CDL has entered an agreement to sell its 50.1% stake in the South Beach mixed-use integrated development for S$834.2 million (US$647.2 million) to minority owner and joint venture partner IOI Properties Group, according to a Wednesday announcement on CDL’s website.
The deal, which will give the Malaysian developer full ownership of the complex, values the property at around S$2.75 billion (US$2.1 billion).
The site for the complex was originally acquired by CDL for nearly S$1.69 billion in 2007 and co-developed by the two firms after they became joint venture partner in 2011, as reported by Bloomberg.
South Beach, located in Singapore’s central business district, features retail outlets, a 34-story office tower, and a 45-story building that houses a JW Marriott Hotel. By the end of March, its office and retail components had committed occupancy rates of 92.4% and 92.5%, respectively.
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The South Beach complex. Photo by City Developments Limited |
The sale comes amid pressure on CDL to offload assets after a public dispute between chairman Kwek Leng Beng and his son, CEO Sherman Kwek, made headlines earlier this year.
In late February, Leng Beng filed a lawsuit against Sherman, accusing him of bypassing the firm’s nomination committee to alter the board’s makeup and make sweeping governance changes.
Public back-and-forth ensued, with Sherman blaming his father’s long-time adviser, Catherine Wu, and Leng Beng pointing to what he described as a “long series of missteps” by his son that had weighed on the company’s stock performance, before the lawsuit was suddenly dropped in March.
Nonetheless, Sherman admitted in April that the episode had shaken shareholders’ confidence and that cutting the firm’s growing debt load is now a priority.
“This transaction gives a strong boost to CDL’s efforts to accelerate capital recycling so as to reduce gearing and redeploy capital. We will continue to unlock value across our diversified portfolio and pursue future growth opportunities,” he said of the South Beach transaction.
CDL said the deal would have lowered its net gearing ratio to 103% from 117% if it had been completed by the end of the 2024 financial year, according to The Business Times.
Trading in both CDL and IOI Properties has been suspended pending announcements, The Edge Malaysia reported. Prior to the halt, CDL shares had gained about 1.6%, while IOI shares were down 2.11% on Wednesday morning.
