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They will be issued under the S$6 billion euro medium-term note programme established by CLI Treasury in 2021

CAPITALAND Investment : 9CI +0.8% (CLI) on Thursday (Aug 15) announced its wholly-owned unit CLI Treasury Limited has priced the offering of S$350 million worth of senior notes due 2035 at a fixed rate of 3.58 per cent.

 

The notes will be issued under the S$6 billion euro medium-term note programme established by CLI Treasury on Nov 9, 2021.

 

The payment obligations of the issuer under the notes will be unconditionally and irrevocably guaranteed by CLI, said the real estate investment arm of property developer CapitaLand.

 

The issue date of the notes is expected to be Aug 22. The maturity date is 10.5 years from the issue date.

 

The net proceeds from the issue will be used to refinance existing borrowings and finance the investments and general corporate purposes of CLI and CLI Treasury.

Revenue is up 1 per cent to S$1.37 billion for the half year

 

CAPITALAND Investment (CLI) posted a 6 per cent fall in net profit to S$331 million for the six months ended Jun 30, from S$351 million the year before.

 

CLI&rsquo s earnings per share for H1 also declined 6 per cent to S$0.065, from S$0.069 previously.

 

Revenue was up 1 per cent to S$1.37 billion for the half year, from S$1.35 billion in the corresponding period the previous year.

 

The group&rsquo s performance comes against the backdrop of a challenging operating environment, with higher-for-longer interest rates, geopolitical tensions and macroeconomic uncertainties, CLI&rsquo s group chief executive officer Lee Chee Koon said on Wednesday (Aug 14) at a results briefing.

 

For instance, fee-related revenue rose 8 per cent year on year to S$561 million for the half-year period, from S$519 million a year ago. 

 

CLI said this was underpinned by improved asset performance and contributions from new management contracts in its lodging and commercial management business. Its fund management business also contributed to the revenue growth, on the back of higher event-driven fees.

 

The growth in fee-related revenue was, however, offset by the group&rsquo s real estate investment segment, which recorded a 2 per cent dip to S$911 million, from S$932 million the previous year.

 

CLI attributed the drop to higher interest expenses and foreign exchange losses, as well as lower contributions from divested properties in China, Australia, France, India and Singapore. 

 

Overall, earnings before interest, tax, depreciation and amortisation rose 8 per cent to S$819 million in H1, from S$757 million previously. This was mainly due to higher portfolio gains from asset-recycling activities.

 

CICT posts 2.5% rise in H1 DPU to S$0.0543 despite higher finance costs

 

Portfolio gains rose to S$35 million in H1, from S$7 million the year before. This was driven by completion gains from earlier divestments, as well as participation in distribution reinvestment plans from CapitaLand Integrated Commercial Trust and CapitaLand China Trust.

 

At the briefing, CLI group chief operating officer Andrew Lim said that capital recycling remained a priority for the group and a key lever for growth. 

 

&ldquo We want dry powder for what we think is coming,&rdquo he said. &ldquo We want to see new products, we want to pay down expensive debt, and we want to potentially buy back shares. For these four reasons, capital recycling takes priority over maximising portfolio gains.&rdquo  

 

In the year thus far, CLI unlocked S$1.7 billion &ndash out of an annual capital recycling target of S$3 billion &ndash to redeploy for growth. 

 

Proceeds from capital recycling can then be used to seek new opportunities in other markets, said Lim. 

 

He cited the group&rsquo s recent announcement at the first close of its sixth onshore renminbi fund &ndash China Business Park RMB Fund III &ndash as an example. 

 

CLI will divest one of its Chinese assets, Ascendas iHub Suzhou, as a seed asset to the fund. It also secured an initial equity investment of 1.2 billion yuan (S$222 million) from an undisclosed institutional investor to invest in China&rsquo s business park sector.

 

When fully deployed, the fund is expected to add two billion yuan to CLI&rsquo s funds under management, which currently stand at S$100 billion. 

 

Such active capital recycling is key for the group to build a more balanced and diversified portfolio, with no more than 20 per cent of its capital in any market apart from Singapore, Lee added. 

 

Lim highlighted the importance of reducing CLI&rsquo s financial exposure in China, while growing its capabilities in key markets that are currently underweight, such as Japan, South Korea and Australia. 

 

&ldquo We find ourselves... in this deglobalised multipolar system that I think is going to stick around for a while,&rdquo said the chief operating officer.

 

&ldquo If you put all your eggs, or too many eggs, in one basket, you run a disproportionate risk (of getting) yourself into trouble.&rdquo

 

CLI is therefore eyeing the lodging and data centre industries in Japan, which seem promising, said Lim. He also noted South Korea&rsquo s Grade A office sector, which remains highly sought-after and &ldquo chronically undersupplied&rdquo , although the group must be careful of overpaying due to high interest rates.

 

There are also structural opportunities in the credit space in both South Korea and Australia, he said.

 

CLI did not recommend any dividend for H1, as it pays only a first and final dividend.

CapitaLand Investment announced a 6% y-o-y decline in Patmi to $331 million, in 1HFY2024 for the six months to June 30. Operating Patmi which excludes gains and losses from divestments, revaluations and impairments, fell by 14% y-o-y to $296 million. CLI' s strong fee-related business (FRB) was offset by weaker real estate investment business (REIB) which was impacted by higher interest expenses and unfavourable foreign exchange rates. 

 

Revenue rose 1% y-o-y to $1,365 million, FRB revenue rose by 8% y-o-y to $561 million from improved asset performance and contribution from new management contracts in the lodging and commercial management businesses. The fund management business also contributed to revenue growth due to higher event-driven fees. The lower REIB revenue of $911 million was mainly due to the absence of contributions from properties divested in China, Australia, France, India and Singapore, as well as lower corporate leasing demand in the USA.

 

  FRB&rsquo s contribution to Operating PATMI grew to 63%, up from 49% in the same period last year. The Group also made significant progress in its asset-light transition and diversification strategy, unlocking capital recycling of S$1.7 billion 1 to be redeployed for growth. 

 

During the first half, CLI monetised $1.7 billion. Lodging management&rsquo s RevPAU increased by 6% and new growth engines were added, including a multi-year partnership between The Ascott Limited and Chelsea Football Club. Commercial management&rsquo s fee-income related revenue grew by 22%, driven by enhanced asset performance and a restructuring of management fees. 

 

No dividend was declared as the company only pays a final dividend.