capitalland rising equity

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CapitaLand to Raise S$1.84 Billion as Profit Slumps (Update2)
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By Chen Shiyin and Andrea Tan

Feb. 9 (Bloomberg) -- CapitaLand Ltd., Southeast Asia’s largest property developer, will raise S$1.84 billion ($1.2 billion) by selling stock to existing shareholders, after fourth- quarter profit slumped 88 percent.

Net income fell to S$78 million in the three months ended Dec. 31, from S$674.7 million a year earlier, the company said in a statement today. CapitaLand plans to sell one share for every two held by investors, including Temasek Holdings Pte, at S$1.30 each, the Singapore-based developer said in a separate statement.

CapitaLand joins Singapore companies including DBS Group Holdings Ltd. in turning to investors for cash as the global financial crisis tightens the availability of credit. CapitaMall Trust, Singapore’s largest property trust and a CapitaLand unit, said today it will raise S$1.23 billion in a rights offer.

“This year is turning out to be a race in raising funds through rights issues and has depressed CapitaLand’s shares for a while,” said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion. “Earnings wise, CapitaLand was a disappointment and pressures continue to mount.”

Temasek is expected to buy as much as 39.7 percent of the developer’s rights shares, CapitaLand Chief Financial Officer Olivier Lim said at a briefing in Singapore. Temasek, Singapore’s state-owned investment company, is the single largest investor in CapitaLand with a 39.7 percent stake, according to data compiled by Bloomberg.

Falling Demand

Demand for property in Australia and China, CapitaLand’s two largest overseas markets, has slumped amid slower economic growth. In Singapore, the government is forecasting a record 5 percent contraction in the economy this year, and private home prices declined in 2008 for the first time in five years.

CapitaLand won’t build 12 malls in China as planned after it reviewed its operations, Chief Executive Officer Liew Mun Leong told reporters in Singapore.

Fourth-quarter revenue declined 47 percent to S$703.7 million, according to the income statement. Earnings this quarter included a one-time revaluation loss of S$103.9 million, compared with a one-time gain of S$470.1 million a year earlier as property prices fell, the developer said.

Full-year profit slid 54 percent to S$1.26 billion. That compares with the median forecast of S$1.31 billion that Bloomberg compiled from 14 analysts. The developer plans to pay stockholders 7 Singapore cents a share in dividends, including 1.5 cents in a special payout.

Home Prices Slump

CapitaLand shares, which were suspended pending the announcement, fell 0.8 percent to S$2.36 on Feb. 6 in Singapore trading. The shares have dropped 24 percent this year, the worst performer among the benchmark Straits Times Index’s 30 members.

CapitaLand will buy as much as 60 percent of CapitaMall Trust’s rights shares, which are being offered at 82 Singapore cents apiece, the developer said.

Home prices in Singapore retreated 6.1 percent in the fourth quarter, while office rentals slumped 6.5 percent, the Urban Redevelopment Authority said on Jan. 23. The fall in home prices was the largest decline since the three months ended Dec. 31, 1998, according to data tracked by Bloomberg.

Sentiment will “remain cautious” in 2009 given Singapore’s slowing economy, the developer said.

CapitaLand’s stock sale “will help lower their gearing, and prepare them better for the anticipated devaluation losses or further weakening in the property market fundamentals,” said Vikrant Pandey, an analyst at UOB-Kay Hian in Singapore.