CapitaLand Investment Limited - Annual Report 2021

Dear Shareholders FY 2021 was truly a milestone year for CapitaLand Group. The management team,withthesupport of the Board, made the strategic decision to restructure the Group. We privatised the development business, CapitaLand Development (CLD), and listed the real estate investment management (REIM) business, CapitaLand Investment (CLI), on the Singapore Exchange on 20 September 2021. On behalf of the Board and Management of CLI, we thank you for your trust and support for our transformation journey, as we set out to build a world-class REIM that will strive to create value for all our stakeholders sustainably. PERFORMANCE HIGHLIGHTS While we continued to face COVID-19 related challenges in our key operating markets, we remained focused on execution, and achieved a creditable first set of financial results in FY 2021. CLI delivered a total PATMI of S$1.35 billion, reversing a net loss of S$559 million in FY 2020. Operating PATMI for the year was S$497 million, representing a year- on-year increase of 12.2%. This was mainly driven by higher fee income from our fund management and lodging management businesses, and improved per formance from CLI’s investment properties portfolio. Cash PATMI for FY 2021 doubled to S$1.11 billion compared to FY 2020, on the back of improved operat ing per formance and record asset recycling in FY 2021, which yielded portfolio gains of S$616 million. For the year, we generated healthy operating cash flowof S$667million. Coupled with the strengthening of our cash profits, we are delighted to propose a shareholder dividend of 15 Singapore cents per share for FY 2021. This amounts to approximately S$771 million and represents a pay- out ratio against PATMI of 57.2%1. O u r s h a r e h o l d e r s h a v e demonstrated their confidence in CLI. Our stock price has increased by approximately 30%2 since CLI ’s listing on 20 September 2021, outperforming our primary benchmark indices. Our average trading price in March 2022 values us at roughly 1.2 times our Net Asset Value. This sharply contrasts with CapitaLand’s historical share valuations before our restructuring, reflecting shareholders’ confidence in our business model, execution capability, and determination to establish ourselves as a leading Asia- based REIM. GROWTH DRIVERS Three synergistic growth drivers – Fund Management, Lodging Management and proactive Capital Management – are at the heart of CLI’s growth strategy and ambition to deliver consistent double-digit return on equity (ROE) sustainably. Fund Management We expect Fund Management to lead CLI’s growth. Along with achieving strong organic growth for our listed real estate investment trusts (REITs) and business trusts, we are committed to setting up new private real estate and alternative asset funds focused on key themes, in response to discussions with private market investors who are seeking enhanced access to Asian markets. We are actively building up an experienced and international team to grow our private funds business through the creation of new fund products and active relationship management with an expanding network of capital partners globally. These moves will enable us to accelerate our drive for quality fee- related earnings (FRE) through a more investor driven and capital- efficient sponsorship of our private equity products. In FY 2021, CLI created seven new funds, raising S$1.4 billion from new capital partners based in Asia (including Japan and South Korea), as well as the Middle East and Europe. These funds focus on specific strategies and sectors, including CLI’s first open- end private fund, first mezzanine financing fund, first cold storage logistics fund and second data centre private fund. In China, we successfully registered CLI as a domestic private equity fund manager. This enables the Group to further leverage its long-standing track record in China to tap on a new source of domestic capital in one of CLI’s most important markets. Complementing our private fund management plat form, CLI ’s leading listed fund management platform enjoyed a strong year of Funds Under Management (FUM) growth and evolution. The expansion of our REITs’ and business trusts’ investment mandates over the last few years has allowed them to strategically enter new sectors and geographies, enabling them to diversify into new avenues of growth and build greater portfolio resilience. In FY 2021, CLI’s listed fund platform generated total FRE of S$295 million in FY 2021 and will continue to be a primary source of FRE for the Group’s fee income- related businesses. 1 CLI dividend policy is to distribute at least 30 per cent of its annual Cash PATMI. 2 Based on closing price of S$3.79 as of 18 March 2022, compared with CLI’s opening price upon listing of S$2.95, and rounded off to a whole number. MR LEE CHEE KOON GROUP CHIEF EXECUTIVE OFFICER MR MIGUEL KO CHAIRMAN Message to Shareholders Annual Report 2021 9