Pushing the space frontiers

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/ EdgeProp
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January 18, 2019 9:00 PM SGT
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The M&A will expand CapitaLand’s portfolio to include ASB’s flagship projects such as Singapore Science Park (Credit: Samuel Isaac Chua/ The Edge Singapore)

How does CapitaLand’s $11 billion merger and acquisition with Ascendas-Singbridge impact the Singapore real estate market?

On Jan 14, CapitaLand announced that it is acquiring all the shares in two wholly-owned intermediate subsidiaries of Ascendas-Singbridge (ASB), which is in turn a subsidiary of Temasek. The acquisition, valued at $11 billion, will make CapitaLand the largest diversified real estate group in Asia.
The question is why. Scale is one of the main reasons. “It has become apparent over the last few years that scale has become increasingly important, as it provides a competitive advantage,” says Regina Lim, JLL head of capital markets research for Southeast Asia. “Moving forward, there could be more such M&As (mergers and acquisitions).”
Post-transaction, CapitaLand will be a behemoth with combined total assets under management (AUM) of more than $116 billion. The expanded portfolio will cover a wide spectrum of the real estate industry — from logistics/ business parks, industrial, lodging, commercial, retail to residential. Its geographical presence will span 180 cities across 32 countries.

Immediate scale

“The acquisition will provide almost immediate scale in the key industrial and business park sectors, and access to new growth markets such as India and Korea, while CapitaLand rapidly expands its presence in the mature European and US real estate markets,” says Moray Armstrong, CBRE managing director of advisory & transaction services, Singapore.
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CapitaLand’s M&A will give it access to Ascendas-Singbridge’s Changi Business Park (Credit: Samuel Isaac Chua/The Edge Singapore)
The acquisition gives CapitaLand a strong foothold in the Singapore industrial and business park sector where ASB was traditionally one of the largest and most experienced developers and landlords, adds Armstrong.
While CapitaLand is a key player in the CBD commercial office space, Ascendas dominates the business park and suburban office space. “CapitaLand bought ASB so it can control the downstream penetration of this market,” says Mark Lampard, director and head of regional tenant representation, Cushman &...