CapitaLand inks US$4.4bil agreement with Temasek

SINGAPORE: CapitaLand Ltd’s new chief Lee Chee Koon has wasted no time putting his mark on the Singapore developer, striking a S$6bil (US$4.4bil) deal with Temasek Holdings Pte to create what he says will be Asia’s largest diversified real estate company.

CapitaLand would pay a mix of cash and new stock for Temasek units Ascendas Pte and Singbridge Pte, bolstering its assets to more than S$116bil spread across 180 cities in 32 countries, it said in a statement.

Lee, the 43-year-old who took the top job in September, is steering CapitaLand deeper into new markets such as the United States and Europe, as well as expanding the developer’s reach in Singapore.

The transaction vaults the company over a 2020 target for assets under management of S$100bil as it moves into areas that can provide a buffer for when other more traditional parts of the real estate industry soften. They include logistics centers, which are tied to the growth of e-commerce, and business parks.

“The deal benefits CapitaLand in two areas – assets under management and diversification,” said Marc Tan, a research analyst at KGI Securities Pte. More assets mean a boost to fees and rental income, while a larger geographical footprint provides stability, he said.

It also lifts Temasek’s stake in CapitaLand to a majority, from 40.8% to about 51%. That increased ownership will “be positive for bondholders looking for strong institutional backers,” Tan said.

Lee is charged with scaling up CapitaLand’s real estate capabilities across asset classes and geographies, positioning the group to better ride out the economic and technological changes. Prior to being appointed group CEO, Lee was head of The Ascott Ltd, an international serviced residence owner-operator. He joined CapitaLand in 2007.

Property markets from Sydney to Vancouver have staged a collective correction over the past few months as government cooling measures bite and the specter of rising interest rates dents investor confidence. Singapore hasn’t been immune with home prices on the island posting their first drop in six quarters in the three months ended December.