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.

 

CAPITALAND Investment (CLI) : 9CI +0.83% has partnered with a Thai real estate developer Pruksa Holding PCL (PSH) and Taiwanese logistics property developer Ally Logistic Property (ALP) to set up a S$1 billion logistics fund.

 

The three companies have committed an initial investment of S$270 million to the CapitaLand Sea Logistics Fund (CSLF), with an option to increase their investment up to S$540 million, they said in a joint statement on Monday (Dec 19). They target to achieve assets under management of S$1 billion.

 

CLI will be the fund&rsquo s manager, leveraging its well-established global real estate platform, fund management expertise and local operating presence to &ldquo provide the fund a competitive advantage in deal sourcing, investment and execution&rdquo , said the statement.

 

Meanwhile, PSH will lend its extensive market knowledge and &ldquo proven integrated development experience&rdquo in Thailand, while ALP will provide deep operational expertise in the real estate and logistics sector.

 

The fund offers a &ldquo cross-platform approach that provides customers end-to-end holistic and smart warehousing solutions to enhance productivity and maximise returns&rdquo , said the companies.

 

It will also benefit from ALP&rsquo s smart warehousing solutions, such as robotic equipment and space planning, to serve the market more competitively.

 

&ldquo This combination of complementary expertise is the key differentiating factor for CSLF to stand out as a leading investment manager and operator in the advanced logistics sector,&rdquo they added.

 

Market demand for Grade A warehouse spaces has expanded significantly as companies relocate their manufacturing activities to South-east Asia in response to global supply chain disruptions, noted the three companies in the statement. &ldquo There is currently a lack of quality warehouse assets in the region, and the overall supply chain is fragmented as industry players are not well-integrated.&rdquo

 

In addition, with the rapid rise in e-commerce and omnichannel retail activities, businesses are also seeking &ldquo innovative and advance logistics and warehouse solutions that are scalable to shorten the supply chain and increase their competitiveness&rdquo , they said.

 

With a more than combined 50 years of experience in the industry, the three companies seek to leverage their investing and expertise to drive value creation for CSLF to maximise investment performance.

 

&ldquo CLI firmly believes in the long-term growth potential of the smart logistics and infrastructure as a strong alternative asset class that will benefit from the favourable economic fundamentals of South-east Asia,&rdquo said Patricia Goh, managing director of CLI South-east Asia.

 

&ldquo The platform will also contribute to CLI&rsquo s funds under management and fee-related earnings and expand the asset pipeline for our private and listed fund vehicles,&rdquo Goh added.

Capitaland Investment (CLI) has announced the appointment of a new group COO and CFO, which will take effect from Jan 1, 2023.

 

Current group CFO Andrew Lim will assume the newly created position of group COO, and will be succeeded by Paul Tham, who is currently deputy group CFO. Tham will oversee CLI&rsquo s finance, capital management and strategy.

 

CLI says that as group COO, Lim will play a &ldquo critical role&rdquo to facilitate and steward CLI&rsquo s deal sourcing, investment and operations in the various markets across its fund and lodging platforms.

 

This will enable CLI to more effectively connect investors to various fund and REIT vehicles, in line with their investment mandates and interests.

 

Lim will also oversee the China business under the leadership of CLI China CEO Puah Tze Shyang, as well as CLI&rsquo s businesses in Japan, Korea, Australia, Europe and the US.

 

Across the group, Lim will also oversee the areas of sustainability, risk management and compliance across CLI.

 

Separately, CLI also announced three other newly created roles and appointments.

 

Janine Gui, who is currently managing director & head of group strategic investment, has been appointed Chief M& A Officer.

 

Furthermore, current CEO of China capital markets and CEO for finance and corporate services Kng Hwee Tin will be appointed group chief risk officer.

 

These are in addition to the appointment of chief people and culture officer Quah Ley Hoon, who joined CLI on Dec 1.

CAPITALAND Investment (CLI) : 9CI 0% is selling its 91.8 per cent stake by total strata floor area of retail space in Penang&rsquo s Queensbay Mall for RM990.5 million (S$295.5 million) to CapitaLand Malaysia Trust (CLMT), CLI announced in a bourse filing on Wednesday (Nov 9) night.

 

The price represents a premium of 3.8 per cent to CLI&rsquo s valuation of the mall in December 2021. 

 

Upon completion, CLI is expected to receive proceeds of about RM987 million and realise an estimated gain of RM59.3 million.

 

CLMT&rsquo s acquisition will be financed by the issuance of new CLMT units to raise gross proceeds of up to 50 per cent of the total purchase consideration. The issue price of this proposed private placement will be determined later via a bookbuilding process.

 

CLI, as CLMT&rsquo s sponsor, intends to take up its pro-rata entitlement in the private placement. As at Nov 3, 2022, CLI had a deemed interest of approximately 39.3 per cent in CLMT.

 

The acquisition, which is conditional upon the approval of CLMT&rsquo s non-interested unitholders at an extraordinary general meeting to be convened at a later date, is expected to be completed by the first quarter of 2023.

 

One of the largest malls in Penang, Queensbay Mall is a free-standing eight-storey shopping centre with a lower ground floor and a lower ground mezzanine comprising five floors of retail space and car parks. 

 

It is located at Bayan Lepas along the south-eastern shorefront of Penang island with transport links and proximity to the Penang Bridge and the Bayan Lepas industrial hub in Penang&rsquo s Free Trade Zone.

 

The mall has a net lettable area of 883,111 square feet (sq ft) and a committed occupancy of 95 per cent as at Oct 7, 2022. Its tenants include those in entertainment, lifestyle, fashion and dining.

 

Jonathan Yap, chief executive of listed funds at CLI, said Queensbay Mall &ldquo is a high-quality asset that will add meaningful scale to CLMT as it seeks to diversify its income streams and grow its asset base&rdquo .

 

He added that post-divestment, CLI will continue to benefit from the mall&rsquo s stable yield and participate in its organic growth through its stake in CLMT.

 

Yap said the proposed divestment is a continuation of CLI&rsquo s strategy to unlock value by converting balance sheet assets into funds under management (FUM) that generate recurring fee-related earnings (FRE).

 

Including this transaction, CLI has announced gross divestments of about S$2.7 billion year-to-date. &ldquo About 87 per cent of this value is acquired by CLI&rsquo s listed and private fund vehicles, boosting CLI&rsquo s FUM and fund management FRE,&rdquo said Yap. &ldquo Amid the global uncertainty, we are on track to meet CLI&rsquo s annual divestment target of S$3 billion.&rdquo

 

Lui Chong Chee, chairman of CLMT&rsquo s manager, CapitaLand Malaysia Reit Management (CMRM), said the proposed acquisition of Queensbay Mall will deepen CLMT&rsquo s presence in Penang, and strengthen its foothold in the northern region of Malaysia, where it already owns Gurney Plaza and is targeting to complete the acquisition of its first logistics property. 

 

The acquisition will enlarge CLMT&rsquo s portfolio to seven properties.

 

The remaining 8.2 per cent strata ownership of the mall not involved in the proposed acquisition are held by private owners.

CapitaLand Investment : 9CI +5.59% (CLI), one of Singapore&rsquo s largest global real estate investment managers (Reims), has a strong Asia foothold with an asset under management of S$125 billion as of Jun 30, 2022. It was listed in September 2021, after CapitaLand Limited restructured its business to form two distinct entities &ndash CLI, the listed Reim business, and CapitaLand Development, the privatised property development arm.

 

CLI&rsquo s funds business comprises five real estate investment trusts (Reits) and business trusts listed on the Singapore Exchange (SGX). In September, Ascendas Reit, Ascott Residence Trust and Ascendas India Trust officially changed their names to align with the CapitaLand brand. Ascendas Reit is now known as CapitaLand Ascendas Reit : A17U 0% Ascott Residence Trust is now known as CapitaLand Ascott Trust : HMN 0% while Ascendas India Trust is changed to CapitaLand India Trust : CY6U 0%. All five Reits and business trusts have reported business updates for the third quarter of 2022.

 

CapitaLand Ascendas Reit (Clar) reported steady portfolio occupancy of 94.5 per cent and positive rental reversion of 5.4 per cent in Q3. Within the quarter, the Reit announced two acquisitions in Singapore across the industrial and logistics sub-segments, totalling purchase consideration of S$296.7 million. To help navigate and mitigate rising utility and interest expenses, Clar have implemented higher service charge for its Singapore leases from October 2022.

 

CapitaLand Ascott Trust (Clas) reported that its Q3 gross profit rose to 90 per cent of pre-Covid levels on a pro forma basis. Portfolio revenue per available unit (RevPAU) grew 88 per cent year on year to S$132, which is close to 87 per cent of Q3 2019 RevPAU. The trust believes that with stable income sources from master leases and longer-stay lodging representing more than half of gross profits, it is resilient against macroeconomic and recessionary headwinds. Looking ahead, Clas sees continued tailwinds from travel recovery and greater demand for accommodation, particularly from its key market &ndash Japan &ndash following the country&rsquo s reopening to independent travellers.

 

CapitaLand China Trust : AU8U +2.65% (CLCT) reported 7.5 per cent year-on-year growth in net property income (NPI) for the first nine months of 2022. New-economy portfolio saw full contributions from business parks and logistics parks, which boast high occupancy of 94.3 per cent and 96.6 per cent respectively. CLCT&rsquo s retail portfolio achieved its first positive rental reversion of 4.9 per cent since the start of Covid-19 while Q3 2022 shopper traffic was up 37.5 per cent and tenant sales grew 33.7 per cent quarter on quarter.

 

CapitaLand India Trust (Clint) reported 8 per growth year on year in Q3 NPI, driven by higher income contribution from Building Q1, Arshiya Warehouse 7 and Industrial Facility at MWC. In the year to date, Clint added 41 new tenants to its portfolio, bringing overall committed portfolio occupancy to 91 per cent, while physical park attendance improved from 5 per cent in September 2021 to 41 per cent in September 2022.

 

CapitaLand Integrated Commercial Trust : C38U +0.54% (CICT) recorded 12.7 per cent year-on-year growth in NPI for Q3. It noted that year-to-date tenants&rsquo sales for its retail portfolio have surpassed pre-Covid levels as downtown malls saw higher shopper traffic from border relaxation. On a portfolio average, tenants&rsquo sales per square feet grew 21.3 per cent year on year while shopper traffic grew 21.9 per cent over the same period. It noted that the Singapore office portfolio has also recorded positive rental reversion of 7.9 per cent, with momentum likely to be sustained on the back of limited new supply. SGX RESEARCH

CAPITALAND Investment : 9CI +5.59% (CLI) posted a 6.3 per cent growth in fund management fee-related earnings for the third quarter ended Sep 30 to S$101 million, from S$95 million a year ago.

 

In the year to date, fund management fee-related earnings grew 16 per cent to S$339 million, from S$292 million in the corresponding period last year. In a business update on Friday (Nov 4), CLI noted that this was driven in part by private funds &ndash almost half of which were recurring &ndash up 44 per cent to S$118 million from S$82 million in 2021.

 

On Thursday, for instance, CLI announced that it has established two onshore renminbi funds totalling four billion yuan (S$796 million) to invest in business park opportunities in China. The two are the latest of five funds established by CLI in Q3 2022.

 

Additionally, CLI highlighted that 17 of its properties within listed funds have undergone asset-enhancement initiatives or redevelopment amounting to around S$1 billion since the start of the year. Ongoing redevelopments include that at the former Liang Court site into an integrated development, and 1 Science Park Drive into a life science and innovation campus. 

 

Meanwhile, funds under management (FUM) in Q3 remained flat at S$86 million, unchanged from FY2021. Including embedded FUM from committed and undeployed capital for private funds and announced real estate investment trusts, CLI said FUM would have risen by 3 per cent or S$6.1 billion to S$92.1 billion.

 

The company&rsquo s lodging management business recorded a 43 per cent increase in revenue per available unit (RevPAU) for the third quarter ended Sep 30, to S$110 from S$77 a year ago. 

 

This was fuelled by year-on-year growth in RevPAU across its various markets &ndash led by Singapore with a 92 per cent increase, followed by South-east Asia and Australia with 81 per cent, and Europe with 75 per cent. 

 

CLI attributed the increase to an upswing in travel demand and activity across all regions as border restrictions eased, with RevPAU recovering to 92 per cent of its pre-pandemic Q3 2019 levels. 

 

Occupancies and average daily rates (ADR) rose 12 per cent and 22 per cent, respectively.

 

On a year-to-date basis, CLI&rsquo s fee-related earnings rose 16 per cent in the year to date to S$760 million, from S$656 million in the corresponding period last year &ndash its property management earnings slipped slightly to S$231 million from S$236 million, while its lodging management earnings rose to S$190 million from S$128 million. 

 

Revenue from its real estate investment business also increased 48 per cent to S$1.6 billion year to date, from S$1.1 billion in the same period last year.    

 

Citibank analyst Brandon Lee said that CLI&rsquo s business update reflects positive momentum in its private funds business, despite a &ldquo generally tough operational environment&rdquo for real estate investment managers. 

 

&ldquo The continued recovery in global lodging markets justified CLI&rsquo s decision to include the segment in its business model,&rdquo he added. &ldquo We believe current valuations &ndash a one-time multiple of the stock&rsquo s price-to-book ratio and 41 per cent discount to our sum-of-the-parts valuation &ndash offer a good entry point.&rdquo

CapitaLand Investment Limited (CLI) has established two new onshore RMB funds to invest in business park opportunities in China. These are CLI&rsquo s first business park private funds in the country.

 

The first, China Business Park Core RMB Fund I (CBPCF I), is a RMB380 million ($76 million) fund that was established with four domestic investors.

 

CBPCF II, the second fund, is a RMB3.6 billion fund that was established with six domestic investors.

 

According to CLI, it has raised RMB3.2 billion in third-party capital for the two funds.

 

The new funds will add over RMB8.2 billion to CLI&rsquo s funds under management (FUM) when fully deployed. The group will hold a 10% stake in the first fund, and a 20% stake in the second one.

 

CBPCF I has acquired Ascendas i-Link, a business park in Zhangjiang Hi-Tech Park in Pudong New District, Shanghai from CLI, which will continue to manage the asset. CLI will also manage the single-asset fund.

 

Zhangjiang Hi-Tech Park is one of China&rsquo s first state-level hi-tech zones approved by the State Council. The park houses many top Chinese technology enterprises and Fortune 500 companies.

 

CBPCF II will invest in a Leadership in Energy and Environmental Design (LEED) Gold-certified business park in China. The fund expects to complete the acquisition by end-2022. CLI will co-manage the fund with an asset management company, an affiliate of one of the anchor investors.

 

According to CLI, both assets are quality core income-generating properties with close to an occupancy rate of 100%.

 

&ldquo With the launch of our first RMB fund in June 2022 and now with CPBCF I and CPBCF II, CLI has raised close to RMB4 billion of onshore capital from Chinese institutional investors. Our close to 30 years of on-the-ground experience and strong fund and asset management track record in China have enabled us to tap domestic capital to support our onshore investment management activities. Leveraging our deal-sourcing capabilities, we secured a quality office asset, which was a special situation opportunity, for our first RMB fund,&rdquo says Puah Tze Shyang, CEO of CLI China.

 

&ldquo We are expanding our RMB funds to acquire business parks which have proven to be resilient in operating performance. We remain confident in the long-term prospects of China given the size of its economy, and will continue to leverage the increasing pool of domestic capital to grow our business in China,&rdquo Puah adds.

 

Simon Treacy, CEO of private equity real estate, real assets at CLI, says, &ldquo CLI is accelerating its onshore RMB capital raising momentum at a time when it is becoming increasingly important for investment managers to build up domestic fund-raising capabilities. CBPCF I and CBPCF II bring 10 new investors including securities firms, trust companies, state-owned enterprises and insurers into CLI&rsquo s network of capital partners. They demonstrate our ability to execute our growth strategies whilst diversifying our capital pool with high quality Chinese partners.&rdquo

 

Treacy adds: &ldquo As a global real estate investment manager with an intimate knowledge of China, CLI is able to source for opportunities and structure unique deals that will deliver sustainable quality returns for onshore investors. Besides business parks, we see potential to invest in other new economy assets such as data centres and logistics in China through our private funds. The expansion of our private fund management business, which is a key growth driver for CLI, will further strengthen CLI&rsquo s asset-light and capital-efficient business model.&rdquo

 

CAPITALAND : 9CI -0.95% Investment (CLI) and APG Investments Asia entered into a joint venture with an initial equity investment of S$570 million to establish a self-storage platform.

 

The deal comes with an option to increase their investment up to S$1.14 billion, with APG contributing 90 per cent and CLI contributing the remaining 10 per cent to acquire Extra Space Asia (ESA) and grow the platform, according to a joint press release on Thursday (Oct 27). (See *Amendment note)

 

ESA is a self-storage business with owned and leased facilities in various Asian cities. It generates the bulk of its net property income in Singapore. 

 

Post-acquisition, ESA will be repositioned into an operating company/property company structure to facilitate future expansion.

 

CLI is the listed investment management business arm of CapitaLand Group, while APG Investments Asia is the investment manager for Dutch pension fund APG.

 

Both parties were drawn to the Asian self-storage sector due to its strong fundamentals, underpinned by high urbanisation rates, high population density, an increasing proportion of renters and the rapid growth of e-commerce, said the companies in a press release.

 

It also highlighted the sector&rsquo s growth potential and opportunities for consolidation.

 

Patrick Boocock, CLI&rsquo s chief executive of private equity alternative assets, real assets, noted the resiliency of the self-storage sector in Asia during the pandemic, and said it would continue to benefit from strong growth tailwinds supported by favourable demographics and lifestyle trends in the region.

 

&ldquo We view the self-storage platform as an extension of CLI&rsquo s logistics platform, well-positioned to capture the increasing demand for flexible storage and last-mile delivery requirements in tandem with the growth of e-commerce,&rdquo he said.