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CapitaLand warns of China losses as Singapore property investor cuts exposure
BloombergUpdated Fri, 22 November 2024 at 12:13 am GMT-8·2-min read
CapitaLand Group, owned by Singapore state investor Temasek, has long been a major investor in China. (Photographer: Wei Leng Tay/Bloomberg)
By Low De Wei
(Bloomberg) – CapitaLand Investment, one of Asia’s largest property investment managers, warned of potential losses as it seeks to extricate itself from China’s real estate crisis.
The Singapore-based firm wants to reduce its exposure in the world’s second-largest economy to 10-20% of its expected S$200 billion ($149 billion) in funds under management by 2028, it said in an investor day presentation Friday.
In doing so, the company may incur “potential fair value or divestment losses” that impact near-medium term non-operating earnings, it said. Its current exposure to China is 27% of its S$113 billion in funds.
The company said in an emailed statement that it was “fully committed” to its China business and intends to grow its funds there with local capital. Diversification is part of its plans to grow as an asset-light real estate manager, it said.
The listed investment arm of CapitaLand Group, which is owned by Singapore state investor Temasek Holdings, has long been a major investor in China, but a years-long property downturn there has made these bets, spanning from office space to malls, turn sour.
These struggles have hit the company’s stock, which is down about 11% this year compared with a 16% gain in Singapore’s benchmark equity index. Selling its property in China has been difficult, with the bulk of the S$4.6 billion divestments this year up to early November coming from Singapore and other countries like Japan.
The firm is seeking to more than double its operating earnings to over S$1 billion by 2028-2030, and could do new real estate investment trust listings in Australia, China and India, it said in the presentation. So far, it’s sought to increase its exposure elsewhere, including most recently announcing it will buy out SC Capital Partners Group, a Japan-focused property investor.
CapitaLand Investment’s management said in an analyst call earlier this month that it hopes to divest about S$1 billion in China this year, according to a Citigroup Nov. 6 note, which added that it estimates the company has just sold about S$300 million so far. Citigroup also said that the Singapore firm is aiming to divest about S$3.5 billion Chinese assets on its balance sheet over three years, although it will stop giving divestment targets next year.
(Updates with company comments in fourth paragraph.)
