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).