CapitaLand Investment started at Buy by DBS

The lyf Mid-Town Hangzhou, located in Hangzhou, China's located in the Gongshu district, near the Grand Canal, is part of the lyf coliving brand from CapitaLand Investment's Ascott. Credit: AscottThe lyf Mid-Town Hangzhou, located in Hangzhou, China's located in the Gongshu district, near the Grand Canal, is part of the lyf coliving brand from CapitaLand Investment's Ascott. Credit: Ascott

DBS Group Research re-started coverage of CapitaLand Investment at Buy with a target price of S$4.00, citing several emerging catalysts.

Those include the launch of new fund products and REIT acquisitions, aiming to boost funds under management (FUM) to S$100 billion by 2024, which would be a 19 percent increase from 2021, DBS said in a note Monday.

In addition, the lodging business could see an operational rebound, DBS said.

“CLI’s private funds and REITs complement each other in terms of acquisition strategy. With diverse real estate strategies ranging from opportunistic, value-add to core investments, we see CLI leveraging on opportunities during market upcycles and downcycles. Its REITs and private funds can be active across all real estate cycles,” DBS said.

“Ascott Limited’s global footprint is well placed to leverage on multi-year recovery of the hospitality sector in coming years. On top of robust growth in its operational footprint to 160,000 units by 2023, we see a turnaround in cashflows, as reopening of international borders is expected to drive the lodging business back to profitability,” the bank added.

CapitaLand Investment is one of Asia’s largest real estate investment managers (REIMs), with total real estate assets under management of around S$120 billion, while funds under management (FUM) was at S$84.3 billion at end-September 2021, DBS said.

DBS noted one of CapitaLand Investment’s weaknesses is that its private equity funds are mainly focused on core investments and value-add investments, which could compete with its listed REITs.

“We see opportunities to expand its strategies to include development funds which would widen CLI’s reach within the real estate ecosystem,” DBS said.

Shares of CapitaLand Investment ended Monday at S$3.48, up 2.05 percent.