities&rdquo in China.

 

It had obtained S$892 million from global institutional investors for the programme. These investors hold an 80-per-cent stake in the programme, while CLI holds the remaining 20 per cent.

 

The new CapitaLand China Opportunistic Partners (CCOP) Programme comprises a S$291 million single-asset fund and an S$824 million programmatic joint venture (JV), CLI said.

 

The single-asset fund has acquired an integrated development with office and retail components in China for 2.81 billion yuan (S$553 million). The property, Beijing Suning Life Plaza, is located in Beijing&rsquo s central business district.

 

The 19-storey development will undergo an asset repositioning in the first quarter of 2023. It now has a net lettable area (NLA) of 52,600 square metres (sq m) comprising 24,200 sq m of office space and 28,400 sq m of retail space. The amount of office space will increase to 55,000 sq m 6,500 sq m of ancillary retail space will be retained in the basement and first levels.

 

The programmatic JV has acquired a logistics development in Foshan, Guangdong, for 799 million yuan. The property, which will complete construction in Q3 2023, is fully pre-leased to a domestic textile e-trading platform for 15 years. It also has an NLA of 140,355 sq m.

 

CLI previously acquired the build-to-suite development in May 2022 as a seed asset for the CCOP programme. It said the programmatic JV will invest in special situation opportunities in China, including commercial and new economy real estate sectors such as office, retail, logistics and industrial. Investors have full discretion on whether to participate in each investment proposed under the JV, CLI added.

CapitaLand Investment (CLI) 9CI 0.00%   has reported earnings of $861 million for FY2022, down 36.2% versus the preceding year ended Dec 31 2021&rsquo s $1.35 million, because of lower divestment gains and also lower fair value gains from revaluation of its investment properties.

 

Revenue for FY2022 was up 25% over FY2021 to $2.88 billion, boosted by higher contributions from FRB, or fee income-related business, and real estate investment business, or REIB.

 

For 2HFY2022, earnings was down 33.8% y-o-y to $428 million, revenue was up 22.3% to $1.5 billion.

 

Despite challenges in the macroeconomic environment, CLI made gross divestments of $3.1 billion in FY2022, in line with its annual target of $3 billion, but below the exceptional year of FY 2021 when $13.6 billion was divested.

 

CLI plans to pay a dividend of 12 cents per share and a special dividend-in-specie of 0.057 CapitaLand Ascott Trust (CLAS) units per share valued at 5.9 Singapore cents per share for FY 2022, bringing the total dividend to 17.9 Singapore cents.

 

As at end-2022, CLI&rsquo s funds under management, or FUM, stood at $88 billion, driven by the acquisition-led growth of CLI&rsquo s listed funds and the launch of eight new private funds during the year, including the newly launched CapitaLand China Data Centre Partners and CapitaLand China Opportunistic Partners Programme, bringing CLI&rsquo s embedded FUM to $96 billion, within striking distance of its $100 billion target by 2024.

 

CLI has enjoyed a recovery in its lodging business too. As at end 2022, lodging unis under management was 159,000, and are on-target to reach 160,000 lodging units this year. Revenue per available unit was up 40% to $110, close to the pre-pandemic level in 2019.

 

&ldquo CLI&rsquo s globally diversified and balanced real estate portfolio has contributed to its steady performance amidst significant uncertainties in FY 2022,&rdquo says chairman Miguel Ko.

 

&ldquo Despite market volatility, CLI&rsquo s share price has remained resilient, demonstrating shareholders&rsquo confidence in CLI&rsquo s long-term vision to be a top global REIM and the management team&rsquo s ability to execute its growth plans.

 

According to Ko, CLAS has a healthy portfolio of lodging assets, and the proposed dividend-in-specie will enable shareholders to participate in and benefit from the recovery of

 

the lodging and hospitality industry as international travel grows.

 

&ldquo We remain confident of the renewed momentum and future growth of CLI&rsquo s businesses as prospects for the global economy improve,&rdquo he adds.

 

Group CEO Lee Chee Koon says the FY2022 results were hurt by rising interest rates and China&rsquo s zero-COVID approach, which led to lower capital recycling activities and higher rental rebates to support tenants in China.

 

&ldquo We forged ahead with our longer-term goal by enhancing our asset and fund management capabilities, launching RMB-denominated funds and setting up new logistics and self-storage fund platforms in Southeast Asia.

 

&ldquo With the return of our ability to recycle capital in China as the country overcomes the worst of its Covid-19 situation, our underlying business is showing encouraging signs of recovery and we stand ready to act on the right opportunities as we pursue long-term growth sustainably,&rdquo says Lee.

CapitaLand Investment (CLI) 9CI 0.00%   has established a China data centre development fund that has committed to invest in two hyperscale data centre development projects in Greater Beijing.

 

Upon the completion of the projects, the fund, named CapitaLand China Data Centre Partners (CDCP), will add around $1 billion to CLI&rsquo s funds under management (FUM).

 

The total equity committed to the fund is $530 million with existing and new global institutional investor clients holding an 80% effective stake in CDCP, and CLI holding the remaining 20%.

 

The data centre development projects are expected to be completed in 2025. They are expected to deliver over 100 megawatts (MW) of power to meet the growing demand from Beijing. They are also poised to capture strong demand from the Chinese capital with their close proximity to established data centre clusters and key network nodes of leading Chinese cloud service providers and internet companies.

 

The accelerated growth of digital usage is driving demand for data centres, says CLI. China&rsquo s data centre market grew 34.6% y-o-y to $60 billion in 2021 following a 43.3% y-o-y growth in 2020.

 

According to CLI, the fund is in line with its strategy to grow its portfolio of new economy assets under management (AUM) and enhance its long-term business resilience.

 

The two data centres will be designed, built and certified against Leadership in Energy and Environmental Design (LEED) Gold standards. They will incorporate energy-saving solutions, such as high efficiency fan wall cooling systems, adopt temperature management best practices, and recycle waste heat from the servers to heat offices.

 

&ldquo As one of the fastest growing new economy asset classes providing critical digital infrastructure for the global economy, data centres present a tremendous opportunity and are a key strategic focus for CLI,&rdquo says Patrick Boocock, CEO of CLI&rsquo s private equity alternative assets. Boocock also oversees the growth of CLI&rsquo s global data centre business.

 

&ldquo We are seeing strong investor interest as the surge in demand for cloud computing, 5G technology, and e-commerce are driving growth in this sector. Leveraging our strength in real estate, we are actively building our capabilities in real assets and growing our alternative assets platform. CDCP is our third data centre development fund, following the establishment of two such funds in South Korea. We are excited to bring our capabilities to the China market and advance our ambition of becoming a major global digital infrastructure player,&rdquo he adds.

 

&ldquo As a leading global real estate investment manager with about 30 years of experience in China, we are able to leverage our wide network and deep expertise to bring quality assets to international investors who are keen to invest in China across different asset classes including data centres. CLI&rsquo s competitive advantage lies in our position as a vertically integrated group in China with a full range of capabilities, from investment sourcing, development, having a strong customer network to operations,&rdquo says Puah Tze Shyang, CEO of CLI China, adding that CLI has $46 billion of AUM in the country.

 

&ldquo CDCP will invest in two highly sought-after data centre projects in prime locations. China&rsquo s data centre market is currently the second largest in the world and the largest in Asia Pacific, and is projected to grow 24% annually until 2025. There is strong interest in CLI&rsquo s future data centre projects in China and Asia Pacific at large, and we are actively seeking to grow in this sector,&rdquo says Michelle Lee, managing director of CLI&rsquo s private funds (data centre).

 

OCBC Investment Research has lifted its fair value estimate on CapitaLand Investment : 9CI +0.76% (CLI) to S$4.05 from S$3.74 upon fine-tuning its assumptions and rolling forward its valuations on the stock.

 

The research house continues to rate CLI at &ldquo hold&rdquo , but views the index counter as a potential beneficiary of China&rsquo s faster-than-expected reopening. 

 

In a report on Thursday (Jan 26), OCBC&rsquo s research team said it is expecting more divestment of assets by the real estate investment manager, having nearly reached its annual divestment target of S$3 billion in 2022 despite challenging capital markets and an elevated interest rate environment. 

 

&ldquo We expect management to target more divestment of assets held on its balance sheet in 2023, including to its listed real estate investment trusts and business trusts and private funds, which would then increase its funds under management (FUM),&rdquo the team said. 

 

Noting that a significant portion of CLI&rsquo s real estate assets under management and FUM are from China, the brokerage expects China&rsquo s reopening to drive CLI&rsquo s recovery efforts. 

 

&ldquo CLI had to defer a sizeable amount of capital recycling activities and fund launches in 2022 due to lockdowns in China,&rdquo recalled the research team. 

 

With the loosening of Covid restrictions as well as the resumption of activities such as due diligence exercises and site tours, the brokerage anticipates an improvement in the operational performance of retail malls in the country. 

 

Aside from likely improvements in CLI&rsquo s retail segment ahead, the research team also noted a &ldquo more meaningful recovery&rdquo in the group&rsquo s lodging management business, which had been adversely affected by the pandemic. 

 

It also likes the stock for its high environmental, social and governance ratings &ndash particularly its above-industry-average score for governance.   

While CapitaLand Investment navigates choppy waters, there is room for the group to surprise shareholders by distributing units of listed trusts that it owns. 

LIKE most of its property peers, CapitaLand Investment : 9CI +2.3% (CLI) is facing down a tough environment amid global economic uncertainties.

 

But perhaps the group can surprise its investors by doing a distribution in specie of units in real estate investment trusts (Reits) that it holds. 

 

The real estate investment manager trades at a superior book-value multiple compared with Singapore-listed property groups City Developments Limited : C09 +0.75% (CDL) and UOL Group : U14 +1.91%.

 

Over 2022, CLI&rsquo s share price rose 8.5 per cent while CDL&rsquo s jumped 20.9 per cent and UOL&rsquo s fell 5.2 per cent. 

 

Rising to the challenge

 

CLI&rsquo s business model makes it vulnerable to rising interest rates, as investors use higher discount rates to value CLI&rsquo s Reits and worry over rising borrowing costs of the trusts.

 

As volatile stock markets make it harder for Reits to buy assets, CLI may face difficulty earning acquisition fees or growing management fees from Reits scaling up via acquisitions.

 

Capital recycling &ndash the selling of assets and deploying of monies in attractive opportunities &ndash can get tricky for CLI under the current climate.

 

As geopolitical uncertainties cause decision-makers to adopt a risk-off approach, asset divestment may be harder.

 

Cost of capital also rises with higher interest rates, which potentially leads to deeper scrutiny of opportunities and less aggressive pricing by buyers. For 2022, CLI&rsquo s capital recycled was S$2.9 billion &ndash shy of its annual target of S$3 billion. 

 

CLI&lsquo s relatively large China exposure also raises uncertainty. As the country makes a messy exit from its zero-Covid strategy, it may take some time for consumer confidence and the economy in China to recover.

 

China, including Hong Kong, accounted for 32 per cent of the group&rsquo s total assets of S$36.4 billion as at end-September 2022.

 

On the other hand, CLI did well to launch private funds in tough market conditions last year. Expanding the private fund management business will help strengthen CLI&rsquo s asset-light and capital-efficient business model.

 

At the same time, CLI&rsquo s growing lodging business should benefit from post-Covid recovery.

 

Still, investors may fret over how CLI&rsquo s top management sees the investment landscape, and whether the group can maintain the dividend per share of S$0.15 that was paid for 2021, when CLI announces its full-year results.

 

Distribution in specie

 

Perhaps, CLI can surprise and reward its shareholders &ndash while lightening its balance sheet &ndash by distributing in specie to its shareholders some of the units it holds in its Singapore-listed trusts. 

 

As at end-September 2022, CLI held effective stakes of 23 per cent in CapitaLand Integrated Commercial Trust : C38U +1.44% (CICT), 18 per cent in CapitaLand Ascendas Reit : A17U +2.5%, 37 per cent in CapitaLand Ascott Trust : HMN -0.92%, 24 per cent in CapitaLand China Trust : AU8U +4.17%and 22 per cent in CapitaLand India Trust : CY6U +0.85%.

 

Hong Kong-listed ESR Group &ndash the largest real asset manager in Asia-Pacific &ndash holds under 10 per cent of units in Suntec Reit : T82U -0.72%. ESR&rsquo s ARA Asset Management owns the manager of Suntec Reit.

 

By holding smaller stakes in the listed trusts that it manages, CLI can become more asset-light while keeping the size of funds under management (FUM). CLI had FUM of around S$86 billion as at end-September 2022, and it intends to grow FUM to S$100 billion by 2024.

 

In November 2022, CLI announced the setting up of two onshore renminbi funds to invest in business park opportunities in China. CLI said that, aligned with its asset-light strategy to grow its FUM, it will hold stakes of 10 per cent and 20 per cent in these funds. 

 

Meanwhile, CLI holds a 10 per cent share of the initial equity commitment in its partnership with APG Asset Management to build an Asia-focused self-storage platform. APG is the investment manager for the largest pension provider in the Netherlands.

 

Holding a large stake in a Reit entrenches CLI&rsquo s position as the manager. However, holding a stake closer to 10 per cent in a Reit could be enough to show that the sponsor has skin in the game.

 

For one, if CLI holds smaller stakes in its various trusts, the free floats of the said trusts would improve.

 

Moreover, with CLI&rsquo s track record in managing Reits, investors will likely support CLI to manage the said trusts, even if it holds smaller stakes in them.

 

For example, if a CLI shareholder receives about 71 CICT units for 1,000 CLI shares held, the value of the CICT units received works out to around the S$0.15 dividend per share that CLI shareholders received for the last financial year, based on CICT&rsquo s unit price as at Jan 25, 2023. In this scenario, CLI distributes a stake amounting to under 6 per cent of CICT. 

 

CLI has a healthy cash balance, available undrawn facilities and a robust credit profile that positions it to weather future economic headwinds and capitalise on opportunities. It need not resort to distributing Reit units in order to minimise the cash dividend payable.

 

Nonetheless, CLI has room to lower the size of stakes held in its listed trusts. And CLI shareholders may be happy to get a mix of cash dividend and units of listed trusts.

 

CLI&rsquo s group chief executive officer Lee Chee Koon was named the Outstanding Chief Executive Of The Year for the Singapore Business Awards 2022. The group&rsquo s then group chief financial officer Andrew Lim was named the best CFO in the category for companies with over S$1 billion in market capitalisation at the Singapore Corporate Awards 2022.

 

Shareholders can be hopeful that CLI&rsquo s board and management will astutely steer the group through choppy waters of slower economic growth, high inflation and high interest rates, while looking after their interests well.

 

A WHOLLY-OWNED subsidiary of CapitaLand Investment (CLI) : 9CI 0% and its joint venture (JV) partner have agreed to divest International Tech Park Pune, Hinjawadi (ITPP-H) to CapitaLand India Trust : CY6U -0.88% for 13.5 billion rupees (S$221.9 million).

 

The sale consideration represents a premium of some 9 per cent to CLI&rsquo s valuation for the site in December 2021, CLI said in a bourse filing on Thursday (Dec 29).

 

Subject to the sellers achieving pre-defined milestones and rents executed in the property at the time of payment, there may also be an additional purchase consideration of some 300 million rupees.

 

CLI owns approximately 78.5 per cent of ITPP-H. Its JV partner, Maharashtra Industrial Development Corporation, holds the balance.

 

The acquisition of ITPP-H would expand CapitaLand India Trust&rsquo s portfolio in Pune to a combined net lettable area (NLA) of 3.8 million square feet (sq ft), the trustee-manager said.

 

It expects the acquisition to create further scale in the trust&rsquo s India portfolio, while deepening its presence in Pune. Therefore, the trustee-manager sees &ldquo significant operational advantages&rdquo in the transaction, given ITPP-H&rsquo s proximity to an existing property owned by the trust.

 

Based on a historical pro-forma basis, the acquisition is estimated to add 0.03 Singapore cent to the trust&rsquo s distribution per unit for FY2021 had the property been purchased, held and operated throughout the financial year.

 

Located on the outskirts of Pune, India, ITPP-H is spread across four buildings situated on 25 acres (10.1 hectares) of land that has a 95-year leasehold interest.

 

It has NLA of 2.3 million sq ft as well as about 2.3 million sq ft of leasable premium office space. According to the trustee-manager, the property has achieved 100 per cent occupancy with a weighted average rent of 45.30 rupees per sq ft per month.

 

&ldquo CLI&rsquo s proposed divestment of ITPP-H to CapitaLand India Trust is in line with our strategy to provide quality, stable-performing assets to support the growth of our sponsored trusts,&rdquo said Jonathan Yap, chief executive of listed funds at CLI.

 

The divestment is targeted for completion by February 2023, subject to approval from CapitaLand India Trust&rsquo s unitholders in an extraordinary general meeting.