Capitaland Investment Management

[weijian]

As the seller, CLI owns 78% and 10% of full sales price will be paid with CLINT's shares. So, CLI will (1) earn a 1% acquisition fee, (2) keep their AUM and (3) recycle 85-90% of their capital.

Great business.

PROPOSED ACQUISITION OF ASCENDAS IT PARK (PUNE) PRIVATE LIMITED AND PROPOSED SPONSOR SUBSCRIPTION (AS DEFINED HEREIN)

The Trustee-Manager intends to finance the Total Acquisition Cost, in the following manner:

2.6.1 S$25.0 million through the proposed issue of new units in CLINT (“Units” and such new Units in CLINT, “New Units”) to the Sponsor (the “Proposed Sponsor Subscription”) (see paragraph 3 below); and/or

2.6.2 through debt financing and internal resources.

https://links.sgx.com/1.0.0/corporate-an...4e5965ef3c

[CY09]

https://twitter.com/caseynewton/status/1...3240702976

Twitter has not paid the rental of its capitagreen office space

[weijian]

The entire value chain is integrated from start to end - From development (probably by its brother who was privatized under Temasek), management and then future divestment into a "readily available captive buyer/s". This integration ability attracts funds to park their money and so this why CLI just needs to put up 10% capital as co-investor (the remaining 470mil difference between EV and equity will probably be borrowed)

CapitaLand Investment establishes China data centre development fund with S$1 billion investments

Total equity committed to CDCP is S$530 million, with existing and new global institutional investor clients holding an 80% effective stake in CDCP, and CLI holding the remaining 20%. CDCP’s establishment is in line with CLI’s strategy to grow its portfolio of new economy assets under management and enhance long-term business resilience.

https://links.sgx.com/FileOpen/CapitaLan...20with%20S$1b%20investments.ashx?App=Announcement&FileID=747276

[EnSabahNur]

Hello, my notes on the AGM that took place today, in case anyone finds it useful.

Please bear in mind that this is not a complete list of what was discussed, and I could have misunderstood or missed out certain points.

Please feel free to correct any inaccuracies, thank you.

[weijian]

CLIM did a 3Q23 update a couple of days back and 1 thing stood out:

~S$390M of share buybacks done since listing in 2021
➢ Including ~S$49M YTD 2023
• Reducing equity base to improve EPS and ROE

CLIM 3Q23: https://links.sgx.com/FileOpen/CLI%203Q%...eID=777537

So after excluding 49mil of SBB done YTD 2023, lets look back at the 340mil it spent earlier:
2022: Spent ~140mil on 34.7mil shares at ~3.80sgd per share.
2021: Spent ~200mil on 62mil shares, ~3.35sgd per share.

In 2023, gearing and interest costs are higher now compared to the good old years of 2021/2022. So it takes brave men to keep buying (and at much higher quantities) at current prices which are 10-20% cheaper than the past, in order to continue to "reduce equity base". If that were so, it would be truly buying from a position of strength!

[weijian]

CLIM's managers for their respective REITs have been busy in the last 2months doing divestment deals.

On one hand, this reduces the AUM if the proceeds are used to delever the BS. This may also be indicative of tougher times to come, with the current divestments. Finally, the DPU will reduce post divestment and nothing irritates REIT shareholders more than DPU reductions!

On the other hand, we know that REIT's properties on fair value are generally fully/overvalued on the BS as maximizing it aid towards gearing level (regulatory fulfilment). All the disposals done, are above fair value on the BS, which is reflective on the assets' quality and the manager's track record of sharing value. In addition, disposal of individual assets >NAV when the market value of the entire entity <NAV is surely accretive to OPMIs.

On a net basis, would the value accretion/delevering deliver more value than the DPU reduction with the divestments over the medium/long term? We all know that the trick for REITs to expand, is to get into a virtuous cycle of a low enough yield so that they can make "yield accretive acquisitions" via financial engineering. Would be interesting to observe how these actions translate to the REITs in the future.

CapitaLand Ascott Trust
Singapore, 17 December 2023 – CapitaLand Ascott Trust (CLAS) is divesting three hotels in Osaka, Japan to an unrelated third party for a total of JPY10.7 billion (S$99.8 million[1]).  The three properties are Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.

The three properties will be divested at about 15% above book value[2].  Net proceeds of the divestment are expected to be about JPY3.9 billion (S$36.4 million) and CLAS will recognise a net gain of JPY1.1 billion (S$10.1 million).  The divestment of the three properties is expected to be completed in 1Q 2024.

CapitaLand Ascendas REIT
The manager of CapitaLand Ascendas REIT (CLAR) has announced the proposed divestment of three logistics properties in Queensland, Australia on Dec 20.

The total sale consideration for the three properties amounts to $64.2 million (A$73.0 million) and represents a premium of 6.2% over the total market valuation of the properties of $60.4 million as at Aug 31.

CapitaLand Ascott Trust
CAPITALAND : HMN +0.52% Ascott Trust : HMN +0.52% (Clas) is to divest two hotels in Sydney, Australia for A$109 million (S$95.6 million) to an unrelated third party, the managers said in a press statement on Monday (Nov 6).

The properties – Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Parramatta – are located outside Sydney’s city centre. They will be sold at 5 per cent above book value with an exit yield of 4.4 per cent on an expected net gain of A$14.2 million.

CapitaLand Ascott Trust (CLAS) is divesting three hotels in Osaka, Japan to an unrelated third party for a total of JPY10.7 billion (S$99.8 million[1]).  The three properties are Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.

The three properties will be divested at about 15% above book value[2].  Net proceeds of the divestment are expected to be about JPY3.9 billion (S$36.4 million) and CLAS will recognise a net gain of JPY1.1 billion (S$10.1 million).  The divestment of the three properties is expected to be completed in 1Q 2024.

CapitaLand China Trust
CapitaLand China Trust announced the divestment of CapitaMall Shuangjing for RMB849.2m or S$159.2m.
The divestment proceeds accrued to CLCT of  S$143.2m will take into account the existing debt on the target SPV level of c.S$14m. Agreed transaction price represents a 37% upside to the latest valuation of the mall.

https://www.capitaland.com/en/about-capi...llion.html

https://www.theedgesingapore.com/amp/new...es-642-mil

https://www.businesstimes.com.sg/compani...09-million

https://www.dbs.com.sg/treasures/aics/te...082023.xml

https://www.capitaland.com/en/about-capi...llion.html

[weijian]

Comparing to Keppel who just recently acquired a European based boutique asset manager outright, CLIM is depending on organic growth via partnerships. AUM increase isn't eye catching but I thought the partners themselves are the interesting bunch:

(1) Extra Space Asia is 90% owned by the APG, a European pension fund and 10% by CLIM. As the "expert", it is always great to be able to partner a deeply pocketed person who has less expertise in this part of the world than you do - You help them to diversify their returns and they help you to scale your FUM business.

(2) The Wellness and Logistics fund are partnered with the same Thai developer. And since Thailand always had a small footprint in CLIM's reach, this partnership increases both partners' geographical range and depth. A win-win.

CapitaLand Investment increases capital deployment momentum with four acquisitions in Southeast Asia and closes core logistics fund in Japan

CapitaLand Investment Limited (CLI) today announced three new acquisitions in Southeast Asia from unrelated third parties. The acquisitions include two industrial properties in Singapore by Extra Space Asia, the Asia-focused self-storage platform managed by CLI. In addition, CapitaLand SEA Logistics Fund acquired OMEGA 1 Bang Na, Thailand (OMEGA 1 Bang Na), a 20-hectare freehold greenfield site in Bangkok, Thailand.

In January 2024, CapitaLand Wellness Fund completed the joint acquisition of a freehold lodging property in Singapore. Upon the completion of the development of OMEGA 1 Bang Na, the total investment value of these four acquisitions will be approximately S$700 million, boosting CLI’s funds under management in the region to S$1.2 billion.

https://links.sgx.com/FileOpen/News%20re...eID=786099

[EnSabahNur]

I'm not familiar with the Keppel Corp acquisition of Aermont but from this news article, it sounds like they are buying a manager with capabilities they do not currently have?

https://www.mingtiandi.com/real-estate/f...r-aermont/

So the Capitaland situation is different from the Keppel situation because Capitaland is co-investing along side a partner whereas Keppel is carrying out a bolt-on acquisition.

[weijian]

I'm not familiar with the Keppel Corp acquisition of Aermont but from this news article, it sounds like they are buying a manager with capabilities they do not currently have?

https://www.mingtiandi.com/real-estate/f...r-aermont/

So the Capitaland situation is different from the Keppel situation because Capitaland is co-investing along side a partner whereas Keppel is carrying out a bolt-on acquisition.

Hi EnSabahNur,

Aermont Capital manages PE and Keppel Capital does the same as well. Of course, the synergies are the different geographies and also the communication lines (ie. customer contacts) each have. Putting on the devil's advocate, GLCs haven't had a good track record of acquiring foreign teams/assets. Ditto Singpost (and possibly S*TS in a few years down the road). IIRC, the GPs (general partners) of Aermont Capital also co-invest together with their LPs (limited partners).

So Keppel is doing the fast track by acquiring FUM through a GP acquisition, while CLIM is going the "slower way" by looking for LPs themselves or partnering with GPs that don't overlap with them. Of course, Capitaland themselves did acquire FUM themselves back in 2019 through buying Ascendas-Singbridge from Temasek. And it is probably because of that acquisition that they had enough scale to split the development and management portions of the business.

[EnSabahNur]

Aermont Capital manages PE and Keppel Capital does the same as well. Of course, the synergies are the different geographies and also the communication lines (ie. customer contacts) each have. Putting on the devil's advocate, GLCs haven't had a good track record of acquiring foreign teams/assets. Ditto Singpost (and possibly S*TS in a few years down the road). IIRC, the GPs (general partners) of Aermont Capital also co-invest together with their LPs (limited partners).

So Keppel is doing the fast track by acquiring FUM through a GP acquisition, while CLIM is going the "slower way" by looking for LPs themselves or partnering with GPs that don't overlap with them.

Hi Weijian

Not to split hairs here but I think there is a subtle difference and I think they are not just buying AUM. In the Keppel case it looks like they are buying over the capabilities, distribution and of course, the AUM. If they decide to exercise the 2028 option they will own this lock stock and barrel. So this is adding a new "business unit" if you want to call it that, they will add to AUM flow and new product offerings in the future, assuming things work out. Like you said, acquisitions are already tricky, plus the fact that this is a very people centric business and GLCs have a not so great track record.

Whereas for CLI they are doing something that they seem to be capable of doing already, so this is "normal" course of business for them.

I didn't realise the point about the Cap-Ascendas merger being done for scale. Can I trouble you to elaborate on that?