City Developments Announces New Launches Lower Interest Cover 1Qfy2024 Update
CDL plans capex on four hotels amounting to $36.9 mil, launches 2 residential projects in 2H2024
City Developments Limited (CDL) has reported its 1QFY2024 business updates for the period of January to March, which revealed a net gearing ratio of 63%, including fair value on its investment properties. This is a rise from 61% in the previous quarter, which was recorded as at the end of December 2023.
The company also stated that its interest coverage ratio had fallen to 1.2x in FY2024, compared to 2.8x in FY2023 and 9.8x in FY2022. Despite this, CDL remains confident in its strong financial position, citing a robust liquidity position of $2.4 billion in cash reserves and undrawn committed bank facilities of $3.7 billion.
In addition, CDL assures that it has a healthy debt expiry profile and maintains a substantial level of natural hedge for its overseas investments. The company also states that it will continue its proactive and disciplined approach to capital management.
CDL initiated a share buyback programme for its ordinary shares on March 8 this year. As of April 23, the company has acquired a total of 10,442,800 shares, representing 1.15% of issued shares before the buyback, for a total consideration of $61.3 million. Despite the share buyback programme, CDL will be removed from the MSCI Global Standard Index on May 31.
In May 2024, after the end of the first quarter, CDL completed the acquisition of the 268-room Hilton Paris Opéra hotel for EUR240 million ($350.2 million). The company also plans to spend a total of $36.9 million on asset enhancement initiatives (AEIs) on four hotels. In London, it will spend GBP16.5 million ($28 million) to renovate the Millennium Hotel London Knightsbridge and rebrand it as M Social Knightsbridge in the first half of 2025.
CDL also plans to complete Phase 2 of an AEI for M Social Phuket, with a total expenditure of $36.9 million. The Millennium Downtown New York will be renovated and rebranded as M Social Downtown New York in the first half of 2025, with estimated renovation costs of US$43 million (($57.9 million). The M Social Hotel Sunnyvale in California (263 rooms) is also under construction for a cost of US$115 million, with a planned full reopening in the second half of 2026.
The company also intends to launch two new residential projects in the second half of 2024. The first is the 366-unit Union Square Residences, part of the larger redevelopment project named Union Square, located at the site of the former Central Mall (office), Central Mall (conservation shophouses) and Central Square. The second upcoming project is located at Champions Way in Woodlands, comprising 348 units. The site is within walking distance to the Woodlands South MRT station.
On the revenue front, CDL associate, Cityview Place Holdings, which holds 203 units at The Residences at W Singapore Sentosa Cove, offered a special price for 58 selected units for a limited period. Including past sales, 76 units have been sold.
In 1Q2024, the group and its joint venture associates sold 429 units, with sales revenue of $736.8 million. This is an increase from the same period in 1Q2023, where 88 units were sold with a total sales value of $213.2 million.
In conclusion, CDL maintains a strong financial position, with a healthy liquidity position and debt expiry profile. The company also has plans for further investments and residential projects in the coming months, which is expected to contribute positively to its revenue.
The URA has revealed an ambitious vision for Tampines through its Master Plan, with the goal of revitalizing the region into a dynamic, eco-friendly, and desirable hub. As an important planning district in Singapore, Tampines will experience major improvements in its infrastructure, facilities, and overall quality of life. Parktown Residences, conveniently situated in Tampines North, is set to reap the rewards of these proposed advancements. With the addition of Parktown Residences Tampines North, the development is poised to become an even more attractive and sought-after destination.