To recap, CLI has two main sources of income: fee-income related business (FRB) and real estate investment business (REIB). FRB comprises fee income from listed REITs, private funds, commercial (previously property) management, and lodging management. REIB comprises income from CLI’s sponsor stakes in listed funds, its stakes as a general partner in private funds, and its effective stakes in on-balance sheet assets.
The business models of CapitaLand Investment (CLI) and City Developments (CDL) may have diverged. However, both depend on the interest rate cycle but for different reasons.
CLI’s stated strategy is to lighten its balance sheet and raise its income to the extent that its ROE gets to 10%. Based on a theoretical equity base of $10 billion, CLI’s net profit after tax and minority interest (patmi) has to get to $1 billion for an ROE of 10%. CLI also has a target for assets under management (AUM) target of $200 billion by 2026, which is about double its current AUM.
