China&rsquo s population numbers are almost certainly inflated to hide the harmful legacy of its family planning policy

  Capital recycling also drove growth in fee-related earnings, with divestments rising from $3 billion to $12.3 billion.

Capitaland Investment (CLI) booked a 33 per cent growth in fee-related earnings in the third quarter of this year to $94.6 million from $71.1 million a year ago, in its first business update since listing on the bourse in September.

 

In a bourse filing on Wednesday (Nov 3), CLI said the growth was driven in part by the 9 per cent rise in funds under management, from $77.6 billion as at end-December to $84.3 billion as at end-September.

 

Capital recycling also drove growth in fee-related earnings, with divestments growing four times from $3 billion to $12.3 billion. This resulted in a nine times increase in event-driven fees to $52 million for the nine months to September.

 

The lodging management business also reported year-on-year growth of 33 per cent of revenue per available unit, with occupancy of around 60 per cent for the third quarter.

 

In a separate announcement on Wednesday, CLI said it established two private funds in Japan and South Korea to grow its funds under management by $688 million.

 

The Japan fund has acquired the real estate investment manager' s two existing commercial assets while the South Korea fund has acquired two operating cold storage logistics properties from an unrelated third party.

 

CLI has invested alongside capital partners and obtained a minority stake in both funds.

 

The Japan fund has funds under management of about 44.1 billion yen (S$522.9 million), with CLI having a 4.98 per cent stake in the fund. The real estate investment manager will remain as the asset manager of office buildings Yokohama Blue Avenue, of which the fund owns 50 per cent, and Shinjuku Front Tower, of which it owns 20 per cent.

 

The South Korea fund has funds under management of 127.1 billion won (S$145.2 million), with CLI having a 5 per cent stake. The two operating cold storage logistics properties are on long-term master leases with Foodist, a nationwide food wholesaler, generating fee-related income immediately.

 

" Our funds under management has increased to $84.3 billion, placing us on track to meet our target of $100 billion by 2024. CLI will also receive recurring fee-related earnings through the management of the two funds and their assets," said Mr Lee Chee Koon, group chief executive of CLI.

CapitaLand Investment (CLI) has set up two private funds in Japan and South Korea to grow its funds under management (FUM) by $688 million. 

The private fund in Japan has acquired CLI&rsquo s interest in two existing commercial assets.

 

In a deal secured by CLI, the private fund in South Korea has acquired two operating cold storage logistics properties from an unrelated third party.  

CLI has also invested alongside its capital partners, obtaining a minority stake in both funds.

 

CLI&rsquo s private fund in Japan is fully deployed through the acquisition of CLI&rsquo s interests in two commercial assets in Japan with funds under management of about JPY 44.1 billion ($537.7 million). 

 

CLI has a 4.98% stake in the fund while the remaining stake is held by new local institutional capital partners in Japan such as Keikyu Corporation, Taisei Corporation, Fuyo General Lease and Odakyu Real Estate. 

 

This fund&rsquo s underlying assets include a 50% stake in Yokohama Blue Avenue and a 20% stake in Shinjuku Front Tower. The other 50% stake in Yokohama Blue Avenue has concurrently been acquired by another CLI managed fund. CLI will remain as the asset manager of these two office buildings. 

 

The divestment proceeds will be recycled into new growth areas to expand CLI&rsquo s portfolio in Japan.

 

Separately, CLI has structured a private fund in South Korea via a joint venture with PGIM Real Estate.   CLI holds a 5% stake in the fund while the remaining stake is held by PGIM Real Estate. 

 

The fund is fully deployed through the acquisition of two operating cold storage logistics properties with FUM of about KRW 127.1 billion ($150.3 million). 

The two properties, both of which are near Seoul, are Foodist Icheon Centre and the Foodist Gyeongin Centre.   They are on long-term master leases with Foodist, a nationwide food wholesaler, generating stable fee-related income immediately.

 

&ldquo CLI&rsquo s establishment of the two new private funds shortly after its public listing demonstrates capital partners&rsquo confidence in us as an asset-light, capital-efficient global real estate investment manager,&rdquo says Lee Chee Koon, group CEO of CLI, who reiterates the company&rsquo s key growth strategies of fund management and capital recycling.

 

Lee notes that with these two new private funds, CLI has launched a total of seven new funds with more than $1.4 billion of new equity raised from external parties year to date. 

&ldquo As part of our disciplined capital recycling efforts, we have divested two commercial assets to our private funds, further growing our FUM,&rdquo he adds.

 

CLI&rsquo s total FUM has increased to $84.3 billion and according to Lee, is on track to meet the target of $100 billion by 2024. 

He adds that CLI will also receive recurring fee-related earnings (FRE) through the management of the two funds and their assets. 

 

&ldquo We will continue to grow our funds business including launching new funds across different real estate asset classes as well as tapping new fundraising channels,&rdquo says Lee.

 

His secret formula is to identify strategic stocks with potential for assets and financial growth over a long period in time backed by strategic investors and institutions with deep pockets.   In recent years, Warren has identified some of these companies with reasonably low valuation but high potential for growth in the stock exchange in India.  

 

Warren Buffett started investing in US companies like GE just after WWII.   Then he took a major stakes in Coca Cola in the 60s, Apple, Bank of America during the Lehmann financial crisis in 2008, etc., which he knows that their assets growth over time would ring in the dividends and profits.   If you have invested US$1,000 in Berkshire Hathaway in early 1960, the share would be worth US$10m today. 

 

The 2 key parameters of investment in stocks are as follows:

 

1.   Start accumulating the stock when valuation is reasonably low like CLI with strategic potential for assets and financial growth over a long horizon in time and

 

2.   Make sure that the majority investors and/or institutions have deep pockets to withstand global financial shocks over a long period in time.   Temasek Holdings is the majority share holder of both CLI and CLD.  

 

A general picture of the timeframe to hold CLI is about 3 to 4 years to witness the first S-curve of 3 times NAV with a targeted 10 years to witness potentially another 2 S-curves of upside.  

 

If you adopt this strategy for CLI, you need not have to be bothered with the predictions of daily, monthly and even yearly temperamental movements of CLI.  

 

Warren Buffett 1st principle:   Invest never speculate.