CapitaLand Investment fund management earnings up 6.3% in Q3

CAPITALAND Investment (CLI) posted a 6.3 per cent growth in fund management fee-related earnings for the third quarter ended Sep 30 to S$101 million, from S$95 million a year ago.

In the year to date, fund management fee-related earnings grew 16 per cent to S$339 million, from S$292 million in the corresponding period last year. In a business update on Friday (Nov 4), CLI noted that this was driven in part by private funds - almost half of which were recurring - up 44 per cent to S$118 million from S$82 million in 2021.

On Thursday, for instance, CLI announced that it has established two onshore renminbi funds totalling four billion yuan (S$796 million) to invest in business park opportunities in China. The two are the latest of five funds established by CLI in Q3 2022.

Additionally, CLI highlighted that 17 of its properties within listed funds have undergone asset-enhancement initiatives or redevelopment amounting to around S$1 billion since the start of the year. Ongoing redevelopments include that at the former Liang Court site into an integrated development, and 1 Science Park Drive into a life science and innovation campus

Meanwhile, funds under management (FUM) in Q3 remained flat at S$86 million, unchanged from FY2021. Including embedded FUM from committed and undeployed capital for private funds and announced real estate investment trusts, CLI said FUM would have risen by 3 per cent or S$6.1 billion to S$92.1 billion.

The company's lodging management business recorded a 43 per cent increase in revenue per available unit (RevPAU) for the third quarter ended Sep 30, to S$110 from S$77 a year ago. 

This was fuelled by year-on-year growth in RevPAU across its various markets - led by Singapore with a 92 per cent increase, followed by South-east Asia and Australia with 81 per cent, and Europe with 75 per cent. 

CLI attributed the increase to an upswing in travel demand and activity across all regions as border restrictions eased, with RevPAU recovering to 92 per cent of its pre-pandemic Q3 2019 levels. 

Occupancies and average daily rates (ADR) rose 12 per cent and 22 per cent, respectively.

On a year-to-date basis, CLI's fee-related earnings rose 16 per cent in the year to date to S$760 million, from S$656 million in the corresponding period last year - its property management earnings slipped slightly to S$231 million from S$236 million, while its lodging management earnings rose to S$190 million from S$128 million. 

Revenue from its real estate investment business also increased 48 per cent to S$1.6 billion year to date, from S$1.1 billion in the same period last year.   

Citibank analyst Brandon Lee said that CLI's business update reflects positive momentum in its private funds business, despite a "generally tough operational environment" for real estate investment managers. 

"The continued recovery in global lodging markets justified CLI's decision to include the segment in its business model," he added. "We believe current valuations - a one-time multiple of the stock's price-to-book ratio and 41 per cent discount to our sum-of-the-parts valuation - offer a good entry point."

The counter closed on Friday up 5.6 per cent or S$0.17 at S$3.21.

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