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City Developments Ltd’s (CDL) gross revenue and earnings declined during the first quarter amid weak performance of its hotel operations and local property development business.
In Q1 2016, revenue fell by 11.2 percent to S$723.31 million from S$814.94 million a year ago, while net profit dropped 14.4 percent to S$105.3 million from S$123 million previously.
“There was reduced contribution from the group’s completed residential projects and absence of profit from The Rainforest Executive Condominium (EC) which was recognised in its entirety upon obtaining its Temporary Occupation Permit (TOP) in Q1 2015,” it said in an SGX filing.
“Hotel operations were also impacted in key gateway cities by the competitive hospitality environment, leading to lower room rates and occupancy,” it added.
According to Credit Suisse, the company’s profit before tax from its hotel operations plunged 68 percent on an annual basis. Revenue per available room (RevPAR) for its hotels around the globe also slid 2.6 percent year-on-year, or 4.7 percent in constant currency terms.
Despite the weak earnings for the quarter under review, Credit Suisse noted that the company’s outlook for the rest of 2016 appears bright due to the anticipated completion of several projects that recorded healthy sales, including Lush Acres EC in Singapore, Phase I of Hong Leong City Centre in China and Hanover House in the UK.
Its Gramercy Park project in Singapore, which is expected to be launched soon, has also attracted keen interest from local and foreign buyers.
Furthermore, CDL has about S$500 million of contracted revenues so far from its projects in China and the UK due to be recognised this year, as well as a profit of S$90 million from the completion of Lush Acres EC, Credit Suisse said.
Meanwhile, the company’s maiden acquisition of an office redevelopment site in the United Kingdom for £37.4 million, or around S$73.5 million, was completed on Wednesday (11 May).
56-64 Leonard Street in Shoreditch. (Source: CDL)
Located at 56-64 Leonard Street in Shoreditch (north of London), the existing six-storey office building with an area of 28,266 sq ft can be potentially redeveloped into nine-storey office block with about 90,000 sq ft, including ancillary retail space on the ground floor.
With its recent acquisition of the property known as Development House, CDL currently has a pipeline of 14 overseas projects in Australia, China, Japan and the UK.
Looking ahead, CDL chief executive officer Grant Kelly said the group will focus on acquiring assets that can immediately contribute to our recurring income, and will “continue to seek attractive overseas investment opportunities such as our latest acquisition in the UK.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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