CapitaLand to create new investment management arm in revamp


CAPITALAND Ltd., Singapore’s largest developer, is restructuring its business by creating a new global real estate investment manager that’s expected to be the biggest such entity in Asia.

The new firm, CapitaLand Investment Management, will consolidate the investment management platforms and lodging business and be listed on the Singapore exchange, the company said in a statement on Monday. The group’s real estate development business will be placed under private ownership, it said.

CapitaLand is regrouping after posting a record loss of S$1.57 billion ($1.2 billion) for 2020, when the pandemic led to writedowns of some investment properties and residential projects. At the time, the company said Covid-19 won’t change its plans to become a globally competitive asset manager and real estate company.

CapitaLand will be delisted upon the proposal’s approval, and all of its real estate investment trusts will come under CLIM. Lee Chee Koon, who’s currently CapitaLand’s chief executive officer, will helm CLIM.

The move is to position the company as an “asset-light and capital-efficient business,” Lee said in the statement, expressing confidence that CLIM will be able to drive returns for shareholders given its “scale, capabilities and a strong ecosystem.”

With assets under management of about S$115 billion, CLIM is expected to be the largest real estate investment manager in Asia, and the third-biggest listed REIM company globally, CapitaLand said.

Risk, Reward

By simplifying the group structure along clear lines of risk and reward, CapitaLand is offering “bespoke sleeves” for co-investment and capital allocation in its highly regarded real estate programs, said Priyaranjan Kumar, managing director at family office Alvarium Investments.

“Over time, this will likely translate in higher returns on equity, more financial discipline and a more robust and agile balance sheet,” Kumar added.

CapitaLand and its REITs halted trading before the announcement.

The real estate development business will be fully held by CLA Real Estate Holdings, an indirect wholly owned unit of Temasek Holdings Ltd., which is the largest shareholder of CapitaLand with a 52% stake.

Jason Leow, currently CapitaLand’s group president of Singapore and international, will be CEO of CapitaLand Development, which is the development business arm of the privatised entity.

“With a privately held development business, we will be able to better ride property development cycles to optimise returns across asset classes and geographies,” Lee said.

“We can make more appropriate risk-return decisions to undertake attractive but longer gestation projects.”

CapitaLand has moved to consolidate its businesses in recent years. Last year, two of its REITs combined in a deal valued at more than S$8 billion to become CapitaLand Integrated Commercial Trust.

In 2019, the developer completed its acquisition of Ascendas-Singbridge from Temasek in 2019. The same year, its Ascott Residence Trust merged with Ascendas Hospitality Trust to form the largest hospitality trust in the Asia-Pacific region.