CapitaLand Investment first-half profit falls 13.3%; CEO urges patience with investment returns

SINGAPORE - CapitaLand Investment (CLI) recorded a 13.3 per cent drop in earnings year on year for the first half of 2025, after loss of contributions from divested assets, lower fund performance and transaction fees, and absence of a one-off tax write-back. 

It also attributed part of its performance to the downturn in China, where it has 18 retail and commercial properties.

CLI shares closed 3.6 per cent down at $2.72 on Aug 14.

Net profit for the six months to June dropped to $287 million from $331 million in the year-ago period.

This came as revenue for the first half fell 24 per cent to $1.04 billion from $1.37 billion. The fall was partly due to the deconsolidation of CapitaLand Ascott Trust as a CLI subsidiary, as well as the loss of contributions from divested properties.

CLI said the fall in profit was mitigated by contributions from new investments, improved performance from lodging properties, and lower finance costs.

Overall revenue from fee income-related businesses was $564 million, up 1 per cent from $561 million in the year-ago period, driven by new acquisitions by real estate investment trusts (Reits), establishment of new funds, and management contracts.

CLI is facing significant headwinds in China, where it is embroiled in a longer-than-expected approval process to reposition and recycle its assets due to economic and political uncertainty.

Group chief financial officer Paul Tham said at a results briefing on Aug 14 that the company will focus on investing in Australia, India, Japan and South Korea.

It will also reposition its assets in China, with plans to divest over $500 million in assets in the next few months, while its first Reit in China – CapitaLand Commercial C-Reit – is expected to launch on the Shanghai stock exchange by the end of 2025.

In India, it is close to exiting from two legacy logistics funds, in which it has 50 per cent stakes.

CLI will instead focus on setting up a core logistics fund and a value-add fund that will increase its revenue from performance fees. This transition is expected to begin in the second half of 2025.

A data centre fund in India could also be raised in the fourth quarter, Mr Tham added.

CLI announced on Aug 12 at the launch of its first Indian data centre in Navi Mumbai that it would invest more than 192 billion rupees (S$2.8 billion) in the state of Maharashtra by 2030, deepening its presence in the key markets of Mumbai and Pune.

Mr Tham added that the company remains confident that it can make up the transaction and performance fees in the second half of 2025.

Mr Andrew Lim, group chief operating officer, said CLI will capitalise on the huge growth potential of private credit in Asia-Pacific, following its acquisition of Australian private credit investment manager Wingate and global real asset manager SC Capital Partners.

Currently the largest Reit manager in Asia-Pacific, CLI will prioritise growing its fund business in the near future.

Describing CLI’s current listed and private funds business as a penny-farthing – an early type of bicycle with a much larger wheel in front and a smaller wheel at the back, making it typically unstable – Mr Lim said the company’s goal is to transition to a “proper road bike” with two equal-sized Reits and private funds businesses.

The company’s listed funds business has funds under management (FUM) of $71 billion and total FUM of $117 billion currently. It aims to hit a target of $200 billion in total FUM by 2028. 

Mr Lim added that the company is targeting $2 billion in FUM in the next 12 months, which will comprise self-storage and lodging and living funds in Asia-Pacific, as well as an Asia-Pacific credit fund that has already been substantially pre-seeded.

Group chief executive Lee Chee Koon said at the briefing that while CLI will strive towards achieving the $200 billion FUM target, it is more an aspiration and that the company will not be forced into making any mega-deals just to hit the figure.

“Our priority is making high-quality deals that can help deliver long-term earnings,” he said.

Mr Lee also urged patience with the company’s investment returns, hinting at a better performance in the second half of 2025 when SC Capital and Wingate are expected to deliver stronger returns.

He said that it had taken many years for CLI’s Reits to reach their current levels of performance, and raising third-party capital requires a different skill set, which takes a lot of time for relationship-building.

CLI also announced the appointment of Mr Kishore Moorjani as the new chief executive officer of the group’s alternatives and private funds, to expand CLI’s private credit and special opportunities business.

Mr Moorjani was senior managing director at global investment firm Blackstone from 2012 to 2021 before founding mortgage asset management technology firm LXA. He is expected to join CLI later in 2025.