CapitaLand targets new growth markets with $4.4 billion Temasek real estate deal

SINGAPORE (Reuters) – Singapore’s CapitaLand (CATL.SI) is paying S$6 billion ($4.4 billion) to scoop up logistics and industrial assets from state investor Temasek, in a deal that the developer said would create Asia’s largest real estate investment manager.

FILE PHOTO – A man passes a Capitaland logo outside an office building in the central business district in Singapore January 22, 2016. REUTERS/Edgar Su

CapitaLand will buy the holding companies of the business of the Ascendas-Singbridge Group, which manages Ascendas Real Estate Investment Trust (AEMN.SI), Ascendas India Trust (AINT.SI) and Ascendas Hospitality Trust (ASHP.SI), for cash and stock.

The transaction marks the biggest consolidation in Singapore’s fragmented real estate investment trust sector. Temasek’s stake in CapitaLand will rise after the deal closes to about 51 percent from roughly 40.8 percent.

CapitaLand’s global businesses span shopping malls, lodging, offices, homes, real estate investment trusts (REITs) and funds. CEO Lee Chee Koon, who assumed the role in September, has been on the lookout for deals to boost the group’s growth.

The deal with Temasek will help further diversify its business by adding logistics assets and data centers to its portfolio as well as new growth markets such as India, helping it cushion against increased challenges in some segments, including retail and housing in Singapore.

“The combined platforms will give us capabilities across the commercial/business space value chain, while adding a strong foothold in logistics and business parks,” Lee said.

The enlarged group will have total assets under management of over S$116 billion, ranking it the ninth biggest real estate investment manager and just behind UBS Asset Management and CBRE Global Investors, CapitaLand and Ascendas-Singbridge said in a joint statement on Monday.

The deal will push CapitaLand ahead of its target to grow its assets under management to S$100 billion by 2020.

Ascendas-Singbridge, which also has private funds, is mainly a provider of business space, such as logistics and business parks, as well as data centers.

The target companies have a combined enterprise value of S$10.9 billion.

Under the agreement, Temasek will effectively receive about S$6 billion, half in cash and half in new CapitaLand shares, which will be priced at S$3.50 a piece.

The announcement of the divestment by Temasek comes just days after a source said the state investor in talks to sell a small portion of its 24.9 percent stake in beauty and health retailer A.S. Watson, part of conglomerate CK Hutchison Holdings Ltd (0001.HK).

Reporting by Aradhana Aravindan and Anshuman Daga; Editing by Richard Pullin and Muralikumar Anantharaman

Our Standards:The Thomson Reuters Trust Principles.