Kwek Leng Beng (centre), executive chairman of City Developments Limited, presenting a new condominium project, Jan. 5, 2007. Photo by SPH Media via AFP
City Developments’ share price rose 8.5% to close last week at S$5.25 (US$4.08) on the developer’s announcement that it is selling a landmark office complex in Singapore to reduce debt and restore investor confidence after a family feud.
The firm said last Wednesday it had agreed to sell its 50.1% stake in the South Beach mixed-use integrated development to its Malaysian joint venture partner, IOI Properties Group, for S$834.2 million.
The property, located in Singapore’s central business district and valued at around S$2.75 billion (US$2.1 billion), features retail outlets, a 34-story office tower, and a 45-story building housing a JW Marriott Hotel.
The deal is expected to generate a disposal gain of around S$465 million for the financial year ending Dec 31, 2025, which will go toward reducing bank borrowings and cutting debt, CDL said, as quoted by The Straits Times.
CDL shares had been trading at S$5.12 before a public feud broke out between billionaire chairman Kwek Leng Beng and his son Sherman Kwek, the firm’s CEO, which saw the stock slipping to a 16-year low of S$4.76 in early March.
The fallout began in late February with Leng Beng filing a lawsuit accusing Sherman of bypassing the firm’s nomination committee on a couple of occasions to change the board composition and making substantial changes to committees and governance.
It soon spilled into the public eye, with Sherman pointing fingers at his father’s longtime adviser, Catherine Wu, and Leng Beng criticizing his son’s “long series of missteps” that he believed caused CDL’s shares to lag behind those of its rivals. Leng Beng withdrew the lawsuit on March 13.
Sherman admitted in April that the incident had shaken shareholders’ confidence and that cutting the firm’s growing debt load was 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.
