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City Developments planned to inject UK assets, including HSBC’s building housing. … [+]
City Developments Ltd. (CDL) — controlled by billionaire Kwak Lang Bang — has postponed plans to list its commercial properties in the UK on the Singapore exchange amid growing market volatility and macroeconomic headwinds.
The company aimed to raise around 500 million pounds ($607 million) from the first share sale of a portfolio of UK commercial properties—which includes an office building housing HSBC’s London headquarters—which it proposed to REIT and list on the Singapore Exchange. .
“Unprecedented interest rate hikes in 2022 have severely impacted initial public offerings of REITs in Singapore, with many planned IPOs and secondary fund-raising exercises of REITs being withdrawn,” CDL said in a regulatory filing late Wednesday. “Amidst this challenging market, the group is putting a temporary pause on its IPO aspirations for its UK commercial properties until the market stabilizes.”
Despite prevailing global economic uncertainty, rising inflation and rising interest rates, CDL said “the group is confident of weathering the storm and emerging stronger.”
The company said it has sufficient financial headroom to seek and acquire opportunistic investments following the divestment of Millennium Hilton Seoul and the sale of its stake in two Singapore commercial properties such as Tanglin Shopping Center and Golden Mile Complex. As of September 30, it had strong cash reserves and bank facilities totaling S$4 billion ($2.9 billion).
While its Singapore residential property sales fell 24% to S$1.9 billion in the first nine months of the year, CDL said it expects property demand to remain resilient due to the industry’s low inventory of unsold properties. Most of the company’s projects are more than 80 percent sold, he said.
The group’s hotel business is also improving due to increased travel demand due to easing of Covid-19 restrictions. Globally, revenue per available room more than doubled in the first nine months of the year, with London and New York seeing notable improvements. The occupancy rate in Singapore rose to 89% in the third quarter as the Lion City hosted back-to-back international events, including the Formula 1 Grand Prix.
Kwek is chairman of CDL and the Hong Leong Group of Singapore, founded by his father in 1941. His cousin Kwek Leng Chan, also a billionaire, runs a separate group in Malaysia, also called Hong Leong. With a net worth of $9.3 billion that he shares with his family, Kwek, 81, was ranked No. 5 in a list of Singapore’s 50 richest people published in September.
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