Singapore's CapitaLand is acquiring Temasek subsidiary Ascendas-Singbridge (ASB) in a deal valued at S$11 billion ($8.1-billion), including debt, to create the largest diversified real estate group in Asia.
ABS is mainly a provider of sustainable urban development and business space solutions, including logistics and business parks as well as data centres.
After the transaction, the group's combined total assets under management (AUM) will exceed S$116 billion (approximately $86 billion) across more than 180 cities in 32 countries, and cover asset classes such as logistics/business parks, industrial, lodging, commercial, retail and residential, CapitaLand and Ascendas-Singbridge said in a joint statement.
In addition, the Group will surpass CapitaLand’s 2020 AUM target of S$100 billion (approximately $74 billion), putting it among the top 10 real estate investment managers in the world, as well as the manager of the three largest real estate investment trusts (REITs) listed on the Singapore Exchange, namely Ascendas Real Estate Investment Trust, CapitaLand Mall Trust and CapitaLand Commercial Trust.
Under the terms of the agreement, Temasek will effectively receive S$6 billion ($4.4 billion), which will be satisfied 50% in cash and 50% in new CapitaLand shares, which will be priced at S$3.50 ($2.21) a piece, increasing Temasek's ownership of CapitaLand from around 40.8 per cent to about 51 per cent upon the close of the transaction.
“Geographically, the deal strengthens CapitaLand’s presence in our core markets of Singapore and China, while adding meaningful scale in India, US and Europe. This deal immediately adds a portfolio of operating assets that contribute income today, while adding a sizeable pipeline of development projects for the future” Lee Chee Koon, President & Group CEO of CapitaLand, said.
(New real estate sectors added from ASB (in green dots). Source: Capitaland’s Acquisition Deal Presentation)
For his part, Miguel Ko, Executive Director & Group CEO of Ascendas-Singbridge added:
“ASB’s early-mover advantage in high-growth markets and attractive new economy sectors, will also bolster the Group’s ambition to become the developer of leading edge urban solutions in Asia.”
In the existing core markets of Singapore and China, CapitaLand’s assets under management will grow by 40% and 9% respectively.
The value of the real estate group’s properties in Singapore will be worth S$38.6 billion ($29 billion) or 33% of the group’s AUM while the value of the group’s properties in China will be worth S$48.2 billion ($35.6 billion) or 41% of the group’s AUM.
The new growth markets for CapitaLand like the US and Europe will also get an immediate boost as the Group seeks to balance its global exposure through deeper presence in these developed markets.
In 2018, ASB expanded its footprint in the US, through an acquisition of a portfolio of 33 suburban office assets in Portland, Raleigh and San Diego. In Europe, Ascendas Reit acquired 38 logistics properties in the UK within the same year. The Group will benefit from the enhanced access into these developed markets. ASB has also already built up a S$2.6 billion AUM exposure in India’s business space sector and India will become an important market for the Group.
The deal is expected to be completed by the third quarter of this year. The market seems to like the proposed deal as the share price of Capitaland, its REITs and ASB-linked REITs all showed positive movement immediately after the acquisition was announced.
J.P. Morgan Limited and WongPartnership LLP are acting as sole financial advisor and legal counsel to CapitaLand respectively. Allen & Gledhill LLP is acting as legal counsel to ASB.