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CapitaLand bets on new markets with $4.4 bn Temasek deal

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SINGAPORE: Singapore’s CapitaLand is forking out S$6 billion ($4.4 billion) to scoop up logistics and industrial assets from state investor Temasek, in a deal the developer said would create Asia’s largest real estate investment manager.


CapitaLand will buy the holding companies of the business of the Ascendas-Singbridge Group, which manages Ascendas Real Estate Investment Trust, Ascendas India Trust and Ascendas Hospitality Trust, for cash and stock. Ascendas-Singbridge also manages private funds.


The transaction, which will give CapitaLand exposure to high-growth technology and e-commerce sectors, marks the biggest consolidation in Singapore’s fragmented real estate investment trust sector. Temasek’s stake in CapitaLand will rise to about 51 per cent after the deal closes from roughly 40.8 per cent. CapitaLand’s global businesses span shopping malls, lodging, offices, homes, real estate investment trusts (REITs) and funds. CEO Lee Chee Koon, who took charge in September, has been looking for deals to boost the group’s growth.


The Temasek deal will help CapitaLand diversify and give it a footing in new markets, analysts said.


“Industrials, which are being driven up due to e-commerce demand, is an area CapitaLand sorely lacked. CapitaLand’s retail mall business was also coming under a lot of pressure due to e-commerce,” said Wong Yew Kiang, an analyst at CLSA.


“Industrial asset class needs scale, you have to buy a big portfolio in one go if you want to make yourself relevant,” said Wong, adding investors could, however, be worried as the deal was coming when valuations had run up a fair bit and interest rates were set to increase.


The deal with Temasek’s subsidiary will add logistics assets and data centres to CapitaLand’s portfolio, cushioning it against increased challenges in some segments, including retail and housing in Singapore. — Reuters



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