CapitaLand Investment to speed up divestments, capital recycling in China portfolio

[SINGAPORE] CapitaLand Investment (CLI) plans to accelerate its capital recycling efforts and is evaluating “structural solutions” for its assets in China, the asset management group said in its annual report released on Thursday (Apr 2). 

“As we continue to drive capital efficiency, we will accelerate divestments, while maintaining disciplined and value-accretive deployment,” said chairman Miguel Ko and group chief executive officer Lee Chee Koon in their joint letter to shareholders.

The group reported S$3.1 billion in gross divestments for the financial year ended Dec 31, 2025, a significant decline from the S$5.5 billion achieved the year prior.

CLI attributed the slower pace to softer market conditions and “a higher concentration of remaining assets in China”.

Significant non-cash revaluation losses within its China portfolio pushed CLI’s full-year overall revaluation loss in FY2025 to S$439 million, widening from FY2024’s S$261 million.

Recycling China assets

To counter these headwinds, CLI is leaning into its “domestic-for-domestic” strategy in China. 

The group noted that it listed its maiden retail China real estate investment trust (C-Reit) on the Shanghai Stock Exchange in September 2025, and launched its first onshore RMB Master Fund with a domestic insurance partner.

These initiatives have created “scalable pathways” to recycle balance sheet assets into domestically funded vehicles. 

A planned second C-Reit, which will include commercial assets such as offices and hospitality, will provide a fresh domestic channel to “facilitate the recycling of China assets alongside direct divestments” of China assets from its balance sheet.

Evolving market valuations and improving liquidity in China’s domestic capital markets “have created a more conducive environment” for deals.

“We will accelerate capital recycling, including evaluating portfolio and structural solutions for our China assets,” the letter read. 

At CLI’s last earnings briefing on Feb 11, CLI group chief financial officer Paul Tham said that over the past five years, China valuations were down about S$1.6 billion from cumulative write-downs, with an average decrease of 12 per cent.

In FY2025, the valuation of CLI’s China assets was down 5 per cent or S$545 million, with offices and business parks hardest-hit.

Fundraising strength, core performance

Despite the valuation drag from China, the group raised S$6.5 billion in total equity in FY2025, nearly doubling the S$3.3 billion raised in FY2024. Of this, S$4.9 billion was secured through private funds and S$1.6 billion via listed funds.

Funds under management (FUM) grew nearly 7 per cent year on year to S$125 billion, underpinned by larger follow-on funds and strategic investments in Wingate and SC Capital Partners. The group remains on track to hit its S$200 billion FUM target by 2028.

While net profit fell to S$145 million from S$479 million due to the China revaluation losses, CLI’s operating net profit – which reflects recurring business performance – rose about 6 per cent to S$539 million.

Lee’s pay package for FY2025 stands at S$5.1 million, down from S$5.4 million the previous year.

His remuneration included S$1.8 million in deferred compensation awards, representing 36 per cent of his total package.

The award comprises contingent performance share awards, subject to pre-determined performance conditions over a three-year vesting period.

It also includes the second and third tranches of deferred shares to be granted under a restricted share plan in FY2026 as part of CLI’s FY2025 performance bonus, which will vest over three equal annual tranches and be delivered in FY2027 and FY2028.

Meanwhile, Ko will be paid an all-inclusive fee of S$763,467 for the financial year, an increase from last year’s S$760,231.

The group highlighted that its listed Reits and business trusts remain a cornerstone of its platform, with Singapore-listed funds delivering total unitholder returns of between 15.6 and 29.9 per cent in 2025, generally outperforming the FTSE ST Reit Index.

CLI said it will continue to evaluate new opportunities, including potential Reit listings in strategic markets, to further strengthen its earnings resilience.

The group proposed a core dividend of S$0.12 per share for the year, consistent with its core payout for the previous year.