CapitaLand Investment Limited - Annual Report 2021

Message to Shareholders Message to Shareholders Lodging Management A rapidly expanding part of CLI’s fee-based income comes from asset-light lodging management and franchise contracts. In FY 2021, FRE derived from Lodging Management was S$190 million, a 27% increase from a year ago due to growth on two fronts. Firstly, we opened over 8,200 units, an annual record for the business, which contributed to growing our recurring lodgingmanagement FRE. Secondly, the gradual reopening of international travel enabled us to increase occupancy levels to approximately 60% (FY 2020: 50%), as well as raise the revenue per unit, by approximately 19% compared to FY 2020. We remain focused on our target to achieve 160,000 units under management globally by FY2023. At that stabilised operating scale, we believe our lodging management platform will achieve operating margins in line with leading global lodging operators, and begin to contribute substantial earnings growth to CLI. In FY 2021, we added 15,100 units across 72 properties to our inventory, bringing the total number of units undermanagement to over 133,000, keeping us on track tomeeting this important target for our lodgingmanagement platform. Our ef for t s and operational excellence were recognised at the prestigious Grand Final of World Travel Awards 2021. CLI’s wholly owned lodging unit, The Ascott Limited, was crowned the ‘World’s Leading ServicedApartment Brand’. With our established strengths in long-stay lodging, CLI has also embarked on expanding into resilient, longer-stay lodging sub- asset classes, including multifamily, student accommodation, and rental housing through our lodging REITs and funds, whilst growing our capital-efficient fee-based lodging management platform. Capital Management Our ambition for sustainable growth is underpinned by strict financial discipline to ensure that we are actively allocating and managing our capital in an astute and systematic manner. We will maintain a well calibrated capital structure and closely monitor our cash management, leverage levels, debt maturities and tax efficiency, as well as proactively diversify our funding sources to ensure our financial resilience. As at 31 December 2021, our total cash and undrawn facilities stood at S$7.0 billion and our gearing was a healthy 0.48x, giving us ample flexibility for growth and ability to enhance shareholder value via share buybacks when opportune. Further bolstering our capacity for growth is our discipline in capital recycling. In FY 2021, CLI achieved a record S$13.6 billion worth of divestments across the Group. This exceeded our annual S$3 billion target by more than four times and generated healthy portfolio gains averaging approximately 13.1% above carrying values . Assets that we divested via our fund vehicles also contributed to transaction-related fee income. In linewith our strategy to growour FUM, over 82% of the divestment value in FY 2021 was successfully retained as FUMor seeded into new funds within the Group. In a landmark transaction last year, we divested partial stakes in a portfolio of funds holding s i x Raf f l e s Ci t y integrated developments in China to Ping An Insurance for approximately S$9.6 billion. CLI continues to be the asset manager of these properties, generating FRE in a capital efficient manner. CLI maintains a pipeline of approximately S$10 billion of high-quality investment properties on its balance sheet, intended for capital recycling to our various fee income-generating platforms over the next three to four years, which will be an important contributor to the Group’s FUM, FRE, and ROE growth. A VIBRANT CULTURE Following our transformation into CLI, we see ourselves as a well-capitalised start-up, and we are building a unique company culture with a strong winning and enterprisingmindset. Coupled with the commitment and drive to work closely with our key stakeholders - our tenants, customers, partners, and communities - we are energised to navigate the challenges that lie ahead, to continually innovate, and to leverage our ONE CapitaLand ecosys tem encompassing CLI and CLD to create positive and mean i ng f u l ou t come s . We are immensely proud of our approximately 10,000 talented and dedicated employees across 200 cities in over 40 countries who share a common ’can-do’ spirit and determination to contribute to CLI’s growth and enable the Group to fulfil its vision to be a leading global REIM, delivering sustainable, high- quality returns. SUSTAINABILITY At CLI, sustainability is embedded into our culture. CapitaLandwas the first in our industry in Singapore to issue an externally assured, annual Global Sustainability Report (GSR) for FY 2010. Since FY 2017, our GSR has incorporated the four pillars of the Task Force on Climate-Related Financial Disclosures. In 2020, we formulated a 10-year Sustainability Master Plan (SMP) with ambitious targets for 2030, including carbon reduction targets validated by the Science-Based Targets Initiative, to continually build a resilient and resource-efficient real estate portfolio with thriving and future- adaptive communities . These targets are incorporated into our key performance indicators to which part of the management’s compensation is tied. To accelerate the achievement of our SMP targets, we set up a S$50 million innovation fund and launched the CapitaLand Sustainability X Challenge (CSXC) in 2021. CSXC is the first in our industry to invite innovators from around the world to submit commercially ready solutions to improve building energy and water efficiencies, indoor air quality and waste management, fromwhichwe select the promising ones to be piloted and scaled up at our properties. Given the overwhelming response of more than 270 entries from over 25 countries in the inaugural event, we will be holding the CSXC annually from here on. We continue to embed ESG into our real estate life cycle starting from investment, and through our building developments and operations via policies, procedures, and best practices. We have also implemented a shadow internal carbon price in our investment process, and increased the portfolio of sustainable finance for CLI, our REITs and business trusts to S$7 billion. We are heartened to be endorsed as a global sustainability leader by international indices and organisations such as the Dow Jones Sustainability Indices, GRESB and Global 100. This year, in addition to new initiatives in our ESG pathway, we will also be undertaking a planned bi-annual review of our SMP, with the intent to recalibrate our sustainability targets to ensure their continued relevance following the Group’s restructuring in 2021. ACKNOWLEDGEMENTS As we embark on our mission to growCLI into a world class REIM, we would like to extend our deepest gratitude to our colleagues, both at CLD and CLI, who have worked tirelessly to ensure the smooth transition during the restructuring in FY 2021. We appreciate your ongo i ng commi tmen t and contributions to our enterprise. We would also like to thank our Board directors for guiding us through our transformation process amidst these very uncertain times. Wewould also like to reiterate our sincere gratitude to our shareholders, partners, and customers. Your valued feedback has always served as our inspiration for continual improvement. At the end of our coming Annual General Meeting in April 2022, Mr Stephen Lee and Ms Goh Swee Chen will step down after serving more than nine and four years on CapitaLand/CLI’s Board. Mr Lee also served as the Chairman of CLI’s Nominating Committee and Ms Goh was deeply involved in steering CapitaLand’s Sustainability Committee, which oversaw the blueprint of our 2030 Sustainability Master Plan. We thank them both for their effective stewardship and guidance to the leadership team. We would also like to welcome Ms Judy Hsu, Mr David Su and Ms Helen Wong as new non- Executive Independent Directors. We are certain that we will benefit from their expertise and guidance. IN CLOSING As we write this letter in the middle of March 2022, the conflict between Russia and Ukraine has already led to soaring energy prices, affected supply chains, and resulted in volatility in the financial markets with uncertain effects on the global economy in the year ahead. We will continue to monitor the developments closely, and remain cautiously optimistic that our strong financial position, experience, and track record in Asia will enable us to stay resilient in the face of potential headwinds. As fiduciary for the capital and the properties we manage, we assure you of our full commitment to our responsibilities with purpose and dedication. We will remain prudent, disciplined, and focused on executing our strategy as we move forward to create sustained growth and long term value. MR MIGUEL KO Chairman MR LEE CHEE KOON Group Chief Executive Officer March 2022 Following our transformation into CLI, we see ourselves as a well-capitalised start-up, and we are building a unique company culture with a strong winning and enterprising mindset. Annual Report 2021 11 CapitaLand Investment Limited 10