CapitaLand also recorded S$593.6 million impairment of investments in Hong Kong, Australia, the US, the UK and Indonesia
Hefty revaluation losses and impairments dragged CapitaLand into its first full-year net loss in nearly two decades.
These non-cash items, largely due to the pandemic, also led to the property conglomerate falling into the red for H2 2020 with a net loss of S$1.67 billion, compared with a net profit of S$1.26 billion a year ago.
Fair value losses of investment properties held through subsidiaries totalled nearly S$1.53 billion in the second half of 2020, compared with a gain of S$571 million a year ago. These were mainly attributable to malls and lodging properties.
CapitaLand also recorded S$593.6 million impairment of investments in Hong Kong, Australia, the US, the UK and Indonesia during the half year, nearly 23 times the S$25.9 million impairment in the latter half of 2019.
A handful of assets, which took the brunt of the pandemic’s impact, accounted for over half of the revaluation losses last year, CapitaLand noted.
These five properties were ION Orchard and Jewel Changi Airport in Singapore, as well as China’s Raffles City Chongqing (RCCQ), CapitaMall Westgate Wuhan and Tianjin International Trade Centre.
The valuation of the five assets shrank by 17 per cent on average in 2020, from 2019, far steeper than the 4.7 per cent drop for the portfolio as a whole, said group chief financial officer Andrew Lim at a virtual briefing on Wednesday morning.
This is not a systemic impact into our property investment business, but rather a much more selected, much more focused impact experienced by a specific number of assets, Mr Lim added.
The five properties suffered fair value losses worth S$886 million, or nearly 54 per cent of the group’s unrealised fair value losses last year.
At end-2020, ION, in which CapitaLand owns a half stake, was valued at nearly S$3.14 billion, down 8 per cent from S$3.42 billion at end-2019. Meanwhile, Jewel, in which CapitaLand holds a 49 per cent stake, was valued at about S$1.4 billion, down 17 per cent from S$1.68 billion in the previous year.
ION and Jewel suffered more aggressive valuation cuts – compared to the retail assets under CapitaLand Integrated Commercial Trust – because both properties were heavily dependent on tourist demand, said Jason Leow, group president, Singapore and international.
The real estate investment trust’s assets include suburban malls, which were supported by local consumer spending. On the other hand, ION and Jewel lost a “very important engine” of demand when the flow of tourists was halted due to border restrictions, thus their foot traffic and gross turnover tumbled more drastically than in suburban malls, Mr Leow added.