With the legal fight within the board of City Developments put behind, the company will give shareholders a proper account, according to group CEO Sherman Kwek.

 

" This is our responsibility," he told Chinese daily Lianhe Zaobao on March 16.

 

Sherman was attending the council installation ceremony of the Singapore Chinese Chamber of Commerce and Industry. Kwek, who has long held various positions in Singapore' s largest Chinese business chamber, is one of the council members.

 

Disputes between Sherman and his father, CDL' s executive chairman Kwek Leng Beng split the company' s board and before the matter was heard in open court, both sides on March 12 announced they had terminated their legal actions.

 

The company, having reported its full-year results on Feb 26, is slated to hold its annual general meeting on April 23.

 

" I am glad the lawsuit has been terminated," said Sherman, when asked by Zaobao if his relationship with his father has improved.

The business has grown from a single hotel in Orchard Road to a global hospitality group with more than 145 hotels worldwide

[SINGAPORE] City Developments Ltd&rsquo s (CDL) global hotel business, Millennium & Copthorne Hotels (M& C), came into the spotlight when a tussle for control over the group emerged in February.

 

Executive chairman Kwek Leng Beng accused his son and group chief executive Sherman Kwek of an attempted coup, filing court actions to &ldquo set things right&rdquo . Central to the dispute were allegations made by Sherman Kwek that Dr Catherine Wu, long-time adviser to his father, wielded power and influence beyond her scope and role at M& C.      

 

Dr Wu has since resigned from her position of &ldquo unpaid adviser&rdquo to the board of M& C, a post she held since August 2024, according to a statement from Kwek Leng Beng. Prior to that, she was a director on the board from June 2022 to January 2024.

 

While the senior Kwek has now dropped his legal action against his son, questions remain on Dr Wu&rsquo s role at M& C. 

 

The group&rsquo s hotel business expanded fast after 1993, when it acquired its first properties outside Asia, in London and New Zealand. By 1996, it had formed M& C after picking up a trophy asset the year before &ndash Donald Trump&rsquo s Plaza Hotel in New York &ndash and listed the hospitality arm on the London Stock Exchange. 

 

In the two decades that followed, M& C continued to acquire assets in new markets. In the process, eight CEOs passed through its doors, three of whom left after mere months on the job. 

 

M& C was taken private in 2019 and folded back into the CDL group. Hotel operations have been a major contributor to the group&rsquo s revenue and profits, in some years smoothing out lumpy development profits. Asset divestments have also boosted CDL&rsquo s financials.

 

The Business Times traces M& C&rsquo s path through the years, from the start of its business as a single hotel in Orchard Road to a global hospitality group with more than 145 hotels across some 80 locations.    

 

1967: Kwek Hong Png&rsquo s Hong Leong Group acquires a site along Havelock Road in Singapore&rsquo s first state land sale for hotel construction. His son Kwek Leng Beng is later tasked with developing King&rsquo s Hotel.

 

1970: The 12-storey King&rsquo s Hotel &ndash renamed King&rsquo s Clarion Hotel in 1992 and the Copthorne King&rsquo s Hotel in 1998 &ndash officially opens. 

 

1980: CDL acquires 65 per cent of King&rsquo s Hotel for S$13.6 million, marking the group&rsquo s first foray into the hospitality industry. The group also acquires Orchid Inn, which is later redeveloped into the freehold condominium The Glyndebourne.

 

1989: CDL&rsquo s hotel arm, which now owns six hotels in Asia, is formed and listed on the Hong Kong Stock Exchange.

 

Dr Catherine Wu has resigned from her position of &ldquo unpaid adviser&rdquo to the board of M& C, a post she held since August 2024. PHOTO: BT FILE

1992: Dr Catherine Wu meets Kwek Leng Beng for the first time, reportedly at a gathering of family friends. Some 30 years later, on a Taiwanese television talk show in November 2024, she says the meeting felt like a job interview. She recalls that Kwek Leng Beng posed several wide-ranging questions before asking her whether she was interested in a move to Singapore. On the show, she also says he subsequently asked her to do research on properties he was interested in, and once asked her to evaluate three potential hotels for acquisition and to choose one from among them. 

 

1993: CDL acquires its first hotels outside Asia with the purchase of the Gloucester Hotel and The Bailey&rsquo s Hotel in London, as well as 13 other hotels in New Zealand.

 

1994: CDL makes its maiden entry into the US market with the acquisition of Millennium Hilton and Hotel Macklowe in New York. 

 

1995: CDL buys an 80 per cent stake in the famed Plaza Hotel in New York for S$455 million with Saudi billionaire Prince Al-Waleed bin Talal &ndash its most significant acquisition to date. The group also acquires the Copthorne chain of hotels in London, Germany and France for £ 219 million (about S$480 million at the time), and launches a new global brand, Millennium Hotels & Resorts. 

 

1996: The group&rsquo s European and US hotels are bundled into a new company, M& C, and listed on the London Stock Exchange. CDL retains a 55 per cent stake. 

 

1999: M& C acquires 17 hotels under Regal Hotels International&rsquo s North American portfolio for US$640 million. It also buys the Seoul Hilton (later known as Millennium Hilton Seoul) for US$213.5 million in the largest international hotel deal in Asia then. Also, M& C acquires CDL&rsquo s portfolio of 43 hotels for £ 556 million, bringing its market capitalisation to £ 1.3 billion.

 

2000: The company trims its portfolio, divesting 12 smaller hotels that were acquired earlier by the Regal chain. 

 

2001: M& C bags hotel management contracts in the Middle East, North Africa and Turkey, as well as an additional 16.8 per cent stake in the Plaza Hotel. It partners Germany&rsquo s Maritim Hotels and launches a new boutique brand under M Hotel. 

 

2004: M& C and partner, Prince Al-Waleed, sell their stake in the Plaza Hotel for US$675 million, at more than US$800,000 per room &ndash the highest per-room price paid for a New York hotel then. 

 

2006: M& C carves out four Singapore hotels and an adjoining shopping centre, bundling them into CDL Hospitality Trust, Singapore&rsquo s first hospitality real estate investment trust. The initial public offering aims to raise around S$579.3 million. At the same time, the company enters the Chinese market, opening Millennium Hongqiao Hotel in Shanghai. 

 

2007: Group CEO Peter Papadimitropoulos quits after six months on the job. He is the third CEO to leave within the last three years. Kwek Leng Beng tells the Financial Times that Papadimitropoulos&rsquo management and leadership approach did not match that of the company&rsquo s. M& C opens St Regis Singapore in December, the first international luxury hotel to open in the city-state in a decade.

 

2014-2015: The company acquires three hotels in Rome, New York and London opens one in Tokyo&rsquo s Ginza district and signs on four hotels in Dubai. 

 

2016: CEO Aloysius Lee quits, leaving after a two-year tenure. This follows M& C&rsquo s disappointing first-half performance, on the back of political and economic uncertainty, as well as structural changes within the industry.  

 

2017: In May, a Singaporean who worked as a senior vice-president at Copthorne Hotels files a claim with the UK employment tribunal, alleging unfair dismissal and discrimination. He had worked at the company between 2012 and 2017. In October, CDL makes a bid to privatise M& C in which it owns a 65.2 per cent stake. The offer for the remaining 34.8 per cent of M& C for £ 624.3 million values the hotelier at about £ 1.8 billion, at a 21.4 per cent premium over the company&rsquo s 446.7 pence share price at the time. Minority shareholders criticise the bid as being too low. CDL raises its offer to 620 pence per share, valuing the company at £ 2.01 billion.

 

2018: CDL&rsquo s privatisation bid falls through. Group CEO Jennifer Fox steps down later this year, just three months after taking up the role. M& C&rsquo s 2018 net profit drops 65 per cent to £ 43 million from £ 124 million the year before. It cites headwinds that it expects to continue, including US-China trade relations, Brexit and increasing minimum-wage levels in many jurisdictions.  

 

2019: CDL makes another attempt to take M& C private, valuing the company at £ 2.2 billion. The offer represents a 37 per cent premium to the company&rsquo s closing price of 500 pence then. The bid is successful and the company is delisted. M& C becomes a wholly owned subsidiary of CDL. Group revenue for the year falls 18.8 per cent to S$3.4 billion, although profit inches up 1.3 per cent to S$564.6 million. The hotel operations segment posts a loss of S$6.6 million due to impairment losses, transaction costs from M& C&rsquo s privatisation, and refurbishment costs. The Biltmore Mayfair also makes an operating loss of S$21 million. 

 

2020: Covid hits, and hotels worldwide suffer as borders close and travel grinds to a halt. M& C falls into the red. CDL names veteran hotelier Clarence Tan as group CEO for M& C in April. He quits just four months after. At the half-year mark, CDL flags that it expects the hotel operations to see a pre-tax loss of between S$120 million and S$140 million. M& C announces 910 job cuts in its 20 hotels in New Zealand and another 159 in Singapore. CDL sells Copthorne Orchid Hotel & Resort Penang, following earlier hotel divestments in the US and Britain.  

 

2021: CDL posts a S$1.92 billion loss for the 2020 financial year, dragged down by a massive S$1.78 billion write-down on its investment in China group Sincere Property. It notes that in the second half, group revenue fell 43.5 per cent on the year to S$1.04 billion, with hotel operations making up 81 per cent of the decline. Kwek Leng Beng says the group will review M& C&rsquo s entire portfolio and seek to unlock value. The group opens its first M Social properties in New York and Paris. 

 

2022: CDL is back in the black with net profit of S$97.7 million for FY2021, as its hotels return to profitability. The group completes the divestment of Millennium Hilton Seoul and its adjoining land site for S$1.26 billion, at S$960.4 million over the net book value of the property. It estimates a gain of S$530 million from the sale.

 

2023: The sale of the Millennium Hilton Seoul helps lift CDL&rsquo s FY2022 net profit to a record S$1.3 billion. The group says it will &ldquo accelerate plans for asset optimisation&rdquo . It acquires an 87.9 per cent interest in Australia&rsquo s Sofitel Brisbane Central hotel for A$177.7 million (S$159.2 million at the time). It buys another property in Myeongdong, Seoul, for 140 billion won (S$143.9 million), and one in Osaka, Japan, for 8.5 billion yen (S$79 million). 

 

2024: The hotels segment posts firm results for FY2023, with China and Taiwan properties outperforming. CDL acquires the Hilton Paris Opera hotel from Blackstone for 240 million euros (S$350.2 million), ahead of the Paris 2024 Olympics. 

 

January 2025: CDL attempts to privatise Millennium & Copthorne New Zealand (MCK). The proposal, at NZ$57.3 million (S$43.7 million), is a 25 per cent premium over its market value. But MCK&rsquo s independent directors reckon that the offer of NZ$2.25 per share is &ldquo too low and inadequate&rdquo .    

 

February 2025: CDL posts a net profit of S$201.3 million for FY2024, a 37 per cent fall from a year ago, as group revenue falls 34 per cent to S$3.3 billion. Revenue for the hotels segment is up 8 per cent at S$1.6 billion as development revenue slides. The company abruptly calls off its results briefing and halts trading. News of the boardroom battle emerges.    

 

March 2025: The lawsuit is discontinued. In his statement, Kwek Leng Beng says the board will focus on strengthening CDL&rsquo s business, including &ldquo globally, furthering the expansion of various brands under Millennium & Copthorne&rdquo .

Father-son spat has wreaked damage, restoring investor confidence will be an uphill task

 

[SINGAPORE] Shareholders of City Developments Ltd : C09 +3.04% (CDL) probably heaved a huge sigh of relief over the announcement late on Wednesday (Mar 12) that Kwek Leng Beng had dropped his lawsuit against his son Sherman Kwek and six other members of the CDL board.

 

CDL&rsquo s share price rallied immediately following this announcement. However, are the group&rsquo s troubles over?

 

Shareholders might wonder if the father-son duo can work harmoniously after their high-profile spat. More crucially, CDL&rsquo s board of directors should urgently launch a strategic review to improve the group&rsquo s performance.

 

According to Wednesday&rsquo s announcement, Kwek Leng Beng and Sherman Kwek will continue as executive chairman and group chief executive officer, respectively. Also, all the current directors, including Jennifer Duong Young and Wong Su-Yen, remain on the board.

 

The announcement appears to bring closure to an ugly saga at the property and hotel group. Kwek Leng Beng wanted to remove Sherman Kwek as CEO citing governance issues. Sherman Kwek and the majority of the board countered that they were concerned over the conduct of Dr Catherine Wu who has a &ldquo long relationship with the chairman&rdquo .

 

Dr Wu was an adviser to the board of CDL&rsquo s Millennium & Copthorne Hotels (M& C). Late on Mar 4, Kwek Leng Beng said that she resigned from being an &ldquo unpaid independent adviser&rdquo with immediate effect. 

Uncertainties persist

Doubtless, concerns will linger over whether the father-son peace can endure. Might the chairman and CEO be wary of each other and constantly clash over issues such as key personnel appointments, capital expenditure, investments and divestments, governance and so forth?

 

Perhaps, CDL&rsquo s top management may be bogged down with trying to read the tea leaves on the chairman-CEO relationship and gingerly working around these two bosses.

 

Then there is the question of whether Dr Wu, who said she first met Kwek Leng Beng in 1992, may try staging a comeback of sorts in the CDL group. 

 

In the background, other Kwek/Quek family members who hold substantial stakes at Hong Leong Investment Holdings (HLIH) might wonder if the father-son duo is best placed to lead CDL. HLIH holds a direct and deemed interest of about 49.3 per cent in CDL.

 

Might key players at HLIH such as Kwek Leng Beng&rsquo s cousins, Malaysian tycoon Quek Leng Chan, who is chairman of GuocoLand : F17 -1.36%, and Kwek Leng Kee of Hong Leong Holdings, hope to see leadership changes at CDL?

 

The Kwek Leng Beng-Sherman Kwek conflict has wreaked much damage on CDL. Top talent may hesitate to join the group given concerns over the father-son relationship. Such concerns might also cloud how counterparties view entering joint ventures or doing major deals with CDL. 

 

In addition, winning over the confidence of equity investors will be tough as the recent saga has raised doubts on the quality of CDL&rsquo s corporate governance.

 

Strategic review

Eighty-four-year-old Kwek Leng Beng, who joined CDL&rsquo s board in 1969, is spot on to say CDL has to &ldquo restore investor confidence&rdquo .

 

CDL&rsquo s board should immediately announce a comprehensive strategic review that includes five key areas.

 

1. Improve financial performance. In recent years, CDL has made serious missteps, including the Sincere Property debacle that led to a S$1.9 billion loss in 2020. Meanwhile, the group has not been aggressive in seizing opportunities in areas such as data centres and modern logistics facilities.

 

CDL posted a net profit of S$201 million for 2024, down 37 per cent from a year earlier. The board should identify what is a sustainable net profit target over the next few years and the road map to getting there. For example, the group may need to find new growth engines, scale up some existing businesses and exit certain businesses.

 

2. Work the balance sheet harder. Based on net profit of S$201 million and shareholders&rsquo equity as at end-2024 of S$9.1 billion, return on equity (ROE) is just over 2 per cent &ndash hardly enticing to investors.

 

Like many property groups, CDL is asset heavy. It needs to set out clear targets and timelines for driving higher ROE, as well as action plans to achieve the targets. It could recycle capital more aggressively, bring in more capital partners for various investment properties, and so forth.

 

3. Examine the ownership structure. CDL trades at well below book value. Based on its share price of S$5.09 on Mar 13, CDL traded at a discount of 50 per cent to end-2024 net asset value (NAV) per share of S$10.17, and a discount of 74 per cent to the revalued NAV per share of S$19.86 if fair value gains of investment properties and revaluation surpluses of the hotel portfolio were included.

 

Should the property development business be split from the investment property and hotel ownership business? What businesses should be listed? Should investment properties and hotels largely be owned by listed trusts? 

 

4. Study the hotel business&rsquo positioning. CDL has a geographically diverse portfolio of more than 150 hotels &ndash the bulk of which are under wholly owned subsidiary M& C.  

 

M& C owns, manages and operates hotels. Perhaps, it should de-emphasise owning hotels so as to help improve CDL&rsquo s ROE. Also, M& C&rsquo s competitiveness as a hotel operator needs to be examined. Its scale pales compared with a group such as Accor, which operates hospitality properties in several thousand locations and multiple brands in many hospitality segments.

 

5. Look at leadership succession. Kwek Leng Beng has been CDL&rsquo s executive chairman since 1995. When should he leave the position notwithstanding his many contributions over the years?  

 

Moreover, a review should explore whether CDL ought to have professionals who are non-Kwek/Quek family members helming the executive management.

 

Hopefully, the dust has settled on the father-son spat at CDL. Meanwhile, the hard slog to regain investor confidence begins. Work should start with a comprehensive strategic review that asks difficult questions, and draws up concrete and ambitious targets for the business.     

[SINGAPORE] Trusted family friends and senior establishment figures in Singapore intervened and mediated a truce which put a halt to an acrimonious boardroom fight between billionaire Kwek Leng Beng and his son Sherman Kwek, according to sources who spoke to The Straits Times.

 

The halt came after more than two weeks of tit-for-tat media statements by both men, during which the share price of their real estate company City Developments Limited (CDL) reached a 16-year low.

 

The Straits Times understands that the senior figures are neutral parties who have kept in contact with Kwek Leng Beng who is the executive chairman of CDL and his son, CDL&rsquo s group chief executive officer.

 

The mediation took place in earnest after Kwek Leng Beng announced on March 4 the resignation of Dr Catherine Wu as &ldquo an unpaid independent adviser&rdquo to the board of CDL&rsquo s hotel arm, Millennium & Copthorne Hotels (M& C).

 

Sherman Kwek had said Dr Wu was the reason for the dispute between the father and son. He accused her of meddling in matters well beyond her scope, adding that she wields and exercises enormous influence. 

 

Due to her long relationship with the chairman, efforts that were made to manage the situation were done sensitively, but to no avail, Sherman Kwek said.

 

On March 12, the saga came to an abrupt halt as quickly as it had erupted, after Kwek Leng Beng said he had decided to drop the lawsuit he had filed in February to stop his son and majority directors of CDL from implementing a number of board resolutions. 

 

Kwek Leng Beng will continue in his role as CDL&rsquo s executive chairman, and Sherman Kwek will continue as its group CEO. All the current directors, including the two new independent directors &ndash Jennifer Duong Young and Wong Su-Yen &ndash will remain on the CDL board.

 

Kwek Leng Beng said all the board members have agreed to put aside their differences for the greater good of CDL and its stakeholders, and will continue to focus on strengthening CDL&rsquo s business.

 

The news was taken positively by the stock market. On March 13, CDL&rsquo s share price closed 3 per cent higher at S$5.09, slightly shy of the S$5.12 level before the board dispute erupted.

 

In February, Kwek Leng Beng had filed court papers to stop his son and majority directors of CDL from implementing a number of board resolutions which he alleged undermined his authority and were an attempted power grab. 

 

The lawsuit was also filed to restrain the two newly appointed independent directors from exercising their powers, as Kwek Leng Beng said their appointment did not have full board approval and had bypassed the nomination committee.

 

He also sought to remove his son as CEO, and proposed that his nephew Kwek Eik Sheng, CDL&rsquo s group chief operating officer, serve as interim CEO. 

 

Sherman Kwek denied that he tried to oust his father.

 

He accused Kwek Leng Beng of being influenced by Dr Wu, whose conduct raises &ldquo a very serious issue of corporate governance&rdquo .

 

Sources who worked at M& C told ST that Dr Wu sat in for most senior management meetings for the hotel arm, &ldquo even when chairman was not around&rdquo .

 

Most operational matters were cleared with her, such as the proposal of new uniform designs and themes for M Social Phuket, a trendy and upscale hotel in the heart of Patong, Thailand. The first phase of the hotel opened in November 2023.

 

The sudden departure of M& C&rsquo s CEO Clarence Tan after helming the hospitality arm for just four months hints at the challenging environment he had to deal with on top of the Covid-19 pandemic, the sources said. Tan was M& C&rsquo s CEO from April 2 to Aug 2 in 2020.

 

Before joining M& C, Tan was the managing director for South-east Asia and South Korea with InterContinental Hotels Group, where he was responsible for the growth and financial and operational performance of about 100 hotels in the areas.

 

During the course of the saga, old and more recent photos of Dr Wu and Kwek Leng Beng were discovered by the public and circulated on social media.  

 

On March 4, he announced the resignation of Dr Wu as &ldquo an unpaid independent adviser&rdquo to M& C&rsquo s board.

 

Kwek Leng Beng also said that with Dr Wu out of the picture, it was time to focus on the issues that CDL has to address. 

 

These included the China Sincere Property debacle that resulted in an extraordinary loss of S$1.9 billion for CDL in 2020 poorly judged investment decisions in the UK property market, which culminated in a 94 per cent fall in profits during the first half of 2023 and CDL&rsquo s share price performance since Sherman Kwek took the helm in 2018.

 

While the reconciliatory moves offer a small respite, they do not fully address the various corporate governance issues and board differences that were raised during the dispute, RHB analysts said.

 

Investors will still want to seek full resolution of these concerns, greater clarity on the company&rsquo s plan to maximise shareholder returns, and additional safeguards to prevent similar corporate governance and board-related issues from arising again, the analysts wrote in a note on the morning of March 13.

 

One analyst &ndash who did not want to be named &ndash questioned why Kwek Leng Beng and minority board members chose to publicly criticise the CEO for the Sincere investment when it was a board decision, which Sherman Kwek chose to abstain from because he had proposed the project.

 

&ldquo Did Sherman go against what the board had decided? Who voted yes and no to the deal? Those who voted yes &ndash are they still on the CDL board?&rdquo he asked, wondering how much culpability each party had.

 

The Sincere proposal was put to the CDL board for approval in early 2020. The cracks became evident during the three-hour-long meeting when the eight-person board of directors debated it vigorously.

 

Eventually, it came down to a narrow vote in favour of acquiring Sincere. However, the fallout from the &ldquo game-changing investment&rdquo led Kwek Leng Peck, who is Kwek Leng Beng&rsquo s cousin, to resign in October 2020 as a director of CDL, a post he had held for over 30 years, after clashing with the board over Sincere and the management of M& C.

 

His resignation was followed by that of two other directors &ndash Koh Thiam Hock and Tan Yee Peng &ndash on concerns over the handling of the Sincere investment.