The transaction will enable the company to reduce gearing and redeploy the capital to maximise shareholder returns: CEO Sherman Kwek

 

[SINGAPORE] City Developments Ltd (CDL)   on Thursday (Nov 20) said that its wholly owned subsidiary Millennium & Copthorne Hotels has divested a multifamily residential asset in the United States for US$143.5 million to a US-based institutional investor. 

 

The 250-unit residential property stands on a 385,000 square foot freehold site located at 1250 Lakeside Drive in Sunnyvale, California, in the larger Silicon Valley area. The sale price is based on its net lettable area of 201,750 sq ft. 

 

Following the divestment, CDL&rsquo s global living sector portfolio comprises around 7,600 multifamily units and student accommodation beds across Singapore, Japan, the United Kingdom and Australia, with a total gross development value of around S$3.7 billion. 

 

Sherman Kwek, chief executive officer of CDL, said: &ldquo As a non-core, standalone asset in the US with limited operational scale in the multifamily space, this transaction enables us to reduce gearing and redeploy the capital to maximise shareholder returns.&rdquo  

 

Kwek noted that since the privatisation of Millennium & Copthorne Hotels in 2019, the group has shifted its portfolio optimisation approach towards unlocking value from non-core and mature assets. He added that these include divestments of hotels in South Korea, UK and the US. They also include the collective sale of Tanglin Shopping Centre in Singapore, as well as the deconsolidation of CDL Hospitality Trusts.

 

The property is situated minutes from the headquarters and offices of major tech companies such as Apple, Google, Amazon and Nvidia. 

 

It was put on sale in May via an expression of interest and marketed by Colliers USA, drawing &ldquo strong interest&rdquo from local property companies and real estate investment trusts, CDL said. 

 

It was formerly the site of Four Points by Sheraton Sunnyvale before CDL developed it into a mixed-use project that was completed in 2021. 

 

The development offers apartments ranging from studios to one- and two-bedroom units with contemporary architecture and premium finishes, the group added. 

 

It features amenities such as a fitness centre, coworking spaces and lakeside trails linked to nearby parks and attractions.

 

It is adjacent to M Social Hotel Sunnyvale, an upcoming 263-room lifestyle hotel that is being developed and is expected to be completed in the second half of 2026. 

 

CDL noted that M Social Hotel Sunnyvale will be operated by Millennium Hotels and Resorts: &ldquo It will feature state-of-the-art event and meeting spaces, vibrant communal areas, and a design ethos inspired by the creativity and energy of Silicon Valley.&rdquo  

The target price is increased to S$8.50 from S$4.90

 

[SINGAPORE] RHB has upgraded City Developments Limited (CDL) to &ldquo buy&rdquo from &ldquo neutral&rdquo , citing a strong momentum in Singapore&rsquo s residential property market, the developer&rsquo s renewed focus on asset divestments and other factors.

 

RHB also raised its target price for the stock significantly &ndash to S$8.50 from S$4.90. That represents an 18 per cent upside from its last close of S$7.20 on Tuesday (Nov 18).

 

According to the report released on Wednesday, CDL&rsquo s share price has rebounded from its lows in April.

 

&ldquo We see legs in the current rally, driven by the positive outlook for the Singapore real estate sector, (CDL&rsquo s) renewed focus on asset divestments, and government policy measures supporting deep value plays (thereby mitigating earlier corporate governance lapses),&rdquo the report said.

 

RHB analyst Vijay Natarajan noted that, despite the recent rally, the counter is still trading at a discount of about 50 per cent to its revalued net asset value (RNAV).

 

Asset recycling unlocks value

A central pillar of the upgrade is CDL&rsquo s active capital-recycling strategy. Divestments have remained a &ldquo key priority&rdquo for the group, the report noted.

 

Significant recent transactions include the South Beach integrated development, where CDL completed the divestment of a 50.1 per cent stake for a net gain of S$465 million in September. 

 

It divested Piccadilly Galleria for S$65.5 million in November, and has put up Quayside Isle @ Sentosa for sale for S$111 million, with negotiations under way with potential buyers.

 

Consequently, CDL&rsquo s net gearing &ndash including fair value on investment properties &ndash has improved, dipping to 69 per cent from 70 per cent in the second quarter of 2025. The group also maintains a healthy interest cover of four times, up from 2.4 times in the first half of the year.

 

CDL is also a key beneficiary of falling interest rates, Natarajan said. As at H1 2025, only 43 per cent of its debt is on fixed interest rates, and about 73 per cent of its debt is due for refinancing by 2027.

 

Local residential market strength

Beyond divestments, CDL is capitalising on the resilience of the local property market. Since June, the developer has acquired three residential sites: Lakeside Drive in Jurong and two executive condominium (EC) sites in Woodlands and Senja Close. These acquisitions add more than 1,300 units to its development pipeline.

 

The analyst highlighted the strong performance of recent launches, noting that the 706-unit Zyon Grand, of which CDL holds a 50 per cent stake, saw 84 per cent of its units sold during the launch weekend at an average of S$3,050 per square foot. This was a figure &ldquo well above&rdquo expectations, the analyst said. 

 

RHB expects stable margins of 10 to 15 per cent for these projects, viewing the pivot towards the EC segment as a move to increase earnings stability.

 

Financial outlook

While global hotel revenue per available room dipped slightly by 0.3 per cent in the first nine months of 2025 due to weakness in the Singapore market, the outlook for the hospitality segment is turning positive for FY2026, RHB said. This optimism is driven by an improving demand outlook on the back of a stronger event calendar pipeline, and the fact that the bulk of the hotel supply is now behind the market.

 

RHB has adjusted its core net profit forecasts for FY2025 to FY2027 upwards by 5 to 8 per cent, factoring in better operational performance and lower interest costs.

 

The revised target price of S$8.50 is based on a narrowed RNAV discount of 40 per cent (previously 65 per cent), reflecting the improved outlook for the real estate sector and the declining interest rate environment. 

 

The target price also includes a 2 per cent environmental, social and governance discount. The analyst noted that, while CDL has excellent environmental scores, corporate governance lapses remain a concern for investors.

 

Meanwhile, OCBC maintains its &ldquo hold&rdquo rating on CDL, with a higher fair value estimate of S$7.49. It notes the absence of new launches in Q3, leading to a 49 per cent fall in sales value to S$313.2 million.

 

&ldquo CDL has been proactive in reconstituting its portfolio to unlock value for shareholders, such as the divestment of assets at a premium to their book values and redeveloping some of its older commercial properties in Singapore,&rdquo OCBC said.

 

However, it added that the uncertain global economic outlook and impact of policy tightening measures rolled out previously could be potential dampeners to investor sentiment.

The group also reports that it is in advanced talks over the sale of Sentosa Cove&rsquo s Quayside Isle

 

[SINGAPORE] Sales value in the Singapore market for   City Developments Ltd   : C09 -0.54% (CDL) and its joint venture associates fell 48.7 per cent year on year to S$313.2 million in the third quarter, from S$611.1 million, the group said on Monday (Nov 17).

 

Some 88 units were sold in the three months ended Sep 30, versus 321 units in Q3 2024, CDL said in an operational update.

 

Sales were primarily from existing projects as there were no new launches during this quarter, said CDL. It explained that last year&rsquo s Q3 sales were boosted by the launch of the 276-unit freehold condo Kassia in July, which sold 144 units during its launch weekend.

 

Separately, CDL added that it is now in advanced stages of discussion and negotiation with shortlisted parties over the sale of Quayside Isle @ Sentosa Cove, after it put the mall up on the market at S$111 million in September and closed its expression of interest exercise last month. 

 

This trophy waterfront asset is the only retail property within the Sentosa Cove enclave and has attracted encouraging market interest, said CDL.

 

Noting that capital recycling remains a key strategic focus for CDL, the property conglomerate said it completed on Nov 7 its divestment of ground-floor retail podium Piccadilly Galleria &ndash which was put on sale in September &ndash for S$65.46 million.

 

The Business Times earlier reported in May that the 15-unit retail podium was up for sale at S$67.5 million, down 10 per cent from its initial S$75 million price tag in October 2024.

 

Property development

For the first nine months of the year, total sales value was up 38.9 per cent at S$2.5 billion (or 990 units), from S$1.8 billion (or 905 units) in the previous corresponding period.

 

Strong sales were driven by the 777-unit The Orie joint-venture project at Toa Payoh, launched in January, with 94 per cent of its total units sold to date.

CDL noted in its update that buying interest stayed strong this year. 

 

&ldquo With interest rates moderating, residential sales have picked up after the seasonal lull in September during the Hungry Ghost Festival,&rdquo it said. &ldquo October saw a flurry of new launches, particularly well-located projects, which saw strong demand and robust sales.&rdquo

 

On the outlook for its property development sector, CDL noted that its core operations remain resilient and that it has built a strong pipeline of well-located projects in Singapore and China via its ongoing land replenishment efforts.

 

Hotel operations

On its hotel operations front, the group recorded a 0.3 per cent drop in global revenue per available room to S$165.80 in the first nine months of this year, from S$166.30 in the year-ago period.

 

This was attributed to weaker performance in Asia.

 

Its Singapore hotels posted a 10.6 per cent year-on-year decline in revenue per available room to S$158.50 from S$177.20, due to a lower average room rate and occupancy. The decline was attributed to a high-base effect from last year&rsquo s events.

 

The rest of Asia registered a 3.6 per cent year-on-year decrease in revenue per available room, driven mainly by the weaker performance of Grand Millennium Beijing and Grand Millennium Kuala Lumpur. 

 

The inclusion of the newly opened M Social Resort Penang, which is still in the stabilisation phase, also affected the region&rsquo s performance, added CDL. 

 

Asia&rsquo s weaker showing was offset by a 10.7 per cent growth in revenue per available room across the rest of the UK and Europe, excluding London, driven by the acquisition of the Hilton Paris Opera hotel in May 2024.

 

CDL concluded that the group&rsquo s hotel performance across its key markets remains stable, with major events in the last quarter of this year anticipated to support continued domestic inflows.

 

The counter ended Monday S$0.04 or 0.5 per cent lower at S$7.31, before the announcement.