SINGAPORE: CapitaLand has proposed the group’s biggest-ever overhaul that will see the privatising of its real estate development business and consolidation of its fund management and lodging business.
Under the scheme, the group’s investment management and fund managing platforms, as well as its lodging business will be consolidated into CapitaLand Investment Management (CLIM), which is to be listed by introduction on the Singapore Exchange.
With assets under management (AUM) of about S$115bil (RM352bil), CLIM is expected to be the largest real estate investment manager (REIM) in Asia, and the third largest listed Reim company globally.
Singapore’s biggest property developer announced the restructuring along with CLA Real Estate Holdings, an indirect fully owned unit of Temasek Holdings and CapitaLand’s largest shareholder.
As part of the proposed restructuring, the group’s real estate development business will be placed under the private ownership of CLA. This entity will develop and incubate projects as a key source of pipeline for CLIM.
Under the proposed scheme, for every one share held in CapitaLand, eligible shareholders will receive one CLIM share, between 0.155 and 0.143 unit of CapitaLand Integrated Commercial Trust (CICT) and cash of S$0.951.
The implied value per share for CapitaLand’s shareholders is S$4.102, based on current share capital. This is 24% above the last traded price of CapitaLand and represents a premium of 27% to the one-month volume-weighted average price.
CapitaLand shares last traded at S$3.31. The company called for a trading halt before the stock market opened yesterday.
Lee Chee Koon, CapitaLand group CEO, will be taking the helm of CLIM as group CEO.
“This restructuring is about sharpening our focus and positioning ourselves to be an asset-light and capital-efficient business, ” he said.
“We have made good progress to pivot ourselves to the new economy sectors, expanding our global footprint and growing our fee-income business. We are now taking the next step to create a leading global real estate investment manager with dominance in Asia, especially through our track record in the public REITs space.
“As listed REIMs generally trade at a premium to their NAVs in the capital markets, we are confident that CLIM will be able to drive returns for our shareholders given its scale, capabilities and a strong ecosystem, ” he said.
Lee added: “The real estate development business is subject to longer gestation periods and not adequately appreciated by the public markets. With a privately held development business, we will be able to better ride property development cycles to optimise returns across asset classes and geographies.
Under the proposed scheme, CapitaLand will distribute about 48% of shares in CLIM to all its shareholders, excluding CLA.
As this is a 1-for-1 distribution, the share ownership ratio in CLIM immediately after the issuance of the CLIM shares will be equal to the eligible shareholders’ existing ownership in CapitaLand.
CapitaLand will continue to own a 52% interest upon listing of CLIM. Its current 28.9% stake in CICT will be reduced to 22.9%.
CLA will not participate in the distribution of the CICT units, and its entitlement to the CICT units will be distributed to the eligible shareholders as part of the scheme.
CLIM at its inception will be a fully integrated REIM with funds and property management capabilities across multiple asset classes and a spectrum of private and listed funds.
The managers of all the listed real estate investment trusts (REITs) and business trusts, as well as selected unlisted funds currently managed by CapitaLand, will be held under CLIM.These funds have a total fund AUM of about S$78bil as of end-December 2020, having grown at a compound annual growth rate of 15% since 2017. CLIM’s investment management business will be a scalable and global business focused on fee-related earnings and FUM growth, said the announcement.
CapitaLand’s full stack lodging management business, which encompasses the leading global serviced residence management platform under The Ascott Limited, will also become a part of CLIM.
CLIM will hold the stakes in the listed REITs and business trusts, as well as the managed private funds. CLIM will also have within its investment portfolio over S$10.1bil worth of income-generating properties.
The remaining real estate development-related business and assets under CapitaLand, with a pro forma net asset value (NAV) of about S$6.1bil, will be held privately by CLA upon completion of the scheme.
The proposed deal will allow eligible shareholders to realise immediate value upside from the development business, which is a segment requiring commitment of capital for longer-term gestation projects, said CapitaLand.
Jason Leow, president, Singapore & International of CapitaLand group, will be the CEO of CapitaLand Development, the development business arm of the privatised entity, post the restructure.
The scheme is subject to relevant regulatory conditions, the approval of the High Court and CapitaLand’s independent shareholders at an EGM and at a scheme meeting. — The Straits Times/ANN