South Beach to start building by 2011

http://www.straitstimes.com/Money/St...ry_495183.html

Feb 26, 2010

CDL plans to start $2.5b mega project next year

By Esther Teo


CITY Developments (CDL) is aiming to start building its landmark $2.5 billion South Beach project in Beach Road next year, said its boss Kwek Leng Beng yesterday.

Mr Kwek gave an update on the project - shelved in late 2008, owing to high construction costs, then slated for a start this year - as he unveiled a far- better-than-expected 77 per cent surge in fourth quarter net profits for CDL.

He brushed aside financial worries over the mega project, which is set to boast offices, luxury hotels, retail space and residences when completed in 2016.

CDL bought the site in 2007 jointly with Dubai World and El-Ad Group, which have since been hit by debt woes.

Mr Kwek, the executive chairman, said: 'We cannot presume that the two partners have no money. If the two partners have no money, then their share will be diluted,' he said, of the Dubai partners.

Hong Kong's Nan Fung group emerged as a new investor in the project last June under a refinancing exercise.

'The verbal understanding with Nan Fung is that both of us will put in more money if so required,' Mr Kwek said.

CDL's net profit for the three months ended Dec 31 shot up 77 per cent to $176.7 million, as the group booked profits in projects such as Cliveden at Grange, The Arte and One Shenton.

That beat the average estimate of six analysts polled by Dow Jones Newswires of $129 million. Fourth quarter revenue rose 28.6 per cent to $922.4 million.

'The global economic recovery is better than expected,' he said, adding that prospects were good for the residential, hospitality and commercial sectors.

Full-year earnings rose 2.1 per cent to $593.4 million, on the back of better income from strong property prices.

Last year also marked the group's highest ever revenue of $3.27 billion, up 11.1 per cent, and second highest profit since its inception in 1963. It expects to stay profitable over the next 12 months.

Mr Kwek said that the firm will continue to focus on the local market, capitalising on its land bank and experience - but said China is promising.

'That is not to say that we will never go abroad... But why would we want to go in a big way at the moment when I still believe that we can make a lot of money in Singapore. We know Singapore best, can read the trends better and are here most of the time,' he said.

CDL expects sentiment among genuine buyers to remain strong despite recent government measures to cool speculation in the property market.

Full-year earnings per share were 63.8 cents, up from 62.5 cents a year earlier. Net asset value per share rose to $6.57 as at Dec 31, from $5.97.

The group is recommending a dividend of eight cents a share, up from 7.5 cents the previous year. CDL shares rose two cents yesterday to close at $10.34.

OCBC Investment Research analyst Foo Sze Ming said he expects CDL to deliver strong earnings this year, underpinned by its sold residential projects last year - The Gale, Volari and Hundred Trees - that have yet to book in profits.

http://www.businesstimes.com.sg/sub/...74182,00.html?

Published February 26, 2010

South Beach to start building by 2011

Owners eye lower costs, with mega projects completed

By KALPANA RASHIWALA


(SINGAPORE) The consortium that owns the South Beach site now plans to begin construction 'by next year' - since most of the mega projects including the two integrated resorts are nearing completion and 'contractors will be hungry' for business by then.

This will enable the consortium to award construction contracts at lower cost, reckons Kwek Leng Beng, executive chairman of City Developments Ltd (CDL), a member of the consortium.

In August last year, he had indicated that construction was likely to begin around the third quarter of this year. CDL teamed up with Dubai World and El-Ad Group to buy the 99-year leasehold site for $1.69 billion at a Singapore government tender in 2007.

In June last year, a new party entered the picture when Hong Kong developer Nan Fung, along with CDL, subscribed for five-year secured convertible notes under a refinancing exercise for the site's land loan.

CDL also announced yesterday that South Beach Consortium Pte Ltd has appointed a new CEO, Aloysius Lee, to replace Paul Gately, who has left.

Mr Lee, who came on board late last year, was formerly managing director (commercial) of Shui On Development Limited and executive director of Shui On Land, where his duties included overseeing the branding and operations of Shanghai Xintiandi.

The South Beach consortium has also hired special structural engineering consultants from the UK to assist in lowering costs by 'value engineering' to maximise the asset's value. The plan is to develop South Beach into a retail, office, hotel and residential project. Mr Kwek also reiterated that the consortium is studying how to tap synergies between South Beach and next door Suntec City convention centre as well as Marina Bay Sands and Resorts World Sentosa.

Last year, Mr Kwek indicated that Nan Fung and CDL would probably be the ones to pump in further money. El-Ad and Dubai World are likely to be passive investors who may then see their share in the project diluted.

Yesterday, he said that a meeting will be held among South Beach investors sometime next week to discuss contribution for the project's further development.

'In terms of financing, we have not discussed and we cannot presume the two partners have no money, their shares will be diluted. Our verbal understanding with Nan Fung is that both of us will put in more money . . .

'I am not concerned whether there's shortage of money to build. I'm more concerned (whether we) can we build something that can be very exciting, everyone falls in love with, (and comes) knocking at my door: 'Can I buy this?'

Based on a recent external valuation for the year ended Dec 31, 2009, no impairment charge is required for the South Beach development.