Revaluation loss and impairments exceed S$400 million; the group will speed up action on China assets
[SINGAPORE] Sharp revaluation losses on China assets dragged CapitaLand Investment (CLI) into a S$142 million net loss in the second half ended Dec 31, 2025, reversing a net profit of S$148 million a year earlier.
These non-cash items, which stemmed primarily from the group’s investment properties in China, surged 68 per cent to S$439 million in H2, from S$261 million in the corresponding period last year.
Portfolio gains – comprising profits or losses from divestments, acquisition adjustments and realised property revaluation – tumbled 91 per cent to S$18 million in the latest half year, from S$195 million in the year-ago period.
Excluding these non-cash items, operating profit rose 30 per cent to S$279 million in H2, from S$214 million in the prior year. This came amid higher contributions from the listed funds business, lower interest costs and reduced operating expenses, but was offset by growth-related expenses and lower contributions following divestments.
Meanwhile, revenue fell 25 per cent to S$1.1 billion, from S$1.5 billion in H2 FY2024. Adjusting for the deconsolidation of CapitaLand Ascott Trust, CLI said revenue would have been stable year on year.
Loss per share for the six months stood at S$0.028, compared with an earnings per share (EPS) of S$0.03 in H2 FY2024.
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Speaking at an earnings briefing on Wednesday (Feb 11), CLI group chief financial officer Paul Tham noted that China valuations were down about S$1.6 billion from cumulative write-downs over the past five years, with an average decrease of 12 per cent.
“Some of the assets’ (valuations) have gone down 20 to 30 per cent, some of them have actually barely moved because they are very strong performing assets,” said Tham.
Hardest hit
In the past financial year alone, the valuation of CLI’s China assets was down 5 per cent or S$545 million, with offices and business parks hardest hit, said Tham. This came amid challenging market conditions, which continued to weigh on rental rates and occupancies.
Net property income (NPI) yield for some of those developments consequently fell to about 3 to 5 per cent. “As we fill up that occupancy, that should drive NPI up hopefully to get us to a stronger 4 to 7 per cent-type level,” said Tham.
The group made around S$1 billion of gross divestments in China at a 10 to 20 per cent discount to book value.
“The team likes to think that the worst has passed us, but as we continue to expect negative reversions and occupancy is still weak for some of the asset classes, we do think there could be movement up or down over the next 12 months,” Tham said.
Nonetheless, CLI continues to see opportunity in China.
Lee Chee Koon, group chief executive officer of CLI, said the group plans to maintain an asset-light, recurring fee-led model in 2026, particularly in markets such as China.
He noted that the group’s longstanding presence and strong reputation in the region has generated significant interest from capital partners. This positions CLI “quite nicely” to expand its fee-led asset management business in China using third-party domestic capital, even as competitors exit the market.
CLI group chief operating officer Andrew Lim reckons the China market is ripe with opportunity, given its large savings base where cautious consumers are holding back on spending and seeking stable, low-risk investment options.
“This plays to our strength,” said Lim, pointing to CLI’s China real estate investment trust. Its first retail C-Reit launched in September 2025, and a second – this time with commercial assets such as offices and hospitality – is planned for late Q2 or early Q3 this year. “If we execute well, we can turn what is an uncertain environment into something that is positive and part of the growth story for the group.”
Tham added that while some assets were sold at a discount, the group was willing to take the hit if it supported capital recycling and the generation of long-term recurring income.
On a full-year basis, CLI’s earnings were S$145 million, down 70 per cent from FY2024’s S$479 million. This was mainly due to lower portfolio gains and higher revaluation losses on the group’s China portfolio.
Revenue was S$2.1 billion, 24 per cent lower than the S$2.8 billion in FY2024.
Operating profit rose 6 per cent to S$539 million in FY2025, from S$510 million in FY2024.
Full-year EPS stood at S$0.029, 69 per cent down from S$0.095 the prior year.
Despite the fall in earnings, the board has proposed an ordinary dividend of S$0.12 a share for FY2025. This is subject to approval at the upcoming annual general meeting, and translates to a payout of around S$599 million based on the number of issued shares as at Dec 31, 2025.
“On an overall basis, we are down quite a fair bit in terms of total (profit after tax and minority interests), but it’s mostly non-cash elements, which is why we kept our dividend at 12 cents for the year,” Tham explained. “From a cash flow perspective, we still had a very strong year.”
Tham said the group had decided to keep dividends stable, even though some earnings could have been returned through share buybacks. In FY2024, CLI’s dividend was around S$0.18 a share. This comprised an ordinary dividend of S$0.12 a share and a special dividend in-specie of CapitaLand Integrated Commercial Trust units worth about S$0.06.
“We think it is a level that we can comfortably maintain given the trajectory we are on,” he said. “At some point, we hope that we grow faster and we’re able to increase the dividends.”
Funds under management grew to S$125 billion as at end-2025, from S$117 billion the year before. This was driven by strong capital-raising momentum, larger follow-on funds launched during the year and positive organic and inorganic growth.
Net debt-to-equity was 0.43 times as at Dec 31, 2025. Around 72 per cent of CLI’s borrowings were on fixed rates at an implied interest cost of 3.9 per cent. The weighted average debt maturity was around 3.1 years.
The group has around S$6.4 billion of debt headroom to support investments and growth, it said. This includes potential acquisitions to meet CLI’s funds under management target of S$200 billion by 2028.
Shares of CLI closed at S$3.05 on Tuesday, down 3.8 per cent or S$0.12.
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