CapitaLand announces US$3.4b of divestments in deleveraging bid

It aims to bring net gearing from 0.73x to 064x by end-2020.

CapitaLand has proven unrelenting in its capital recycling activities, announcing $3.4b of divestments as of 06 August in an effort to help meet its net gearing targets, according to a report from OCBC Investment Research. 

Of the $3.4b in divestments, $2.1b was sold to sponsored REITs and funds. Around $1.2b has been completed as of 30 June, suggesting that the bulk of net proceeds have yet to come in, OIR added. “Gains from the completion of the remaining divestments are likely to be felt in 2H,” Mun Yee Lock, analyst at CGS-CIMB said in a report. 

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The total amount has already exceeded the company's annual asset recycling target of $3b.

The move comes after CapitaLand's net gearing rose from 0.56x in end-FY18 to 0.73x in Q2 after it completed the purchase of Ascendas Singbridge which brings its AUM to $129.1b.

The company aims to meet a net gearing target of 0.64x by 2020 and CapitaLand acknowledged that it may reach its target ahead of schedule following intensified capital recycling exercises. “Furthermore, it has made $3.35b of new investments. It would also continue to look for opportunities to trim non-core assets, extract value from existing properties or recycle assets into its REITs and fund platforms,” added Lock.

In Q2, CapitaLand profits fell 4.2% to $579.8m as earnings took a hit from a one-off transaction costs of $36.1m related to the acquisition of ASB. Excluding one-off items, PATMI would have grown 1.7% YoY on higher gains from asset recycling and revaluations partly offset by lower contributions from residential projects.