Privatization of real estate development business

CapitaLand Group issued an announcement showing that CapitaLand Group will implement a group business restructuring proposal with CapitaLand Holdings to integrate the investment management platform and lodging business under CapitaLand Group into “CapitaLand Investment Management (CLIM)”. The company will be based in Singapore. Listed on the stock exchange; at the same time, the group’s development business will be privatized and will be held by Kaiteng Holdings after the implementation of the plan is completed.

CapitaLand Group Chairman Huang Jizu said that the restructuring plan is an important milestone in the transformation of CapitaLand Group. It will further expand its asset and investment management and lodging business to provide impetus, which will also consolidate CapitaLand’s market position in the real estate investment management business field in Asia. At the same time, shareholders will have the opportunity to continue to invest in the growth of asset-light business through CapitaLand Investment Management, and they will also benefit from the huge value released by the business restructuring.

Privatization of real estate development business

It is understood that Kaiteng Holdings is a wholly-owned subsidiary of Temasek Group. As of March 12, 2021, it owns 52% of the CapitaLand Group and is the largest shareholder of CapitaLand Group.

According to the plan in the reorganization of CapitaLand Group, the investment management platform will be merged with the hotel business. Among them, the CapitaLand Group’s hotel management business includes a full-line hotel management business and the world’s leading serviced apartment management platform under Ascott Co., Ltd. (Ascott). CapitaLand’s investment portfolio includes high-quality revenue-oriented properties with asset values ​​exceeding S$10.1 billion. Most of these properties can be recycled and used as potential asset reserves to help CapitaLand Investment Management’s fund tools expand the scale of assets under management during the expected realization period of about three years.

After the merger of the two, CapitaLand’s investment management has assets under management of approximately S$115 billion, making it the third largest listed real estate investment management company in the world.

In terms of privatization of development business, the remaining real estate development-related businesses and assets of CapitaLand Group have a net asset value of approximately S$6.1 billion, which will be held by CapitaLand Holdings after the implementation of the restructuring plan. In addition, the privatized development business will continue to support the development of CapitaLand’s investment management business by participating in and cooperating in the development or renovation of projects in CapitaLand Investment Management and its funds.

After the reorganization, the privatized development business will also become an incubator for the potential new business of the CapitaLand Group. The development business through privatization will continue to develop and cultivate projects, and it will be an important source of project reserves for CapitaLand Investment Management.

“This reorganization is to highlight our business focus and position CapitaLand as an asset-light, capital-efficient enterprise. We have made good progress in laying out new economic fields, expanding global business footprint, and expanding expense and income business. We are taking further action, especially through CapitaLand’s good performance in the field of listed real estate investment trusts, to build an Asia-centered and world-leading real estate investment management company. The valuation of listed real estate investment management in the capital market is usually high In terms of its net asset value, given the scale, capabilities and strong business ecosystem of CapitaLand Investment Management, we believe it will be able to bring good returns to shareholders.”

CapitaLand Group CEO Li Zhiqin said, “Due to the long incubation period, the value of the real estate development business has not been fully reflected in the open market. The privatization of this part of the business will allow CapitaLand to better grasp the real estate development cycle. To optimize returns for different asset classes and markets.”

At the same time, Li Zhiqin pointed out that, given that the privatized development business is an important source of project reserves for CapitaLand’s investment management, the complete business ecosystem that CapitaLand Group has built will remain unchanged. The symbiotic relationship between the business within the group will become a major advantage of CapitaLand’s investment management and differentiate it from other real estate investment management companies.

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