Capitaland Investment (CLI) AGM notes

I attended the Capitaland Investment (CLI) AGM today and here are my notes from the meeting based on the investor Q&A.

Please be aware that I did not capture every single point and I could have misunderstood or missed out important parts.

On sources of capital and impact of de-coupling

US institutional investors may face challenges in getting approval from their investment committees due to geopolitical factors. However, they can still find capital resources from Southeast Asia (SEA) or the Middle East (ME), even if American capital is not available.

Pension funds in China have shown interest in investing in assets like property and stocks. The RMB funds established last year is an interesting start. A lot of capital in China are looking for domestic investment opportunities.

Additionally, investors from other countries still find China to be an appealing investment opportunity.

On US commercial real estate risks

The CEO of CLI recently visited the US and provided some colour with regards to the challenges with commercial real estate there. This includes the Work-From-Home culture (which impacted San Francisco hard) and also some older buildings (Grade B and C) aren't up-to-date with modern needs.
However, CLI is exploring investment opportunities in the US. The CEO also mentioned that some US companies are trying to bring employees back to the office. CLI is being careful and selective in seeking out opportunities, such as by focusing on specific micro markets rather than macro.

On risk management

With regards how CLI manage black swan events, it is hard to capture and foresee all risks, as much as they try to, but they are experienced and have seen a lot of crises and one thing that pulls them through is having dry powder and being prudent about balance sheet risks.

CLI takes workplace safety very seriously. The CEO used the phrase "money lost can be regained but loss of life and limb is irreplaceable". There are processes such as channels to allow all staff to report unsafe practices/working environments.

On the risk of redemptions faced by other rivals like Blackstone, Paul Tham, Deputy Group CFO, pointed out that a majority of FUM are permanent capital (the listed REITs) unlike the Blackstone private REITs. CLI have similar funds that are open ended private REITs and private funds where capital is not permanent, but they are a small part of the FUM. If these grow bigger, then these are risks they have to manage carefully.

On growth

They seem confident about achieving the 100B FUM target by 2024. CEO reiterated they are not after "growth at all cost" and set stringent requirements for buying assets. He mentioned it is all too easy to grow FUM by acquiring other asset managers. Even if they do acquire, they look at factors such as culture and people of target companies, if they can integrate them successfully.

CEO wants to build capabilities to compete at the level of the big players (found mainly in US). There are not a lot of comparable asset managers in Asia Pac with teams on the ground. They would like to use these strong teams on the ground to find off-market deals. They are also focusing on quality of assets.


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