A planned lifestyle hotel for Silicon Valley geeks reflects City Developments’ (CDL), developer for The Brownstone EC (executive condo), latest thrust to find other ways to grow its business, amid tough times in the Singapore property market.
The company has been stabilising its overseas assets this year by obtaining planning approvals for sites, or reviewing plans for projects in Britain, China and Japan.
And despite China’s soft economic outlook, executive chairman Kwek Leng Beng said at CDL’s results briefing he is not worried – and is even eyeing a big deal there.
For the second quarter, CDL yesterday posted a 3.2 per cent dip in net profit to $133.5 million, on the back of a 4.2 per cent decline in revenue to $824.9 million.
First-half net profit slid 0.4 per cent to $256.5 million while revenue rose 2.8 per cent to $1.64 billion. CDL also continues to look at “clever” ways to monetise its assets, including via funds management, although chief executive Grant Kelley stressed yesterday that the company “is not an asset seller”.
Any programme will involve a shorter-term realisation of the asset, with potential for the asset to return to the group, he added.
On the property development front, revenue fell 2.9 per cent to $567.4 million for the first half of this year, from projects Coco Palms, D’Nest, H2O Residences, Jewel@Buangkok, The Palette and UP@Robertson Quay.
Revenue for hotel operations increased 3.6 per cent to $797.6 million for the half year, mainly due to contributions from five hotels acquired last year – The Chelsea Harbour Hotel, Novotel New York Times Square, Grand Hotel Palace Rome, Hotel MyStays Asakusabashi and Hotel MyStays Kamata – and improved performance from refurbished hotels and hotels in Australasia.
First-half revenue from rental properties rose 6.6 per cent to $199.2 million.
Mr Kwek said the company has been defensive and does write down asset values, as it did for Nouvel 18 last year, its joint venture with Wing Tai, and even the Silicon Valley site – held for about a decade.
The company intended to launch a project on the former Hilton Hotel site in Sunnyvale, California back then, but later held back as he suspected the market would go south.
The company now has basic planning approval for a mixed development with the hotel, shops, offices including small office home offices, and residences on the 3.2ha site.
As for the unsold Nouvel 18, completed in December, Mr Kwek said it is still considering converting some into serviced apartments or for corporate leasing, although that means the company must buy the units.
“Property is cyclical in nature; it’s a class of asset that, in a good country, should be very safe and can narrow the gap between the haves and have nots,” he said.
He suggested that the Government could consider a variant of Britain’s “Help to Buy” programme. The Government could initially lease out homes to those who cannot afford them, later giving them the option to buy.
Quarterly earnings per share was 14 cents, down from 14.5 cents.
Net asset value was $9.36 at June 30, up from $9.25 as at Dec 31.
CDL declared an interim dividend of four cents per share, unchanged from a year back.