US acquisitions could beef up earnings for CapitaLand

The $1.2b multi-family asset portfolio is over 90% occupied with an average length of stay of 2 years.

CapitaLand could boost its earnings stability through its acquisition of 12 multi-family properties in the US, DBS Equity Research said.

“This acquisition will broaden the group’s lodging property business into a deep and scalable asset class and enable it to build a new business platform in the US, with the option to spin off into investment vehicles and partnerships in the future,” CGS-CIMB noted.

The new addition to their portfolio is complementary with the firm’s Ascott serviced residence business, DBS Equity Research added.

“Metrics like the portfolio location within cities that enjoy strong employment growth, and in hubs with expanding multinational presence, are drivers of demand for these homes,” they explained.

According to Capitaland, the $1.2b multi-family asset portfolio is over 90% occupied with an average length of stay of 2 years. 

DBS Equity Research noted that the multi-family sector in the US is broad, scalable and a growth sector is widely seen as one of the most resilient and liquid institutional asset classes. Data from CBRE even revealed that the sector is second in terms of liquidity compared to the office sector in the US and has shown to be less impacted by downturns compared to other property types.

“According to data from the National Council of Real Estate Investment Fiduciaries (NCFREIF), the annual investment return of this asset class averaged 9.75% over the past 10 years, one of the highest among various asset classes,” DBS Equity Research said.

The portfolio comprises 3,787 apartment units across suburban communities of the metropolitan areas of Seattle, Portland, Greater Los Angeles and Denver. The properties offer facilities such as swimming pools, fitness centres, dog parks, playgrounds and clubhouses, all in an expansive garden-style compound.