CapitaLand Investment Limited - Annual Report 2021

FUND MANAGEMENT In 2021, CLI continued to make good progress towards achieving our target of S$100 billion funds under management (FUM) by 2024. CLI’s FUM increased by 10% to S$86 billion, from S$78 billion in FY 2020. This translated to a 34% increase in fee-related earnings (FRE) to S$409 million, from S$306 million in FY 2020. 1-5 years 15% >5 years 4% Perpetual 81% CAPITAL TENURE LISTED FUNDS Since 20191, we have been sharpening the mandates of our listed REITs and business trusts to ensure that they are optimally structured for growth. Some of these entities underwent mergers to enhance scale for synergistic value. Others expanded their investment mandate to add new geographies or asset classes to create optionality for growth. In FY 2021, CLI’s REITs and business trusts executed a total of S$1.7 billion worth of non-core asset divestments, freeing up capital for investments in better yielding, more preferred assets. They made S$4.5 billion of acquisitions during the year, more than 10% of which were pipeline assets provided by the Group. These transactions contributed to a three-fold increase in event-driven FRE. For the full year, FUM grew by a healthy 12%. FY 2021 Performance Review FY 2021 Performance Review BUSINESS PERFORMANCE Key transactions by listed REITs and business trusts in FY 2021 ART CICT Ascendas Reit CLCT a-iTrust CLMT Investments Significant expansion into student accommodation and rental housing • 2021: Eight student accommodation assets for US$518.7 million2 (S$700.2 million) in the USA • Jun: Three rental housing assets in Japan for JPY6.8 billion (S$85.2 million) Foray into Australia – second market outside Singapore • Dec: Two Grade A offices and 50% interest in an iconic integrated development in Sydney, Australia for A$1.1 billion (S$1.1 billion) Deepening exposure to data centres and logistics beyond Singapore • 2021: 11 data centres in Europe and 11 logistics properties in the USA for S$1.1 billion Participation in rejuvenating Singapore’s cityscape • Nov: Entered into a JV with CapitaLand Development (CLD) to jointly redevelop 1 Science Park Drive into a life science and innovation campus for S$883 million Maiden entry into China logistics to diversify exposure in new economy assets • Oct: Four prime logistic properties for RMB1.7 billion (S$350.7 million) Diversifying into industrial and data centres • Jul: Forward purchase committment of its first industrial facility in Chennai for INR2.1 billion (S$38.3 million) • Acquired site for development of its first data centre campus. Total estimated investment for phase one of development is INR12 billion (S$216.6 million) Expansion of investment mandate • Jun: Received unitholders’ support to expand beyond retail sector to include commercial, office and industrial asset classes Divestments • Feb: Somerset Xu Hui Shanghai in China for RMB1,050 million (S$215.6 million) • Nov: 50% interest in One George Street in Singapore for S$640.7 million • Jun: Two Brisbane logistics properties and one Melbourne logistics property in Australia for A$125.1 million (S$128.7 million) • Nov: 1 Science Park Drive for S$103.2million • Jan: CapitaMall Minzhongleyuan for RMB458.0 million (S$93.4 million) • Jun: Completed divestment of CapitaMall Saihan for RMB460 million (S$90.8 million) as announced in 2019 No divestments in 2021 No divestments in 2021 FY 2020 FY 2021 FY 2024 78 86 100 FUM (S$ billion) 10% Business Performance Target Note: The investment and divestment values stated are based on agreed property value (100% basis) or purchase or sales consideration. 1 As CapitaLand Limited. 2 Excludes Ascott’s share in the JV to develop a student accommodation property in South Carolina, USA. ART’s share comprises its investment in the initial 45% stake, estimated cost of the additional 5% stake which ART will acquire at fair market valuation, and other deal-related expenses. Our ability to ramp up FUM – doubling FY 2020’s growth rate and expanding FRE meaningfully – demonstrated our resolve to grow our fund management (FM) business. CLI’s FRE/FUM ratio – the metric that we use to track our capital efficiency, improved by 10 basis points (bps), from 40 bps in FY 2020 to 50 bps in FY 2021. FM EBITDA margin was a healthy 54% for FY 2021. Event-driven fees made up approximately 18% of the total FM FRE (refer to the “FUMand FundManagement Revenue” chart on page 31). This was an outcome of a higher volume of transactions – over 30 divestments and investments amounting to S$7.5 billion were executed by CLI’s fund vehicles during the year. The remaining 82% of FRE was made up of recurring base management fees, which had increased by 17% as a result of a larger asset base for REITs and business trusts, as well as the inception of seven new private funds. FRE/FUM 50bps FM EBITDA Margin 54% Perpetual funds comprising our listed funds, continued to make up the largest portion of CLI’s FUM, giving us high quality recurring FRE. As we continue to drive and grow our private funds platform, we expect the capital tenure to further diversify. In addition, we will also pursue different fund products such as Core, Core+, Value-add and Opportunistic funds, giving the platform greater balance across strategies. CapitaLand Investment Limited 36