As one of Asia’s largest listed real estate companies, CapitaLand has group-managed assets of S$63bn. Its core businesses in real estate and hospitality services are focused on markets in Singapore, China and Australia. The company’s portfolio – which includes homes, offices, shopping malls, serviced residences and mixed developments – spans more than 110 cities in over 20 countries.
Focus, balance and scale
CapitaLand has been able to leverage its significant asset base to develop real estate products and services in Singapore and the surrounding regions. The listed entities of CapitaLand include Australand, CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, Ascott Residence Trust, CapitaRetail China Trust, CapitaMalls Malaysia Trust and Quill Capita Trust.
Accounting for 87 percent of its assets and 88 percent of its EBIT at the end of September 2012, the three core markets in Singapore, China and Australia are selected for strong fundamentals.Scale is also crucial for CapitaLand to establish a presence in the market, and generate credibility with important stakeholders, including government and financial institutions.
Its balanced portfolio comprises different real estate sectors to help mitigate overall risk, and ride market cycles well. In Q3 2012, it achieved an 85.1 percent year-on-year increase in net profit to S$148.5m. Group revenue grew 12.9 percent to S$686.9m year-on-year for the same period, driven by higher revenue recognised from development projects in Singapore, China and Australia as well as strong contributions from the group’s shopping malls and fee-based income businesses. The group’s Q3 2012 EBIT grew 41.3 percent to S$383.3m year-on-year, boosted by higher operating profits and portfolio gains. These results fully attest to its ability to capture opportunity and foresee growth in the business despite macroeconomic challenges. The company believes that its core markets will continue to provide opportunities for long-term sustainability.
While global economic conditions have been volatile and uncertain, we continue to explore and seize opportunities
Supported by financial raising efforts, and to accelerate the growth of its retail network in China, the company established a US$1bn private equity fund through the subsidiary, CapitaMalls Asia, in July 2012. The objective was to access the US$ bond market with a 10-year US$400m proposal, which at 4.076 percent in September, saw an overwhelming response with orders totalling US$7bn and an order book of 200 investors.
With S$63bn worth of assets across several entities managed by CapitaLand, balance sheet strength and liquidity are paramount for the whole group. It is a priority for it to ensure that all businesses are sufficiently capitalised. Therefore, it is not sufficient to rely on one source of funding.
CapitaLand is consistently looking to diversify sources of capital – ranging from equity and bank loans to debt markets – and is in constant communication with a broad range of financial providers that include individual equity and institutional bond investors, and corporate bankers. It also looks into raising funds when there is an opportunity, and not when there is a pressing need for it. With its credit reputation, it has obtained strong support from fiscal providers.
While global economic conditions have been volatile and uncertain, the company continues to explore and seize opportunities – remaining pragmatic and disciplined. Its strategy is to hold a long-term view and to remain ahead of the competition. From 2013, it will be completing nine residential projects in China – including its first value housing project and 10 retail outlets – and two office projects in Singapore. Having invested substantially over the past few years, CapitaLand expects these investments to provide solid returns in the future.
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