Two of Singapore’s largest property companies reported a mixed set of results on Aug 14, as high interest rates and a global real estate slowdown weighed on performance in the first half.
CapitaLand Investment (CLI) saw a 5.7 per cent drop in net profit to $331 million from a year earlier, despite returning to the black after a $170 million loss in the second half of 2023.
Revenue edged up slightly to $1.37 billion.
It attributed the profit drop in a statement to a weaker performance of its real estate investment business, which was hit by higher interest expenses and unfavourable foreign exchange rates.
“Capital recycling remains a key priority in 2024 as we continue to reconstitute our portfolio,” CLI chief executive Lee Chee Koon said in a statement.
He added that the company will sustain the ongoing momentum of divesting assets in China and the United States.
The company’s share price fell as much as 4.35 per cent in the morning on Aug 14, the lowest since September 2021. It closed at $2.49, down 1.58 per cent.
CLI is on track to meet its $3 billion divestment target by the end of 2024, chief financial officer Paul Tham said during a media briefing.
He added that recent divestments in China have been above book value, without elaborating on details, and the company continues to sell assets there.
The company will still operate in the country, while reducing capital allocation.
Globally, all properties divested in the first half were 1 per cent to 3 per cent above book value.
Mr Tham added that a 12-cent dividend was sustainable.
Mr Lee said during the briefing that the company will prioritise opportunities in Asia before the US and Europe.
It does not expect any markets outside of Singapore to take up more than 20 per cent of capital allocation.
Chief operating officer Andrew Lim said he sees structural opportunities in Australia including in credit, lodging and living segments.
The company is also looking at Japan lodging and data centres, as well as Korea grade-A offices.
City Developments (CDL) meanwhile saw net income increase by 32 per cent to $87.8 million in the six months ended June 30, compared with $66.5 million recorded a year before, which it attributed to divestment gains.
But revenue plunged by 42 per cent to $1.56 billion.
“The real estate sector faced considerable headwinds from macroeconomic conditions and higher financing costs, impacting the group’s financial performance,” said CDL chief executive officer Sherman Kwek in a statement.
Source: The Strait Times
