CDL to sell its 50.1% stake in South Beach development to partner IOI for S$834.2m
[SINGAPORE] City Developments Ltd (CDL) has agreed to sell its 50.1 per cent stake in office complex South Beach to project partner IOI Properties Group (IOIPG) for about S$834.2 million.
The deal values the complex at about S$2.75 billion, which represents a premium of about 3 per cent over the latest valuation of S$2.67 billion as at Dec 31, 2024.
The transaction is expected to result in a gain on disposal of about S$465 million for the financial year ending Dec 31, 2025, CDL said in a statement on Wednesday (Jun 4).
Cash proceeds from the proposed divestment will allow CDL to reduce bank borrowings and improve net gearing ratio, the group said. Capital from the sale will also be used to pursue new acquisitions, invest in upcoming pipeline development projects and optimise capital management.
Assuming that the deal had been completed at the end of FY2024, the group's net gearing ratio would have fallen to 103 per cent, from 117 per cent, CDL said.
It would have logged earnings of S$638.5 million, up from S$190.8 million, had the deal been completed at the beginning of FY2024. Earnings per share would have risen to S$0.712, from S$0.213.
A NEWSLETTER FOR YOU
Tuesday, 12 pm Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Sign Up
Sign Up
CDL's board believes the sale supports positive returns for the group's business and aligns with its strategic focus on capital recycling.
It said the South Beach property has reached maturity and has been delivering 'strong occupancy and stable income', the group said. Post-sale, IOI will take full ownership of the complex.
Sherman Kwek, CDL's group chief executive officer, said: 'Having fulfilled our vision for South Beach – from securing the land site via a rigorous tender process in 2007, navigating macroeconomic challenges, to transforming it into the high-performing, stabilised asset it is today – it is now time to crystallise its value.'
The Norman Foster-designed complex in Singapore's central business district includes retail space, a 34-storey office tower, and a 45-storey building housing a JW Marriott Hotel.
As of Mar 31, South Beach's office and retail components posted committed occupancy of 92.4 per cent and 92.5 per cent, respectively, CDL said on Wednesday. Major tenant Meta Platforms last year gave up seven floors of space at the office tower last year, with the exit bringing occupancy down to 92.4 per cent, compared with 94.4 per cent at the end of last year.
CDL had acquired the site at a government land sale for nearly S$1.7 billion in 2007, with two foreign partners, a unit of state-owned Dubai World, and El-Ad Group.
According to a Bloomberg report, the global financial crisis led to a yearslong delay in construction and the two partners exited the project, with IOI eventually taking a minority stake in 2011. The elder Kwek resisted allowing IOI to take an equal stake in order to maintain control, according to a biography published in 2023, Bloomberg said.
In CDL's Jun 4 statement, chairman Kwek said: 'South Beach began as a bold vision to enhance Singapore's reputation as a global city, attract international investors and create a new icon that blends modern, sustainable architecture while preserving the site's conserved buildings.'
IOIPG group CEO Lee Yeow Seng said: 'The acquisition of the 100 per cent equity stake in this landmark development marks a significant strategic expansion for IOIPG in Singapore. Combined with the IOI Central Boulevard Towers (ICBT) and the W Singapore – Marina View hotel, this acquisition will elevate the group's profile as one of the major landlords of premium office space and a prominent player in the hospitality industry within the Republic.'
The Malaysia-listed group is controlled by the Lee family, which made its fortunes from palm oil.
CDL shares rose about 1.6 per cent before a trading halt on Wednesday (Jun 4) morning.
The group had said in 2024 that it aimed to divest S$1 billion in assets, and has announced about S$600 million in divestments so far.
News of the South Beach sale comes in the wake of a public feud between father and son in CDL's Kwek family, which emerged in late-February.
While chief executive officer Sherman Kwek and his father and chairman Kwek Leng Beng have since buried the hatchet, the younger Kwek acknowledged at CDL's annual general meeting in April that the dispute had hurt shareholders' confidence, and said that reducing the growing debt load is a priority.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
4 hours ago
- Business Times
Daily Debrief: What Happened Today (Jun 9)
Stories you might have missed Will deglobalisation and business uncertainty hurt buying power in Good Class Bungalow properties? [SINGAPORE] Owning a detached home in a Good Class Bungalow (GCB) Area is arguably the ultimate status symbol for the super rich in land-scarce Singapore. CapitaLand Investment expands fund with Japan asset acquisition at 30 billion yen [SINGAPORE] CapitaLand Investment (CLI) on Monday (Jun 9) announced that it secured additional capital commitments from new and existing institutional investors for its value-add lodging private fund, CapitaLand Ascott Residence Asia Fund II (Clara II). CDL's high debt and interest costs continue to weigh on stock despite South Beach sale BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up [SINGAPORE] News of City Developments Ltd's (CDL) sale of its 50.1 per cent majority stake in the South Beach mixed project put some bounce in the property developer's share price last week, but analysts were less sanguine, due to the company's high debt and interest costs. Income Insurance chairman Ronald Ong to retire from role after seven years at helm [SINGAPORE] Income Insurance chairman Ronald Ong, 69, will retire from his role after seven years at the helm, the company announced on Monday (Jun 9). MoneyHero expands into digital assets in partnership with OSL [SINGAPORE] MoneyHero, a leading personal finance aggregation and comparison platform across Greater South-east Asia on Monday (Jun 9) announced a strategic collaboration with digital asset platform OSL Group. Singapore stocks close Monday higher ahead of US-China talks; STI up 0.1% [SINGAPORE] Local stocks rose on Monday (Jun 9), in line with gains in Asian markets on hopes that a fresh round of US-China trade talks will ease tensions. Investors also digested the latest China inflation and trade data.
Straits Times
13 hours ago
- Straits Times
CDL pops after selling South Beach stake to Malaysians; SIA Engineering hits five-year high
CDL's share price rose 8.5 per cent over the week to close at $5.25 on June 6. PHOTO: ST FILE SINGAPORE – City Developments Limited (CDL) popped last week, after it announced it will sell its 50.1 per cent stake in the South Beach mixed project to its Malaysian partner's IOI Properties Group for about $834.2 million. The transaction is expected to result in a gain on disposal of about $465 million for the financial year ending Dec 31, 2025, which will be used to reduce bank borrowings and lower its debt, CDL said on June 4. The company had said in 2024 that it aimed to divest $1 billion in assets, and has announced about $600 million in divestments so far. CDL's share price, which had declined following a public dispute between executive chairman Kwek Leng Beng and his son, chief executive Sherman Kwek, over control of the company's board, rose 8.5 per cent over the week to close at $5.25 on June 6. SIA Engineering hit a five-year high of $2.98 on June 6, outperforming its average target price of $2.71 as investors ploughed into the stock. The aircraft maintenance provider has been a favourite stock pick among analysts, who have begun identifying companies that could benefit from an expected capital infusion into local stocks before the end of the year. As part of an effort to revive the stock market, the Monetary Authority of Singapore will be allocating $5 billion in seed capital to Singapore-based funds for investing in local stocks, and expects to shortlist suitable investment strategies by end-September. Analysts reckon the funds will likely be deployed before the end of 2025. SIA Engineering rose 8.5 per cent through to the week, and closed on June 6 at $2.94. Great Eastern to address share trading suspension Great Eastern Holdings on June 6 finally announced that minority shareholders will be able to vote on the delisting of the insurance company or a resumption of trading, nine months after its shares were suspended from trading on the Singapore Exchange (SGX) due to an insufficient public float of less than 10 per cent. If shareholders vote in favour of delisting, major shareholder OCBC Bank will make a final exit offer of $30.15 per share, valuing the remaining 6.28 per cent it does not own at $900 million. This revised offer represents a 17.8 per cent premium over OCBC's initial offer of $25.60 per share in May 2024. Independent financial adviser (IFA) Ernst & Young has assessed the new offer as fair and reasonable, after previously finding the earlier offer unfair but reasonable. The delisting decision will be made solely by minority shareholders, as OCBC – which already owns 93.72 per cent – will abstain from voting. The proposal requires at least 75 per cent approval at the upcoming extraordinary general meeting. Of the 6.28 per cent of shares that OCBC currently does not own, two prominent shareholder families – the Lees and the Wongs – own a combined 3 per cent. In January, it was reported that OCBC CEO Helen Wong had met them to persuade them to accept the earlier offer, though those efforts were reportedly unsuccessful. The Lee family, which has ties to OCBC's founding, is expected by some to support the delisting. However, if the Wongs choose not to vote in favour, the resolution would require unanimous support from the Lees and the rest of the minority shareholders to pass. If the delisting vote fails, shareholders will then vote on whether to resume trading of Great Eastern's shares. This resolution also requires 75 per cent approval. OCBC will be able to vote on this resolution. Under the trading resumption plan, Great Eastern will carry out a one-for-one bonus issue, giving shareholders a choice of receiving either regular voting shares or Class C non-voting shares. OCBC has indicated that if the delisting does not go through, it will vote in favour of the trading resumption and choose to receive Class C shares, at Great Eastern's request. This move would reduce OCBC's voting stake from 93.72 per cent to 88.19 per cent, restoring the minimum public float required for trading to resume. OCBC has also stated that if the delisting fails and trading resumes, it has no intention of making another offer for the remaining shares. Some analysts view the revised offer positively, noting that it is now considered fair, is in line with peer valuation multiples and offers a 17.8 per cent premium over the earlier bid. However, they also caution that if trading resumes, liquidity in Great Eastern shares is likely to be limited due to OCBC's more concentrated shareholding in the company. Other market movers Units of Keppel DC Real Estate Investment Trust (Reit) rose 2.3 per cent to $2.24 on June 6, after it was announced that the Reit will replace Hong Kong-based conglomerate Jardine Cycle & Carriage on the Straits Times Index (STI), following a quarterly review. The move, which will take effect on June 23, increases the total number of Singapore Reits on the index to eight, and is expected to increase their combined weight in the index to more than 10 per cent. Internet service provider NetLink NBN Trust will replace Keppel DC Reit on the STI's reserve list. The other four companies on the reserve list are CapitaLand Ascott Trust, ComfortDelGro, Keppel Reit and Suntec Reit. Oiltek International, a provider of vegetable oil processing technology, jumped by more than 9 per cent to 60.5 cents on June 6, when it successfully transferred its listing from the Catalist to the SGX mainboard. The company first listed in March 2022 at 23 cents per share. CEO Henry Yong said the move will enable Oiltek to gain greater visibility, liquidity and access to capital. Oiltek International jumped by more than 9 per cent to 61 cents on June 6, when it successfully transferred its listing from Catalist to the SGX mainboard. PHOTO: OILTEK Ms Lee Khai Yinn, a partner at SAC Capital, which was Oiltek's former sponsor, said the company's move to the mainboard is an example of how the Catalist can serve as a platform for emerging firms to scale and succeed. Shares of Singapore Paincare Holdings rallied last week after the Securities Investors Association (Singapore), or Sias, noted that a privatisation offer of 16 cents on May 27 undervalues the stock. Sias noted that Singapore Paincare was listed at 22 cents per share at a premium to its unaudited net asset value per share in July 2020 during Covid-19, when valuations were depressed and the STI was trading at around 2,500. It pointed out that the company should now be valued at a similar premium, at around 36 cents to 37 cents, given that the STI is trading at around 3,900, and 'well-managed healthcare companies generally trade at premiums to their net asset value'. In any case, minority shareholders of Singapore Paincare should wait for a report to be released by an appointed IFA before selling their shares on the open market, said Sias. Shareholders who do sell on the open market will not have recourse if the privatisation offer price is subsequently revised upwards, Sias added. It also reminded shareholders that 'for a delisting to take place, the IFA has to conclude that the offer is both fair and reasonable'. The Catalist-listed counter closed on June 6 at 17.4 cents, up 11.5 per cent through the week. What to look out for this week All eyes will be on US consumer price index data for the month of May, which will be released on June 11. US consumers probably saw slightly faster inflation in May, notably for merchandise, as companies gradually pass along higher import duties, Bloomberg quoted analysts as saying. Despite US President Donald Trump's efforts to pressure the Federal Reserve into quickly lowering interest rates, Fed chairman Jerome Powell has indicated they have time to assess the impact of trade policy on the economy, inflation and jobs market. Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
5 days ago
- Business Times
Who is behind Malaysia's IOI Properties Group?
[SINGAPORE] Property developer IOI Properties Group (IOIPG) is poised to grow its Singapore presence with the acquisition of the remaining 50.1 per cent stake in the South Beach development that it does not already own, from its joint venture partner City Developments (CDL). Upon the S$834.2 million acquisition, slated to complete by Q3 2025, IOIPG will gain full ownership of South Beach's commercial components, the group said in a Wednesday (Jun 4) bourse filing. This includes the 34-storey South Beach Tower housing Grade-A office units, the 634-room JW Marriott Hotel Singapore South Beach, and the restaurants and cafes in the complex. The mixed-use integrated development along Beach Road is now owned by both parties via an entity called Scottsdale Properties, which owns South Beach Consortium, which in turn owns South Beach. The acquisition, one of CDL's largest divestments, will expand IOIPG's Singapore investment property portfolio – even as it is already a major player in the city-state's real estate space. IOIPG has developed projects such as the IOI Central Boulevard Towers in the Marina Bay area. Nearby, in the pipeline is W Singapore - Marina View, a 350-room hotel slated to open in late 2028. Branded apartments W Residences - Marina View will be part of the 51-storey mixed-used development. Lee Yeow Seng, IOI's group chief executive officer, said: 'This acquisition will elevate the group's profile as a major landlord of premium office space and a prominent player in the hospitality industry within the Republic.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up The deal will bring the total net lettable area (NLA) of IOI's Singapore investment assets to 1.8 million square feet (sq ft) and the total NLA of its property investment segment across Malaysia, Singapore and Xiamen, China, to 9.82 million sq ft. IOI's total assets across investment properties, hotel assets and property development assets stood at RM47.93 billion as of Mar, 31, 2025. News of the South Beach sale comes on the heels of CDL's announcement of its plans to divest assets in a bid to cut debt. The Business Times explains who is behind IOIPG, and throws light on its diverse portfolio of property developments in Singapore. What is IOI Group? The group is a Malaysian conglomerate that started off as a palm oil business before venturing into property. Its palm oil business is parked under IOI Corporation, one of Malaysia's largest palm oil companies; its property business is handled by IOIPG, the property arm of IOI Corporation. One of Malaysia's largest property entities by market capitalisation, IOIPG was carved out of IOI Corporation, and separately listed on the Malaysian stock exchange in January 2014. IOIPG has three core business segments: Property development, property investments and hospitality and leisure in the markets of Malaysia, Singapore and Xiamen, China. It has four-decades of experience in property development across residential, commercial and industrial offerings. IOI Corporation is among the 30 largest companies listed on the main board of the Malaysian stock exchange, and a constituent company on the bourse's benchmark index, the FTSE Bursa Malaysia KLCI. Who is IOI's founder, and who runs the business now? The late Malaysian magnate Lee Shin Cheng, who died in 2019, founded IOI Corporation and its property arm IOIPG, which is also listed on Bursa Malaysia. Born in 1939 in Kuala Selangor in the Malaysian state of Selangor, he was raised on a poor rubber plantation. He dropped out of school at 11 and started selling ice cream to support his family. He began working as a supervisor in a rubber estate at the age of 17, and worked his way up to becoming an estate manager before he turned 30. In 1975, he acquired a property company and over the years, developed the business. In 1982, he acquired Industrial Oxygen Incorporated. Renamed as IOI Corporation in 1995, it ventured into the palm oil business. After his death, his sons inherited stakes in IOI Group. Lee Yeow Chor is group managing director and chief executive of IOI Corporation, and Lee Yeow Seng is the group CEO of IOIPG. What other Singapore assets does IOIPG own? Beyond the integrated developments, IOIPG has a portfolio of high-end residential properties in Singapore. These include Seascape and Cape Royale, condominium developments in Sentosa Cove that were developed in partnership with Ho Bee Land. IOIPG also developed The Trilinq, a residential development in Clementi and Cityscape@Farrer Park. Last November, Lee Yeow Seng acquired Shenton House along Singapore's Shenton Way, in his personal capacity, for S$538 million.
