CapitaLand's restructuring exercise paves way for others to follow

SINGAPORE (March 24): The major restructuring plan by CapitaLand to consolidate its fund management and lodging business into a new entity as well as taking its property development business private may pave the way for other industry players to follow suit, reported Bloomberg.

The real estate behemoth has recorded its first annual loss in close to two decades last year due to the Covid-19 pandemic.

According to Channel News Asia’s report, CapitaLand’s proposal to split itself into two is meant to sharpen the group’s focus on strategic growth to create greater shareholder value.

The first entity, called CapitaLand Investment Management (CLIM), will house its stakes in real estate investment trusts and business trusts, selected unlisted funds it is currently managing as well as its lodging business.

Set to be listed on the Singapore Exchange, CLIM is expected to be Asia’s largest real estate investment manager with assets under management of about S$115 billion (RM353 billion).

The report said it will be asset-light and capital efficient, as well as focusing on growth in fee income and funds under management. 

Meanwhile, its real estate development business will be taken private and become part of CLA Real Estate Holdings, its largest shareholder. CLA is an indirect wholly owned unit of Temasek Holdings.

Market analysts said the shrinking profit has driven industry players to focus on fund management, and the CapitaLand’s restructuring plan could be a new way for them to unlock value, said Bloomberg Intelligence analyst Patrick Wong, adding that City Developments may be another possible candidate to do a similar type of restructuring.

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