CapitaLand Investment to launch second C-REIT in China; net profit falls over 69% for 2025

SINGAPORE – CapitaLand Investment (CLI) will launch its second commercial China real estate investment trust (C-REIT) by the third quarter of 2026, despite facing substantial losses from divesting its assets there in the past year.

The real asset manager made the announcement at its financial results briefing on Feb 11. It said that one of the assets it has filed in its prospectus includes the Raffles City Shenzhen development, which comprises a shopping mall, offices and serviced apartments.

It cited the relaxation of regulations in China, which now allows commercial assets to be approved in a C-REIT class, as a primary motivating factor. There are also no longer reinvestment obligations for C-REIT sponsors in China.

CapitaLand Commercial C-REIT, CLI’s first C-REIT, made its debut on the Shanghai Stock Exchange on Sept 29, 2025. It also marked the first retail C-REIT with an international sponsor.

CLI’s announcement follows its full-year financial results, which saw its 2025 total net profit tumble more than 69 per cent from the previous year, owing to lower portfolio gains and higher revaluation losses on its China portfolio.

This was despite operating net profit rising 6 per cent to $539 million, on the back of higher contributions from the listed funds business, lower interest costs and reduced operating expenses.

CLI said it incurred losses from the divestment of its assets in China, worth about $1 billion.

About $700 million worth of assets were sold at a discount of between 10 per cent and 20 per cent, which offset its gains from divesting its Japan and India assets.

Its business was further hit by revaluation losses in China, amounting to $545 million.

Total revenue for the financial year ended Dec 31, 2025, fell by 24 per cent to $2.1 billion, as higher fee-related revenue was offset by lower contributions from the real estate investment business post-divestments.

Group chief financial officer Paul Tham said 2025 was a challenging year for the company, with uneven recovery across different markets. Although its net profit had fallen, the rise in operating profit was a positive sign that it is turning a corner after being on the decline for the past few years, he added.

Shares of CLI fell more than 7 per cent to $2.96 when the market opened at 9am, and hit their day’s lowest of $2.90 at 9.18am. The counter climbed to $3 after midday and closed at $3.06.

Group chief executive Lee Chee Koon said in a statement that the company will remain focused on its priorities as a scaled, asset-light investment manager with a recurring fee-led model.

He said: “We will sharpen our portfolio through accelerating divestments and redeployment, balancing pace and pricing to enhance earnings quality and resilience.

“Where it is value-accretive and commercially viable, we will leverage our debt headroom to evaluate and pursue strategic options to deepen capabilities and expand growth pathways for CLI.”

The company said it has around $6.4 billion of borrowing capacity left, which gives it financial flexibility to support future investments and growth.

CLI, which was spun off from the former CapitaLand Group as an investment management platform in 2021 following the company’s restructuring, is in the middle of its asset-light transformation.

It aims to hit $200 billion in funds under management (FUM). For financial year 2025, its FUM grew to $125 billion, up 6.8 per cent. This was driven by larger follow-on funds launched during the year and strategic investments in private credit investment manager Wingate and real estate investment manager SC Capital Partners.

Mr Tham said that 2025 was the company’s “best fund-raising year”, with 24 per cent growth in fee income from private funds management and 8 per cent growth in listed funds management revenue.

Meanwhile, its commercial and lodging management businesses grew 1 per cent and 2 per cent, respectively.

Mr Tham said he expects double-digit growth in private funds management, while the commercial management business will serve as a “supporting vertical”.

Mr Lee said the company is on track to hit $160 billion FUM via organic growth, and mergers and acquisitions (M&As) will be critical for it to hit the $200 billion target.

But it will look only for deals that make “strategic sense”, which can build long-term capabilities and drive the company’s share price.

Mr Lee was responding to questions about a rumoured merger between CLI and Mapletree Investments, which was a significant area of interest during the company’s briefing.

The Wall Street Journal first reported on the two companies exploring a merger on Nov 3, 2025. While Mr Lee did not confirm the authenticity of the rumour, he said the company is looking at numerous potential deals and assessing their affordability and ability to be integrated and make a difference to the company’s capabilities.

“We are not deal junkies. We are not here to pursue any M&A target or growth just because we want to hit a $200 billion target. We are careful,” he said.

CLI declared a dividend of 12 cents, adding that it has chosen to keep dividends stable over opting for a share buyback.

It also outlined plans for other areas of its business, including a data centre strategy in India.

The company’s new chief executive of alternatives and private funds Kishore Moorjani, who joined in late 2025, said the company already has 27 data centre assets in operation or under construction with a combined capacity of 800MW. Of these, 15 are in Singapore, India, South Korea, Japan and China, and the company will continue to expand its data centre operations in specific key markets.

Mr Lee said the company is currently inclined towards running its data centre business as an operating platform, rather than as a REIT, as it can put its capabilities and assets together while attracting customers and raising capital.

“That’s a more integrated strategy that can help us to scale much faster.”