CapitaLand Investment back in the black in H2, proposes special dividend

SINGAPORE – Real estate investment manager CapitaLand Investment (CLI) bounced back into profit in the second half of 2024, and is proposing a special dividend in the form of units in its biggest Reit and a higher annual payout to shareholders.

The group swung to a net profit of $148 million for the six months to December, from a net loss of $170 million in the year-ago period.

Excluding gains or losses from divestments, revaluations and impairments, operating net profit fell 4 per cent to $214 million. The decline was due mainly to the absence of contribution from divested properties, partially offset by higher fee income from CLI’s fee income-related business, it said in its exchange filing on Feb 27.

For the full year, net profit surged 165 per cent to $479 million, from $181 million in 2023.

Operating profit fell 10 per cent to $510 million, mainly due to absence of contribution from divested properties as CLI continued its asset-light strategy. The group generated net portfolio gains of $230 million from divestments. 

The board has proposed a core dividend of 12 cents per share, as well as a special dividend-in-specie of 0.031 CapitaLand Integrated Commercial Trust (CICT) units per share valued at about six cents each for FY2024.

It said that the payout will allow shareholders to participate in the growth of Singapore’s largest real estate investment trust.

This brings the total dividend for 2024 to about 18 cents, with a total payout of about $904 million.

In a bid to boost shareholder returns, CLI’s board has also proposed to increase the annual dividend to a minimum of 50 per cent of cash net profit and portfolio gains from asset recycling.

Chairman Miguel Ko said in a statement: “We remain confident of the momentum and future growth of CLI’s fund, lodging and commercial management businesses.”

Maybank analyst Krishna Guha characterised the proposed higher payout ratio for dividends as “a positive surprise” and “an outcome of having a bit more visibility of core operating cash flow”.

However, he feels that what needs to be seen is “how the mix between cash and in-specie dividend pans out”.

During the review period, CLI’s funds under management (FUM) rose to $117 billion, up from $99 billion in FY2023.

Chief executive officer Lee Chee Koon said in a statement: “We are on track to achieve our target of $200 billion FUM by FY2028 and will continue to enhance our fund management capabilities with the right partnerships.”

CLI had said in November 2024 that it aims to rebalance its portfolio to grow its India and South-east Asia businesses and optimise its China holdings. For that, China contributions would be reduced to between 10 per cent and 20 per cent of FUM by FY2028, it said then. It adjusted that target to 15-20 per cent on Feb 27.

Mr Lee said in the statement: “I am confident that we will be able to recycle more of our China assets and drive asset-light growth of our fund business in China by developing attractive products for both domestic and international investors.”

He added that the company will seek to pursue investments in undervalued assets as well as seed new funds and Reits.

Commenting on CLI’s shift in strategy, Mr Guha described it as “still work in progress”.

“We are not yet seeing the impact on profitability due to revaluation losses and also the reduction in capital base has not happened fully,” he said.

“While the direction is set, the timeline appears more fluid,” he added.

Maybank is maintaining its buy recommendation as the stock “remains below book and on the higher payout positive surprise”. 

CLI shares closed at $2.62 on Feb 27, up 12 cents, or 4.8 per cent.