CapitaLand Investment 9M revenue drops 3% to S$2.1 billion on weaker real estate business
REAL estate investment manager CapitaLand Investment (CLI) posted a 3 per cent drop in revenue to S$2.1 billion for the nine months ended Sep 30, compared with S$2.2 billion in the corresponding period the previous year.
The dip in revenue was due to an 8 per cent decline in revenue of its real estate business to S$1.4 billion, dragged by a faltering China market, but partially offset by a 9 per cent growth in its fee income-related business to S$799 million, said the manager in a business update on Thursday (Nov 9).
Still, 64 per cent of the nine-month revenue came from its real estate investment business. Total assets as at end-September stood at S$34.3 billion, down from S$36.4 billion the previous year.
Its net asset value dropped around 5 per cent to S$14.4 billion, while the manager highlighted that over 50 assets – worth around S$10 billion – are in the divestment pipeline.
The manager also noted that softening economic activities in China have been weighing on its real estate performance, as the S$10.6 billion in China assets occupy the most of its portfolio at 31 per cent.
Growth driver
Its growth driver is an asset-light fee-based business, which comprises private funds, listed funds, lodging and commercial management. This segment registered the strongest revenue growth in lodging management, with a 31 per cent year-on-year increase.
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This was mainly led by stronger operating performance and higher contribution from serviced apartment provider Oakwood, which was acquired in July 2022.
The property giant also recorded growth in revenue per available unit (RevPAU) across various markets, driven by higher occupancy and room rates.
Overall RevPAU improved by 25 per cent, while the occupancy rate increased nine percentage points and average daily rates grew 8 per cent.
“North Asia continued as the region displaying the fastest growth in RevPAU, driven by Japan,” said the manager, noting that RevPAU for the region, excluding China, rose 110 per cent on the year.
China market’s occupancy rate improved by 12 percentage points year on year on recovering tourism, boosting RevPAU by 16 per cent.
The manager highlighted that Singapore market’s RevPAU recovered to 130 per cent of pre-Covid levels, while RevPAU of the European market was restored to 117 per cent of pre-Covid levels.
Healthy debt headroom
The manager also noted a healthy debt headroom, with its net debt-to-equity ratio at 0.55 times and average debt maturity at 2.9 years.
The interest coverage ratio of the debt profile stood at 3.7 times, with an implied interest cost at 3.9 per cent and 64 per cent debt on fixed rates.
Since the start of Q3 and until Nov 8, CLI has made S$1.1 billion worth of divestments, with the majority of the proceeds going into its private and listed funds.
Under CLI’s fund management segment, while recurring fees increased 9 per cent on the year for the three quarters, fee-related earnings decreased 10 per cent. This was due to an absence of event-driven private funds performance fees, which registered S$38 million in the same period the prior year.
Five funds were launched, and the total funds under management stood at S$29 billion in the nine months.
As at Nov 8, the total equity raised through funds was S$3.5 billion, including CLI’s equity contribution. Total investments of S$1.5 billion and divestments of S$167 million were made under CLI’s funds.
CLI’s counter closed 0.3 per cent or S$0.01 lower at S$3.03 on Thursday.
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