CapitaLand takes aim at Asian industrial and logistics sectors with new venture - Singapore
By ARTHUR SIM
(SINGAPORE) CapitaLand has entered a joint venture with Australian subsidiary Australand to establish a pan-Asian development platform in the industrial and logistics sectors.
The joint venture will identify suitable development sites for projects, in which CapitaLand - through a newly established unit - will take a 51 per cent stake. Australand will own the remaining 49 per cent of the projects.
CapitaLand already has a 54 per cent stake in AustraLand, which is listed in Singapore and Australia. Australand owns 59 properties with an aggregate value of about A$1.9 billion (S$2.5 billion) and a pipeline of development sites with an end value of about A$3.5 billion which can potentially yield a total net rentable floor area of 30 million square feet in industrial space.
At the company’s full-year results briefing yesterday, CapitaLand chief executive and president Liew Mun Leong said that it intends to ‘capitalise on the high growth in the industrial and logistics sector in Asia to become a leading industrial and logistics player’.
He added that the joint venture would also be a good platform from which to enter the Chinese logistics sector.
Mr Liew said that CapitaLand already owns over $300 million worth of industrial properties in Singapore, including Technopark@Chai Chee, Corporation Place, Kallang Avenue Industrial Centre and Kallang Bahru Complex.
He added that Australand owns over $1 billion worth of income-producing industrial properties in Australia. Its tenants include LG Electronics, DHL, BMW and Toyota.
While CapitaLand did not say if it intends to launch a pan-Asian real estate investment trust (Reit), one does seem imminent, especially as Mr Liew had reiterated that CapitaLand was ‘interested in creating more Reits’.
CapitaLand’s financial statements also revealed that its financial services unit has some $11.8 billion of investible income, which has a ‘mandate’ to be invested in South-east Asia, China, India, Japan and the Gulf Cooperation Council countries in the Middle East. It also noted that there has been ‘increased institutional and private investors’ interest’ for new Asian Reits and property funds.
That CapitaLand is looking at growing its revenue streams from sectors other than its main residential unit is significant.
While its residential business unit contributed earnings before interest and tax (Ebit) of $1.07 billion in 2007, up 52.6 per cent from a year earlier, Ebit from its serviced residence unit was up 66.5 per cent at $337.2 million.
Shedding some light on CapitaLand’s general offer for its subsidiary, The Ascott Group, last month, Ascott chief executive and president Jennie Chua said: ‘If the privatisation should go through, it will be helpful in the growth process.’ The deal could see CapitaLand invest up to $989.5 million to acquire the remaining 33.5 per cent of Ascott that it does not already hold.
Currently, CapitaLand’s assets under management stands at $15.9 billion. Including Ascott Residence Trust and the Ascott Serviced Residence (China) Fund, the figure is higher at $17.7 billion. ‘I look forward to growing very aggressively,’ said Ms Chua.
Source : Business Times - 23 Feb 2008
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